Severance Pay Calculator
Enter your hire date, last working day, and wages for the 3 months before termination to automatically calculate your average daily wage and estimated severance pay (pre-tax).
① Employment Info
Enter your hire date and last actual working day. The statutory termination date (the day after your last working day) is calculated automatically.
② Wages for the 3 Months Before Termination
Enter the wages paid during the 3 months immediately before your termination date. Enter pre-tax amounts.
Assumes the same amount is paid every month and calculates 3-month total wages as (base pay + other allowances) × 3.
| Period | Days | Base pay (KRW) | Other allowances (KRW) |
|---|
Enter your hire date and last working day in ① to automatically display the 3-month periods.
③ Bonuses & Unused Leave Pay (optional)
Enter the total amounts received in the most recent 1 year (12 months) before termination, and 3/12 (3 months' worth) of each is added to the average wage. Leave blank if not applicable.
Amount paid in the last 12 months, such as regular bonuses
Unused leave pay from the prior year (excluding the settlement paid at termination)
④ Ordinary Wage (optional)
If the average wage is lower than the ordinary wage, severance pay is calculated using the ordinary wage (the Labor Standards Act's floor guarantee). Enter your monthly ordinary wage and the daily ordinary wage is converted automatically.
The monthly ordinary wage is converted to a 1-day (8-hour) amount based on 209 standard monthly working hours (40-hour work week). If you already know your daily ordinary wage, enter it directly in the field on the right.
Calculation Results
- Days of service (hire date ~ termination date)
- -
- 3-month total wages
- -
- + Bonus (3/12)
- -
- + Unused leave pay (3/12)
- -
- = Average wage calculation base
- -
- Total days (3 months)
- -
- Average daily wage (base ÷ total days)
- -
- Applied daily wage (ordinary wage applied)
- -
Severance pay = average daily wage × 30 × days of service ÷ 365.
Severance Income Tax
Calculates the tax for a lump-sum payment based on Income Tax Act Articles 48 and 55.
- Years of service (rounded up under 1 year)
- -
- Years-of-service deduction
- -
- Converted wage
- -
- Converted-wage deduction
- -
- Tax base
- -
- Severance income tax (calculated amount)
- -
- Local income tax (10%)
- -
- Total tax
- -
Net pay = severance pay − severance income tax − local income tax.
Lump Sum vs. Pension (IRP) Receipt Comparison
If you transfer your severance pay to a pension account such as an IRP or pension savings account and receive it as an annuity, severance income tax is reduced depending on the actual pension-receipt year (applicable to pension payments received on or after 2026-01-01, under Article 129 of the Income Tax Act).
| Receipt method | Tax | Amount received | Savings vs. lump sum |
|---|
To qualify for the pension reduction, you must transfer the full severance pay to a pension account such as an IRP or pension savings account to defer taxation without withholding, and receive it as a pension after age 55. If you withdraw any part as a lump sum (a non-pension withdrawal) before or during the pension period, that amount is taxed in full on the deferred severance income tax with no reduction.
The table above is a reference comparison only — check actual eligibility for the reduction and the year calculation with your pension account provider (securities firm or bank) and National Tax Service Hometax.
User guide
About This Tool
This severance pay calculator is built following the calculation methods of Article 8 (Retirement Benefit System) of the Employee Retirement Benefit Security Act and Article 2 (Average Wage) of the Labor Standards Act. Enter your hire date, last working day, wages for the 3 months before termination, and annual bonuses/unused leave pay, and it automatically calculates your average daily wage and estimated severance pay (pre-tax). It then shows your estimated net pay after severance income tax and local income tax, and a tax-savings comparison for transferring your severance pay to a pension account (IRP) and receiving it as an annuity — all in one place. Just like the Ministry of Employment and Labor's official calculator, it also enforces the floor guarantee that the average daily wage cannot be lower than the ordinary daily wage.
How to Use
- ① Employment info: Enter your hire date and last actual working day. The statutory termination date (the day after your last working day), days of service, and years of service are calculated automatically. If continuous service is under 1 year, a notice appears indicating you may not be eligible for statutory severance pay.
- ② Wages for the 3 months before termination: The 3 months immediately before your termination date are automatically split by calendar month. In "Same pay every month (simple)" mode, enter your monthly pay once; in "Enter by period (detailed)" mode, enter base pay and other allowances for each segment.
- ③ Bonuses & unused leave pay: Enter the total bonuses and unused annual leave pay received in the last year, and 3/12 (3 months' worth) of each is added to the average wage calculation. Leave blank if not applicable.
- ④ Ordinary wage (optional): Enter your monthly ordinary wage, and the daily ordinary wage (÷209×8) is automatically converted based on 209 standard monthly working hours. If you already know your daily ordinary wage, enter it directly in the field on the right. If the average wage is lower than the ordinary wage, the ordinary wage is applied instead (the Labor Standards Act's floor guarantee).
- Click Calculate to see your average daily wage, estimated severance pay (pre-tax), estimated net pay after severance income tax and local income tax (after tax), and the pension (IRP) tax-savings comparison table — all shown together in the results area. The tax and pension comparisons are calculated automatically from your severance pay and years of service, with no extra input needed.
Limitations & Notes
- The "severance income tax" and "net pay" results assume you receive your severance pay as a single lump sum. The reduction rates (30/40/50%) in the pension comparison table are reference approximations only — the actual reduction bracket depends on your actual withdrawal history with your pension account provider.
- If you have a history of early settlement of severance pay, executive severance income exceeding the statutory cap (taxed as earned income), or tax-exempt severance income, the actual tax amount may differ. Check the exact tax amount using Hometax's "Severance Income Tax Simulation" or your company's withholding results.
- Severance pay is paid to employees with 1 year or more of continuous service who worked an average of 15 hours or more per week over 4 weeks. You must confirm this eligibility yourself.
- The scope of wages included in the average wage (the nature of various allowances and bonuses) can vary depending on company work rules, employment contracts, and case law. This calculator trusts the amounts you enter as-is, so please separately confirm which items should be included.
- There is a special rule that excludes periods with abnormally low wages (due to probation, absence, leave, etc.) in the 3 months before termination from the average wage calculation, but this calculator does not reflect it.
- Laws and standards may be revised, so this calculator cannot guarantee it always reflects the latest standards. All results are for reference only — confirm exact amounts with your company or the Ministry of Employment and Labor / your local employment office.
FAQ
What date should I enter for "last working day"?
Enter the actual last day you worked. For example, if you worked through December 31, enter December 31. The statutory termination date (January 1) and days of service are calculated and displayed automatically. You no longer need to manually calculate "termination date = the next day" yourself.
What should I enter for 3 months of wages?
Enter the base pay and various allowances (position allowance, meal allowance, overtime allowance, etc. — anything regularly paid as compensation for work) actually paid during the 3 months before termination. If your pay is the same every month, you only need to enter your monthly pay once in "simple" mode.
Why are only 3/12 of the bonus and unused leave pay reflected?
Since the average wage is based on 3 months (about 1/4 of a year), only 3/12 (=1/4) of the annual total of bonuses and unused leave pay — which are paid on an annual basis — is added to the 3-month wage. This is the standard method for calculating average wage under the Labor Standards Act.
What if the daily average wage comes out lower than the ordinary wage?
Under the Labor Standards Act, if the average wage is less than the ordinary wage, the ordinary wage is treated as the average wage. If you enter the daily ordinary wage in ④, severance pay is calculated using whichever value is larger.
How is net pay (after tax) calculated?
The "converted wage" is calculated by subtracting the years-of-service deduction from the severance pay, dividing by years of service, and multiplying by 12. The severance income tax is then calculated by applying the converted-wage deduction and the basic tax rate (with progressive deduction), and local income tax — 10% of that — is subtracted from the severance pay along with it (Income Tax Act Articles 48 and 55). Years of service under 1 year are rounded up to 1 year. This net pay figure is based on lump-sum receipt; you can separately check the amount received when a reduction applies in the pension comparison table below.
How is the pension (IRP) receipt comparison calculated?
If you transfer your severance pay to a pension account such as an IRP or pension savings account, the severance income tax is deferred without withholding, and only 70% of the deferred tax is taxed for pension-receipt years 1–10, 60% for years 11–20, and only 50% from year 21 onward (applicable to pension payments received on or after 2026-01-01, under Article 129 of the Income Tax Act). The comparison table is built by multiplying the "total tax" calculated above (the deferred severance income tax on a lump-sum basis) by these rates. The "year" count is not the number of years elapsed since the account was opened, but the number of times you have actually received a payment each year, so skipping a withdrawal can delay entry into a lower-tax bracket.
Reference Laws & Sources
- Employee Retirement Benefit Security Act, Article 8 — Severance pay = average daily wage × 30 × (days of service / 365)
- Labor Standards Act, Article 2(1)(6) — Average wage = total wages paid during the 3 months before the date the reason for calculation arose / total days of that period
- Income Tax Act, Article 48 (severance income deduction — years-of-service deduction, converted-wage deduction) and Article 55 (basic tax rate) — Severance income tax = basic tax rate applied to (converted wage − converted-wage deduction), then ÷12 × years of service; local income tax is 10% of that
- Income Tax Act, Article 129 (withholding tax rate) — Withholding tax rate on deferred severance income tax when received as a pension from a pension account: 70% for pension-receipt years 1–10, 60% for years 11–20, 50% from year 21 onward (applicable to pension payments received on or after 2026-01-01)
- Ministry of Employment and Labor (www.moel.go.kr) severance pay calculator, National Tax Service Hometax severance income tax simulation, Easy-to-Find Practical Legal Information (easylaw.go.kr), Korea Law Information Center (www.law.go.kr)
- This content is current as of July 2026 and may change with revisions to laws and notices.
Usage Tips
- Enter your actual last working day in "Last working day," and the statutory termination date (the next day) and days of service are calculated automatically.
- If your pay is the same every month, you only need to enter your monthly pay in "simple" mode. If it varies month to month, use "detailed" mode to enter amounts by period.
- For annual bonuses and unused leave pay, enter the total for the most recent year and only 3 months' worth (3/12) is reflected automatically.
- Check the "User Guide" at the top right for the calculation formula, relevant laws, and precautions.
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