What are the conditions for receiving severance pay in Korea?

Under Korean labor law, employees who have worked for at least one year with a weekly working schedule of 15 hours or more are entitled to severance pay. The amount is calculated based on the average daily wage over the last 3 months of employment, multiplied by 30 days per year of service.

When must severance pay be paid in Korea?

According to the Employee Retirement Benefit Security Act, employers must pay severance within 14 days from the date of retirement or separation. Failure to pay within this period may result in additional interest penalties of 20% per annum.

What is the difference between severance pay and retirement pension in Korea?

Severance pay (퇴직금) is a lump-sum payment calculated at retirement. Retirement pension comes in two types: DB (Defined Benefit), where the employer manages funds and pays based on the final average salary, and DC (Defined Contribution), where the employer contributes a fixed amount and the employee manages the investment. DC plans may result in higher or lower payouts depending on investment performance.

Korean Severance Pay Calculator | 퇴직금 계산기

퇴직금 계산기 사용 가이드

퇴직금은 근로기준법에 따라 1년 이상 근무한 근로자에게 지급해야 하는 법정 퇴직급여입니다. 퇴직 전 3개월간 평균임금을 기준으로 계산되며, 재직기간에 비례하여 지급됩니다.

퇴직금 계산 공식

•퇴직금 = 1일 평균임금 x 30일 x (총 재직일수 / 365)
•1일 평균임금: 퇴직 전 3개월간 지급된 총 임금을 해당 기간의 총 일수(약 91일)로 나눈 금액입니다.
•3개월 총 임금: 기본급, 고정수당 외에 상여금과 연차수당도 3개월분으로 환산하여 포함됩니다.

퇴직소득세 계산 방법

1.근속연수공제: 근속연수에 따라 5년 이하 30만원/년, 10년 이하 50만원/년, 20년 이하 80만원/년, 20년 초과 120만원/년을 공제합니다.
2.환산급여: (퇴직금 - 근속연수공제) x 12 / 근속연수로 계산합니다.
3.환산급여공제: 환산급여 구간별로 60~100% 공제율이 적용됩니다.
4.과세표준: (환산급여 - 환산급여공제) / 12 x 근속연수로 산출합니다.
5.퇴직소득세: 과세표준에 종합소득세율(6~45%)을 적용하고, 지방소득세 10%를 추가합니다.

참고사항

•퇴직금은 근로자퇴직급여보장법에 따라 퇴직일로부터 14일 이내에 지급해야 합니다.
•1주 소정근로시간이 15시간 이상이고, 1년 이상 계속 근무해야 퇴직금 수급 자격이 있습니다.
•퇴직연금(DB형, DC형)에 가입한 경우 퇴직금 산정 방식이 다를 수 있습니다.
•정확한 퇴직금은 회사의 취업규칙 및 근로계약서를 확인하시기 바랍니다.

Complete Guide to Korean Severance Pay

Understanding Korean Severance Pay

Korean severance pay (퇴직금) is a legally mandated retirement benefit under the Labor Standards Act. Employers must pay severance to any employee who has worked continuously for one year or more with at least 15 hours per week.

Calculation basis: Average daily wage over the last 3 months before retirement, multiplied by 30 days per year of service.
Payment deadline: Must be paid within 14 days of the retirement date.
Tax treatment: Subject to retirement income tax with special deductions for long service periods.

Severance Pay vs Retirement Pension

Korea offers two retirement benefit systems: the traditional severance pay system and the retirement pension system.

Severance Pay (퇴직금): A lump-sum payment at retirement based on final average salary and years of service. Simple and predictable.
DB Pension (확정급여형): The employer manages the pension fund and guarantees a defined benefit at retirement, similar to severance pay calculation.
DC Pension (확정기여형): The employer contributes at least 1/12 of annual salary. The employee manages investments, so the final amount depends on returns.

Tips for Maximizing Severance Pay

Include all pay components: Fixed allowances, prorated bonuses, and unused vacation pay should be included in the average wage calculation.
Check your employment contract: Some companies provide more favorable severance terms than the legal minimum.
Consider IRP (Individual Retirement Pension): Rolling over severance into an IRP can defer taxes and provide tax deduction benefits.
Keep records: Maintain pay stubs and employment records to verify the correct severance calculation.

퇴직금 계산기

퇴직금 계산기 사용 가이드

퇴직금 계산 공식

퇴직소득세 계산 방법

참고사항

Complete Guide to Korean Severance Pay

Understanding Korean Severance Pay

Severance Pay vs Retirement Pension

Tips for Maximizing Severance Pay

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