In Korea, there are strict regulations regarding the payment of severance pay when an employee leaves after a certain period of employment. Severance pay is generally calculated as 30 days of average wages for employees who have worked for one year or more. While this concept is familiar to most employees in Korea, foreign companies often find it confusing.
Below is an example of the estimated severance pay calculation for an employee who has worked for three years. While the calculation may seem straightforward, there are various factors involved in determining the average wage. Therefore, it is crucial to consult with experts for accurate severance pay calculation.
Please note that the calculations provided are for informational purposes only and should not be considered as legal or financial advice. Each case may have unique circumstances that require professional analysis and consultation.
Stay tuned for our upcoming blog post on severance pay calculation in Korea, where we will delve deeper into the intricacies of the process and provide valuable insights for businesses operating in Korea. For further information, please contact at siyoon@theclacc.com
SAMPLE SEVERANCE PAY CALCULATION for the following case:
- Monthly salary 10,000,000 KRW (10,000 USD)
- Employment period 3 years
- Annual bonus approx. 24,000,000 KRW (24,000 USD)
| KRW | USD | |||
| 산정급여 | A | Sum of regular salary pmts for recent 3 mos | 30,000,000 | 30,000.00 |
| 산정상여 | B | Non-regular pmts (bonus, etc) of the recent 3 mos (weighted from the recent 1 year pmt) | 6,000,000 | 6,000.00 |
| 산정급상여합계 | C | Total A+B | 36,000,000 | 36,000.00 |
| 평균입금 | Average wage* | 400,000 | 400.00 | |
| 근속일수 | Total employment days | 1,095 | 1,095 | |
| 퇴직급여 | Severance pay | 36,000,000 | 36,000.00 |
*Average wage is a concept similar to daily wage in Korea for severance pay calculation purposes.
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