Severance Pay in Korea for Foreign Workers: Who Gets It and How Much

Severance pay — 퇴직금 in Korean — is a lump sum your employer pays when you leave a job. For many foreign workers it's the biggest single payment of their whole stay. It's also the money people most often lose, because they don't know the rules or they leave Korea before checking. Here's how it works, with a calculator to estimate your own amount.

Who qualifies

Under the Employee Retirement Benefit Security Act, you generally get severance pay when both are true:

• You worked for the same employer for 1 year or more without a break.
• You worked 15 hours or more a week on average.

The law applies to businesses of every size. Foreign workers are covered the same way as Korean workers. Your visa type doesn't change your right to severance pay.

Say you start work on March 3, 2025. If your last day is March 2, 2026, you've worked one full year. If your last day is February 27, 2026, you're a few days short — and under the general rule, no severance is owed. Dates matter. Write down your first and last working days.

How much: the formula in plain words

The law sets a minimum of 30 days of average wage for each year you worked. Two terms need explaining:

• Average wage (평균임금): all the wages you were paid in the 3 months before you left, divided by the number of days in those 3 months. It generally includes overtime and allowances paid in that period.
• Years worked: your total days of service divided by 365. Part of a year counts in proportion once you've passed 1 year.

If your average wage comes out lower than your ordinary wage, the ordinary wage is used instead. That protects people whose last months were unusually low.

Example: your last 3 months had 90 days and you were paid 9,000,000 won in total. Your average daily wage is 100,000 won. After exactly one year, severance is about 100,000 × 30 = 3,000,000 won. After two and a half years, it's about 7,500,000 won.

When it must be paid

Your employer must pay within 14 days after you leave. You can both agree in writing to a later date for special reasons, but that should be your choice, not something forced on you.

Many companies now pay retirement money through a retirement pension plan instead of a simple lump sum. If yours does, the money may go into a retirement account in your name. Ask your employer which system they use and how you'll receive the money, especially if you're going home.

Asking for severance early, while you're still working, is called an interim settlement. It's allowed only for a short list of reasons set by law — like buying a home — and only if you ask for it. Splitting severance into your monthly pay isn't the same thing and is generally not allowed.

E-9 workers: departure guarantee insurance

If you're on the E-9 visa, your employer must join departure guarantee insurance (출국만기보험) for you and pay into it every month. It's one of the four EPS insurance plans. Under the law on employing foreign workers, this insurance counts as the employer's severance system. Here's what that means for you:

1. It's for severance. The money builds up from your employer's monthly payments, not from your wages.
2. It's paid after you leave Korea. The payout is triggered by leaving Korea for good (not a short trip), a change of visa status, or death.
3. You need 1 year of work. If you worked less than 1 year, the money goes back to the employer.
4. The employer covers any gap. If the insurance payout is less than the severance the law requires, your employer must pay you the difference.
5. Don't wait too long. The claim generally expires after 3 years.

Before your flight home, ask your employer or call 1350 about how to claim, and keep your passport and bank details ready. Our EPS guide lists all four E-9 insurance plans, including the return cost insurance you pay for yourself.

Situations that come up

“My company changed its name.” If the business is the same and you kept working without a break, your years usually keep counting. Keep any papers that show the change.

“I moved to a new company through the job center.” A new employer is a new start. Each employer owes severance for your time with them if you reach 1 year there.

“My boss says severance is already in my monthly pay.” Ask to see it in writing and call 1350. Severance is meant to be paid when you leave.

“I took a few weeks off in the middle.” Approved leave usually doesn't break your service. Quitting and being rehired later can. If you're unsure whether a gap counts, ask 1350 with your dates in hand.

“The company closed.” Don't give up. Ask the labor office about the substitute payment system, and keep every document you have.

If you're not paid

1. Ask in writing. Send a short message with your first and last working days and your bank account. Keep a copy.
2. Wait 14 days. That's the legal deadline unless you agreed to a later date.
3. Call 1350. The Ministry of Employment and Labor can explain your options in several languages.
4. File a petition at the labor office. Bring your contract, pay slips and bank records. If the company has gone bankrupt or can't pay, ask about the government's substitute payment system, which can cover part of unpaid wages and severance.

Going home soon? Don't leave without checking. It's much harder to chase money from abroad. Before you go, also return your residence card at the airport and settle any health insurance — our residence card guide and health insurance guide explain both. And check that your pay was right all along with our minimum wage guide; underpaid wages also lower your severance.