Severance pay (퇴직금) is one of the most consistently misunderstood benefits foreign workers in Korea are entitled to. It isn't a bonus, and it isn't discretionary — under the Employee Retirement Benefit Security Act (근로자퇴직급여 보장법, geunrojatoejikgeubyeo bojangbeop), any employer with at least one employee must pay severance to a worker who has completed one year or more of continuous service, regardless of nationality, visa type, or documentation status. Yet plenty of foreign workers leave a job, and eventually Korea, without ever receiving what they're legally owed — sometimes because they never asked, sometimes because an employer counted on that.
→Who Is Legally Entitled to Severance Pay (퇴직금)
The eligibility test is narrower than people assume, but once you clear it, entitlement is automatic — not something your employer can opt out of by contract:
- One year or more of continuous employment with the same employer, counted from your actual start date, not just the date on a written contract
- An average of 15 or more hours worked per week over the relevant period — part-time workers below this threshold generally don't qualify
- Applies regardless of how employment ended — resignation, being fired, contract non-renewal, or even termination for cause generally does not eliminate the right to severance already accrued
- Applies regardless of visa status — Korean labor law has consistently treated severance as owed to a worker who actually performed the work, including in cases involving undocumented workers
→How Severance Pay Is Calculated
The standard formula is straightforward once you understand the building block: average wage (평균임금, pyeonggyun imgeum), calculated over your last three months of employment, including base pay and most regular allowances and bonuses.
| Step | What It Means |
|---|---|
| 1. Average daily wage | Total wages in your last 3 months of employment ÷ total calendar days in that period |
| 2. 30 days' average wage | Average daily wage × 30 — this is your severance rate per year of service |
| 3. Total severance | 30 days' average wage × (total days employed ÷ 365) |
In plain terms: severance pay is roughly equivalent to one month's average pay for each full year worked, prorated for partial years. Overtime, certain regular bonuses, and some allowances factor into the average wage calculation — a point where employers commonly lowball the number by only counting base salary.
Severance pay (퇴직금) is calculated on average wage — including regular overtime and allowances — not just your base salary, which is where many employer calculations quietly fall short.
→The 14-Day Payment Deadline
Under the Labor Standards Act (근로기준법), an employer must pay severance within 14 days of the employee's last day of work, unless both sides specifically agree in writing to extend that period. Missing this deadline without a valid extension agreement is itself a violation, separate from the underlying question of whether severance is owed at all — meaning a foreign worker can have a valid claim even if the employer eventually pays, if the payment was unreasonably delayed.
→Retirement Pension (퇴직연금) vs. Lump-Sum Severance
Some employers have adopted a retirement pension system (퇴직연금, toejigyeongeum) instead of paying a lump sum directly — either a defined benefit (확정급여형, DB) or defined contribution (확정기여형, DC) plan, where funds are set aside with a financial institution rather than paid out of pocket at the end of employment. If your employer uses one of these plans, you generally need to separately claim the funds from the pension provider after leaving, rather than expecting a direct bank transfer from your employer. Ask your employer, early in your employment, which system applies — it changes what you'll need to do when you leave.
→Common Ways Foreign Workers Get Shortchanged
- "Contract renewal" used to reset the clock — some employers issue a new short-term contract every 11 months specifically to argue continuous employment never reached a year; courts have frequently rejected this where the work itself was genuinely continuous
- Only counting base salary in the average wage calculation, excluding regular bonuses and allowances that should be included
- Treating a worker as an independent contractor on paper while directing their work like an employee — misclassification doesn't defeat a severance claim if the actual relationship was employment
- Assuming a worker won't pursue it after leaving Korea — a claim doesn't automatically disappear just because the worker has left the country, though it does get more logistically difficult
→What to Do If Your Employer Won't Pay
Unpaid severance (퇴직금 체불) is handled the same way as other wage claims — through a complaint (진정, jinjeong) to the local office of the Ministry of Employment and Labor (고용노동부), not through a slower civil lawsuit as a first step:
- File a wage claim complaint (진정) at the labor office with jurisdiction over your former workplace, bringing your employment contract, pay stubs, and any communication about your departure date
- A labor inspector investigates and can order the employer to pay, often resolving straightforward severance disputes without a courtroom
- If the employer still doesn't pay, the case can be referred for criminal prosecution, since willful nonpayment of wages and severance is a criminal offense in Korea — this leverage alone resolves many disputes
- You can also pursue a separate civil claim for the unpaid amount, particularly useful if you've already left Korea and need a path that doesn't require your physical presence for every step
→What to Do About Unpaid Severance in Korea
- Confirm your actual start date and total time worked — including any "renewed" contracts that were really continuous employment
- Request your pay records and a clear breakdown of how your employer calculated severance, rather than accepting a lump figure without seeing the math
- Track the 14-day payment deadline from your last working day, and don't assume a delay is automatically fine
- If you've left Korea already, know that a valid severance claim doesn't expire just because you're no longer in the country — but it does require prompt action, since claims are subject to statutory time limits
- If your employer disputes eligibility or the calculation, file a complaint (진정) with the labor office rather than accepting an unexplained lowball figure
Severance pay (퇴직금) is one of the clearest, least discretionary rights a foreign worker has in Korea after a year on the job — the gap is almost always in enforcement, not in the underlying legal entitlement.