Essential Steps in Korean Payroll: Termination Process for Employees in Korea

When processing employee termination in Korea, there are several essential steps that need to be confirmed and followed. Sometimes, there are processes specific to Korea that may be unfamiliar to foreigners or foreign companies. Please note the following:

  1. Notice Period: Verify the notice period required for employee termination according to the Employment Contract (“EC”). This period typically ranges from 30 to 90 days, depending on the employee’s length of service and EC.
  2. Termination Agreement: Prepare a termination agreement that outlines the terms and conditions of the employee’s departure, including the final date of employment, severance pay (if applicable), and any post-employment obligations. The Termination Agreement should also specify that the employee must return any office equipment or corporate cards used during their employment without disclosing any confidential information related to their job duties.
  3. Severance Pay: Determine if the employee is eligible for severance pay based on the Korean Labor Standards Act. Severance pay is generally calculated based on the employee’s years of service and average wages. The Korean employment system mandates the payment of 30 days of average wages per year of service. This unique system can often cause confusion among foreign companies when hiring in Korea. We will provide a more in-depth article specifically addressing this topic.
  4. Final Settlement: Settle any outstanding payments, such as accrued salary, unused vacation days, and other entitlements, as required by law and the EC.
  5. Exit Interviews: Conduct exit interviews with the departing employee to gather feedback and ensure a smooth transition. This process helps identify any areas for improvement within the organization.
  6. Return of Company Property: Collect all company property, including laptops, access cards, and any other items issued to the employee during their employment.
  7. Notification to Relevant Authorities: Notify the appropriate government agencies, such as the National Pension Service and the Employment Insurance Agency, about the employee’s termination to ensure compliance with legal obligations.

It is important to consult with a local HR expert or legal advisor familiar with Korean employment laws to ensure compliance with all necessary procedures and requirements. Please contact us at for further Korean payroll consultations.



Essential Steps in Korean Payroll: Termination Process for Employees in Korea

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