Severance Pay Calculator

Severance Pay Calculator helps estimate wage, overtime, allowance, arrears, or pay-period scenarios in English.

Severance inputs

Uses the Korean severance module: average wage for the last 3 months, 30 days per service year, interim settlement deduction, and retirement-income tax.

Gross statutory severance

₩24,632,990

5 service years

After interim settlement

₩24,632,990

Interim settlement ₩0

Retirement income tax

₩498,278

Local income tax ₩45,298

Net severance pay

₩24,134,712

After retirement income tax and local tax

Daily average wage

₩164,130

Last 3 months total ₩15,100,000

DC pension estimate

₩26,626,261

3% annual return scenario from the same wage base

Tax basis detail

Tenure deduction

₩5,000,000

Converted salary

₩47,119,176

Converted salary deduction

₩31,471,506

Taxable base

₩15,647,670

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Korea severance pay calculator guide

This English page translates the Korean severance pay calculator and keeps the same calculation path: calculateSeverance and calculateDCPension from the employment feature library. It is not a flat one-month wage shortcut.

Statutory formula and average wage

Korean severance under the Labor Standards Act Article 34 is based on daily average wage, 30 days, and total service days divided by 365. The calculator therefore measures the service period from the hire date to the resignation date and checks the one-year eligibility threshold before calculating a payable amount.

Daily average wage is calculated from the last 3 months before resignation. The Korean source includes base salary for 3 months, fixed allowances for 3 months, annual bonus prorated as annual bonus / 12 x 3, and annual leave allowance when included. That is why the English calculator asks for bonus and allowance fields instead of multiplying monthly salary by a generic percentage.

Retirement income tax

The Korean tax logic preserves the tenure deduction table: up to 5 years is KRW 1,000,000 per service year, 6 to 10 years is KRW 5,000,000 plus KRW 2,000,000 per year above 5, 11 to 20 years is KRW 15,000,000 plus KRW 2,500,000 per year above 10, and above 20 years is KRW 40,000,000 plus KRW 3,000,000 per year above 20.

After the tenure deduction, the module calculates converted salary, converted salary deduction, taxable base, retirement income tax, and local income tax at 10% of retirement income tax. The output separates gross severance, severance after interim settlement, total tax, and net severance pay.

DB, DC, and interim settlement

Defined-benefit style severance generally follows average wage and service period, while a DC pension style can be estimated from annual wage contributions and investment return. The English calculator includes a DC pension estimate by calling calculateDCPension with the same wage base so that the comparison remains tied to the Korean feature logic.

The Korean article also explains interim settlement reasons such as home purchase, jeonse or lease deposit needs, medical care for at least 6 months, bankruptcy or rehabilitation, wage-peak conversion, and disaster. Prior settlement amounts reduce the later severance balance, so they must not be ignored in an English translation.

Payment timing and disputes

Unpaid wages and severance should generally be paid within 14 days after separation unless the parties agree otherwise. Delayed payment can trigger 20% annual delayed interest, and wage and severance claims are generally subject to a 3-year prescription period.

For retirement pensions, receiving through an IRP and later pension withdrawal can change tax timing and may reduce pension-income tax to the 3.3% to 5.5% range depending on the withdrawal method and age. The calculator is a planning tool and should be checked against employer records, payroll data, and pension-provider statements.