Severance Pay and Annual Leave in Korea: What Foreign Workers Should Know
Two rights that many workers in Korea do not fully use are severance pay (퇴직금, toejikgeum) and paid annual leave (연차, yeoncha). Both apply to foreign workers on the same terms as Korean workers.
Severance pay (퇴직금)
Who qualifies
- You worked for the same employer for 1 year or more, and
- you worked on average 15 hours or more a week.
How it is calculated
The average daily wage is the total pay for the 3 months before you leave, divided by the number of days in those 3 months. Bonuses and leave pay from the past year are added at 3/12 of the yearly amount.
Example
Start date 2 March 2021, last working day 31 October 2026 (2,070 days). Monthly pay ₩3,500,000 and a yearly bonus of ₩3,000,000. The 3-month total is ₩11,250,000 over 92 days, so the average daily wage is about ₩122,283. Severance pay is about ₩20,804,795 before tax.
Things to know
- Your employer must pay within 14 days of your leaving, unless you both agree to a later date.
- Retirement income tax is taken separately and is usually lower than tax on monthly pay.
- Workers on the Employment Permit System (E-9) may also have departure guarantee insurance (출국만기보험). It is paid toward your severance and the details depend on your situation, so ask your employer or the insurer how the two relate.
Annual leave (연차)
| Service | Paid leave |
|---|---|
| First year | 1 day for each full month worked, up to 11 |
| After 1 and 2 years | 15 days |
| After 3 and 4 years | 16 days |
| Then +1 day every 2 years | up to 25 days |
From year 1 onward you need 80% attendance in the previous year. Workplaces with fewer than 5 employees are exempt from these rules.
Unused leave becomes pay
Leave you could not use within a year is normally paid out: daily ordinary wage × unused days. With a monthly ordinary wage of ₩3,000,000 and a 40-hour week, the daily wage is ₩3,000,000 ÷ 209 × 8 ≈ ₩114,833, so 5 unused days ≈ ₩574,163. If your employer formally asked you to plan and use your remaining leave and you did not, they may not have to pay for it.
This guide is general information, not legal advice. If you think you were not paid correctly, you can contact the Ministry of Employment and Labor or a support center for foreign workers.
This article is general information, not tax or legal advice.