How Korean Severance Pay Works for Foreigners

By LEANG, koreayo.com Editorial Team · Last verified: August 9, 2026

Korean severance pay is one of those things nobody explains until you are already halfway out the door. You put in your year. You quit, or the company let you go. And now you are wondering whether that lump sum everyone keeps mentioning is real, or just another rumor that dies somewhere between your boss and the labor office.

It is real. It is called toejikgeum (퇴직금), and by law your employer owes it to you exactly the way they would owe a Korean coworker sitting at the next desk. Your visa does not change this. E-9, E-7, E-2, D-10, it does not matter.

What actually trips foreigners up is three things. The math. The timing. And one specific clause a few shady employers slip into contracts to dodge the whole thing. So here is what you are owed, how to calculate Korean severance pay yourself, and what to do when the money mysteriously does not show up.

Korean Severance Pay Basics Every Foreigner Should Know

Severance in Korea is not a bonus or a favor. It is a legal obligation under the Employee Retirement Benefit Security Act (근로자퇴직급여 보장법), enforced by the Ministry of Employment and Labor. If you meet two conditions, your employer must pay, full stop.

Hit both and you qualify. Foreigner or not. A lot of people assume severance is a Korean-citizens-only thing, or that it depends on your visa type. It does not. The law reads the same for everyone with a work contract.

My coworker told me foreigners do not get toejikgeum. He was confidently, completely wrong, and it almost cost me two months of pay.

Who Qualifies for Korean Severance Pay

The one-year line is brutal and it is exact. Work 364 days and you get nothing. Work 366 and you are owed a full month of average wage. This is the single most common way foreigners lose money here.

Part-timers count too, as long as you clear the 15-hour weekly average. Contract workers, dispatch workers, hagwon teachers, factory workers on E-9, office staff on E-7. All in.

What does not count? Genuine freelancers with no employment relationship, and anyone under that 15-hour threshold. If you are a freelancer being paid on 3.3% withholding, you are technically not an employee, so no severance. Except a lot of people get misclassified as freelancers when they actually work like employees, and in that case you can still fight for it.

How to Calculate Korean Severance Pay

Here is the formula that matters. Your Korean severance pay equals your average daily wage, times 30, times the number of days you worked divided by 365.

Average daily wage comes from your last three months. Add up your total pay for the final three months of work, then divide by the number of calendar days in that stretch, usually 89 to 92.

So two years at that salary lands you roughly ₩5.5 million. Rough rule of thumb, and it is close enough for a gut check. One month of pay for every year you stayed.

The Ministry of Employment and Labor runs a free official severance calculator if you want the exact figure. Punch in your dates and wages and it does the ugly part for you.

What Counts as Average Wage and Where People Get Shorted

This is where the number quietly shrinks. Average wage is not just your base salary. It legally includes regular allowances, plus a proportional slice of any bonus and unused annual leave pay.

Some employers calculate your severance off base salary alone and hope you do not notice the missing bonus portion. If your contract has a fixed annual bonus (정기 상여금), a chunk of it belongs in your average wage. Leaving it out can shave hundreds of thousands of won off what you get.

Check the number they hand you. Then check it again with the government calculator. The gap is usually the bonus.

Korean Severance Pay vs Retirement Pension

Not every company pays a lump sum directly. Many now run a retirement pension system (퇴직연금) instead, where money is set aside as you go. You still get paid, it just arrives through a slightly different pipe.

DC is honestly the friendlier one for foreigners who move around, because the money is already parked in an account under your name. You are not chasing a company that might ghost you later.

When Korean Severance Pay Must Be Paid

Fourteen days. That is the legal deadline after your last day, set by Article 9 of the Employee Retirement Benefit Security Act. Your employer can push it later only if both of you agree in writing. No agreement, no extension.

If you are on an E-9 visa, there is an extra layer worth knowing. Your employer is required to enroll you in departure guarantee insurance (출국만기보험) under the Foreign Workers’ Employment Act, and that payout is designed to reach you around the time you leave the country. Do not let anyone tell you it vanishes because you flew home.

The Contract Clause That Quietly Voids Your Severance

Watch for this one. Some employers, especially smaller hagwons, write a line saying severance is already included in your monthly salary (퇴직금 포함 연봉). They pay you a slightly higher monthly number and claim that covers it.

THIS IS NOT LEGAL. Korean courts have repeatedly ruled that severance cannot be paid out monthly as part of regular salary. The clause is void. You are still owed a proper lump sum on top, calculated the normal way.

So if a recruiter waves off your severance question with “oh, it is baked into the salary,” smile, nod, and keep the receipt. You can claim the real thing later.

Tax on Korean Severance Pay

Good news for once. Severance is taxed under a separate, much gentler system called retirement income tax (퇴직소득세), not lumped into your regular income tax. The longer you worked, the lower the effective rate, because the tax spreads your payout across your years of service.

For a normal one-to-three-year stint, the tax bite is small. You will not lose a third of it the way you might fear. The company withholds it and hands you the net amount.

What to Do If Your Employer Will Not Pay

Sometimes the money just does not come. The company stalls, claims cash-flow problems, or suddenly stops answering KakaoTalk. Here is your move.

File a complaint with the Ministry of Employment and Labor through the national Labor Portal (노동포털), or in person at your regional labor office (지방고용노동청). It is free. You do not need a lawyer. You do not even need great Korean, since interpreters are available. Bring your contract, pay slips, and anything showing your start and end dates.

You have three years from your last day to file, per the statute of limitations set in the Employee Retirement Benefit Security Act. Miss that window and the claim expires. Unpaid severance past the 14-day deadline can also mean criminal liability for the employer — up to 3 years in prison or a 30 million KRW fine under the Labor Standards Act — though in practice prosecution generally requires the employee’s complaint. That is exactly why a firm complaint tends to shake the money loose fast.

Sorting out your pay usually means sorting out your bank situation too. If your account is a mess, our Korean bank account guide for foreigners covers getting paid cleanly.

Getting Korean Severance Pay After You Leave Korea

Leaving the country does not erase what you are owed. You can still receive Korean severance pay after you fly home, as long as you have a Korean bank account the employer can transfer to, or you arrange it before you go.

This is the part people mess up. They close their Korean account, hop on a plane, and then realize the severance has nowhere to land. Keep the account open until the money clears. If you never set one up properly, see our guide on opening a Korean bank account without a Residence Card (formerly ARC).

Related Guides

• Korean Workplace Culture Guide for Foreigners
• Part-Time Work Permit in Korea
• Korean Bank Account and Banking Guide
• Best Bank for Foreigners in Korea
• Open a Korean Bank Account Without an ARC

Korean Severance Pay Quick Recap

Work a year, clock your 15 hours a week, and Korean severance pay is legally yours regardless of visa. Expect roughly one month of average wage for every year you stayed. Check their math against the bonus. Watch for the included-in-salary trick. And if they stall, the labor office works for free and moves faster than you would think.

FAQ

Do foreigners get severance pay in Korea?

Yes. If you worked at least one year and averaged 15+ hours a week, you are owed Korean severance pay no matter your nationality or visa. The law does not distinguish between Korean and foreign employees.

How is Korean severance pay calculated?

Average daily wage, meaning your last three months of pay divided by the calendar days in that period, times 30, times your years of service. Roughly one month of salary per year worked. The Ministry of Employment and Labor has a free official calculator for the exact figure.

What if my contract says severance is included in my salary?

That clause is void. Korean courts do not allow severance to be paid as part of monthly salary. You are still owed a separate lump sum, calculated the standard way, even if you signed it.

Can I get my severance after leaving Korea?

Yes, but keep a Korean bank account open so the payment has somewhere to go. E-9 workers usually receive it through departure guarantee insurance around the time they leave.

My employer refuses to pay. What now?

Honestly, do not wait around hoping. File with the Ministry of Employment and Labor’s Labor Portal or your regional labor office (지방고용노동청). It is free, interpreters are available, and unpaid severance can carry criminal liability for the employer, so complaints tend to get results. You have three years to file.

Does part-time work count for severance?

It can. If you averaged 15 or more hours a week for at least a year, part-time work qualifies. Below that threshold, it does not.

This guide is for general information only and is not legal advice. Rules and enforcement practice can change — for your specific case, confirm current details with a licensed labor attorney (노무사) or your regional Ministry of Employment and Labor office. Sources: 근로자퇴직급여 보장법 (law.go.kr), 고용노동부 퇴직금 계산기, 고용노동부 노동포털. Last verified August 9, 2026.

Severance Pay Eligibility by Visa Type

Severance pay eligibility in Korea does not depend on your visa category — it depends on how long and how many hours you worked. As of August 2026, the Guarantee of Workers’ Retirement Benefits Act applies the same threshold to Korean nationals and foreign workers alike: continuous employment of 1 year or more, averaging 15 hours or more per week.

What’s the deadline to claim unpaid severance after leaving Korea?

Three years from your last working day. After that, the statute of limitations permanently bars the claim, even if you’re no longer in Korea.

Can I file a severance complaint after I’ve left the country?

Yes — complaints to the Ministry of Employment and Labor (고용노동부) can be filed remotely, and the 3-year window applies regardless of your location.

Sources checked 2026-08-14: 근로자퇴직급여 보장법 (law.go.kr); 고용노동부 임금체불/퇴직금 민원 안내.