The formula
“Average daily wage” = pay for the 3 calendar months before the leaving date ÷ the number of days in those months (89–92). Overtime and fixed allowances count; 3/12 of the last year's bonuses and unused-leave pay is added. The leaving date (퇴직일) is the day after your last working day — one day short of 365 means zero.
After-tax examples
| Monthly pay | Service | Severance | Retirement income tax | You receive |
|---|---|---|---|---|
| ₩2,200,000 | 1 yr | ₩2,169,863 | ₩13,283 | ₩2,156,580 |
| ₩2,500,000 | 3 yr | ₩7,397,260 | ₩63,287 | ₩7,333,973 |
| ₩3,000,000 | 3 yr | ₩8,876,712 | ₩102,345 | ₩8,774,367 |
| ₩4,000,000 | 5 yr | ₩19,726,027 | ₩300,766 | ₩19,425,261 |
Severance is taxed separately as retirement income at a low effective rate. The amount above is what usually lands in your account — or in an IRP account if your company runs a retirement pension plan; you can cash out the IRP when you leave Korea.
E-9 / H-2 workers: departure guarantee insurance
Your employer pays monthly premiums (about 8.3% of wage) into 출국만기보험. Claim it after your contract ends; the payout may be lower than statutory severance, and the employer owes you the difference. Claims go through Samsung Fire & Marine Insurance; ask your EPS center if unsure.
FAQ
Do foreigners get severance pay in Korea?
Yes. The Employee Retirement Benefit Security Act applies regardless of nationality or visa. You need 1 year of continuous service with the same employer and at least 15 hours a week on average.
How is severance pay calculated?
Average daily wage × 30 × (days of service ÷ 365). The average daily wage is your total pay for the 3 months before leaving divided by the number of days in those 3 months, plus 3/12 of bonuses and unused-leave pay from the last year.
I am on an E-9 visa. Is the departure guarantee insurance the same thing?
Not exactly. Employers of E-9/H-2 workers must pay into Departure Guarantee Insurance (출국만기보험, about 8.3% of monthly wage). You claim it from Samsung Fire & Marine after leaving the job. If it is less than your statutory severance, the employer must pay the difference.
When must my employer pay?
Within 14 days after you leave, unless you both agree in writing to a later date. Unpaid severance can be reported to the Ministry of Employment and Labor (call 1350, or the foreign worker helpline 1644-0644).
Sources: Employee Retirement Benefit Security Act art. 4·8·9 (English text, KLRI), Labor Standards Act art. 2(6) (average wage). Estimate only.