Severance Pay Calculator
Calculate Korean severance pay and retirement income tax from employment dates and salary. Includes IRP tax benefit and mid-term settlement scenarios.
This calculator is for reference only and may differ from actual amounts due to law changes or individual circumstances. Please consult a licensed professional (tax accountant, labor attorney, etc.) for accurate calculations.
Daily Average Wage
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Severance Pay (pre-tax)
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Retirement Income Tax
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Net Severance Pay
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Notice: Based on Korean Retirement Benefit Security Act 2026. Severance pay requires at least 1 year of service. Retirement income tax uses the converted wage deduction method. Actual figures may differ β consult your HR department or tax office.
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Frequently Asked Questions
Q. Do part-time or contract workers get severance pay?
Yes β any worker with 1+ year of continuous employment working 15+ average hours per week qualifies, regardless of employment type.
Q. When must severance pay be issued?
Within 14 days of resignation or termination. By mutual agreement the period can be extended; failure to pay carries up to 3 years in prison or β©30M fine.
Q. Are there tax benefits for receiving pay into an IRP account?
Yes. Transferring to an IRP defers retirement income tax until age 55+; drawing as an annuity reduces tax by 30β40%. IRP transfer is mandatory for amounts over β©3M.
Q. What are the eligibility conditions for severance pay?
Continuous employment of 1+ year plus an average of 15+ hours per week over 4 weeks. Applies to full-time, contract, and part-time workers meeting these criteria.
Q. How is severance pay calculated?
Severance = 1-day average wage Γ 30 Γ (total service days / 365). Average daily wage = 3-month total pay Γ· number of calendar days in that period.
Q. Is severance pay taxed?
Yes β retirement income tax applies, with deductions based on years of service. Longer service means lower effective tax rates. This calculator shows the after-tax amount.
How to Use
Input your start and end dates; years, months, and days of service are calculated automatically.
Enter total compensation (base pay + allowances + bonuses) received in the 3 months before separation.
If you have unused annual leave, add the payout amount for a more accurate average daily wage.
Daily average wage, gross severance, retirement income tax, and net take-home amount are displayed.
Expert Knowledge: Severance Pay Calculator
Severance pay in Korea is a statutory benefit under the Act on the Protection of Employees' Retirement Benefits. The formula: 1-day average wage Γ 30 Γ total service years. Workers with less than one year of service receive no severance.
The 1-day average wage uses total compensation (base + allowances + 3-month pro-rated bonuses) divided by calendar days in the 3-month reference period (typically 91β92 days). Annual bonuses contribute 3/12 of their value to the average.
Retirement income tax is intentionally lower than regular income tax, with service-year deductions applied. Under 2026 rules, service up to 5 years receives β©300,000 Γ years of service as a deduction. Long-service employees enjoy substantially lower effective rates.
Transferring severance to an IRP (Individual Retirement Pension) account defers all taxes until age 55+. Drawing as an annuity then reduces the tax by 30β40%. Amounts over β©3M must be transferred to IRP by law. Prior mid-term settlement history reduces the service period for new severance calculations, so track any such history carefully.
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