PangPang ToolsKorean Severance Pay: Calculate 3-Month Average Wage and Compare Ordinary Pay
Korean severance estimates depend on the wages paid over the three months preceding the calculation date and the actual calendar-day count, not a default 90-day divisor. This worked example uses KRW 9 million over 92 days and 1,095 counted days of service, then identifies the exclusions and tax issues requiring separate review.
Open the severance-pay estimator and check the sample numbers
Which daily wage applies to Korean severance pay?
The Korean Ministry of Employment and Labor explains that average daily wage is generally based on qualifying wages paid during the previous three months divided by the actual number of calendar days in that period. Three months are not always 90 days.
If the worker’s ordinary daily wage exceeds the calculated average, the ordinary wage may be used as the basis. Do not assume that dividing a monthly salary by 30 automatically establishes the legally applicable ordinary wage.
- Collect three months of payroll records and allowances
- Count actual days in the reference period
- Confirm ordinary daily wage separately
Worked example: KRW 9 million, 92 days and 1,095 service days
Assume gross wages of KRW 9,000,000 in the three-month window, no additional allocated bonus or leave amount, 92 calendar days, 1,095 countable service days and no higher ordinary wage override. These figures are illustrative, not personal payroll data.
Daily average wage = 9,000,000 ÷ 92 ≈ KRW 97,826.09. Severance reference = daily wage × 30 × (1,095 ÷ 365), giving about KRW 8,804,347.83 before tax, or KRW 8,804,348 when rounded to the nearest won.
- Average daily wage ≈ KRW 97,826.09
- Service multiplier: 1,095 ÷ 365 = 3
- Illustrative gross severance ≈ KRW 8,804,348
How do bonuses, unused leave and excluded periods change the inputs?
MOEL's official calculator distinguishes ordinary wages and allowances received in the prior three months from allocated annual bonuses and leave-related compensation. If applicable, compute these allocated amounts from actual payroll documents rather than leaving the example's zero in place.
Certain leaves may require exclusion from the average-wage reference period; other periods can affect service-day counting. These two kinds of excluded periods should not be combined casually. Verify both eligibility and affected dates in the official workflow.
Why might the actual payment differ from the estimate?
This tool applies a mathematical model to user-supplied wage and service inputs. It does not independently decide statutory eligibility, special-period treatment, payroll classification or any employment dispute.
The displayed amount is gross, not final take-home pay. Retirement income tax, pension plan arrangements and company payroll procedures require separate checks. MOEL also notes that estimates can differ from amounts actually paid.
Final verification checklist
MOEL instructs users to enter the retirement date as the day after the last day worked when using its calculator. Align your reference dates before comparing outputs from multiple systems.
If a result differs, first check the divisor, included wages, bonus allocation, ordinary wage and counted service period. Consult the primary MOEL guidance and payroll documentation for consequential decisions.
- Confirm employment start date and day after last workday
- Verify the three-month wage total and calendar-day divisor
- Review bonus/leave allocation and excluded periods
- Compare average and ordinary daily wage
- Account separately for income tax and actual payment method
Related tools
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