Severance Pay Calculator — Auto-Calculate from Hire Date, Exit Date & Salary

Calculating severance pay involves average-wage computation and tenure-based formulas that can be tricky to get right. This calculator auto-computes statutory severance from hire date, exit date, and recent 3-month salary inputs.

Key Features

💰 Auto-Calculated Severance

• Average wage method: Total salary for last 3 months ÷ total calendar days
• Ordinary wage method: Auto-compared when ordinary wage exceeds average
• Severance = Daily average wage × 30 × (tenure days ÷ 365)
• Tenure auto-calculated from hire to exit date

📊 Detailed Breakdown

• 3-month salary itemization (base, allowances, bonuses)
• Average wage vs. ordinary wage comparison
• Pre-tax and post-tax severance (simplified retirement income tax)

⚙️ Additional Options

• Annual bonus inclusion toggle
• Unused annual leave allowance
• Prior interim settlement history

How to Use

Step 1: Enter Employment Period

Input hire date and exit (or expected exit) date.

Step 2: Enter Salary Details

Input total monthly salary for the most recent 3 months. Add bonuses and unused leave pay if applicable.

Step 3: View Severance

The higher of the average-wage and ordinary-wage calculations is displayed.

Tips

Verify Bonus Inclusion

Regular bonuses are included in average wages. Calculate as 3/12 of the annual bonus amount.

Best Practices

Include All Regular Payments in the 3-Month Average

Severance calculations must include every payment that was regularly and consistently provided during the last three months of employment. This means fixed overtime pay, night shift premiums, and regular performance bonuses should all be counted. Omitting these components undervalues your severance. Gather all three months of pay stubs and verify each line item before running the calculation.

Account for Unused Annual Leave Separately

Unused annual leave is compensated as a separate payment upon resignation, but it also affects average wage calculations. If you have significant unused leave, input that value in the unused leave allowance field rather than ignoring it. Failing to do so can result in underestimating your total separation payment by a meaningful amount, especially for long-tenured employees.

Verify Whether Prior Interim Settlements Were Made

Some companies offer interim severance settlements (mid-service payouts), which reset the tenure clock for the settled portion. If you received an interim settlement, only the period after the last settlement counts toward your current severance. Check your employment records and toggle the interim settlement option in the calculator to avoid double-counting or overestimating your entitlement.

Compare Average Wage and Ordinary Wage Methods

Korean law requires that severance be calculated using whichever method yields the higher amount. The average wage method uses actual earnings over the last 90 days, while the ordinary wage method uses your contractually defined base pay and fixed allowances. Workers with variable bonuses or overtime often benefit from the average wage method, while those with high fixed allowances may benefit from ordinary wage. Always check both.

FAQ

Is severance paid for less than 1 year of service?

No, severance requires at least 1 year of continuous service. However, partial periods beyond the first year are included on a pro-rata basis.

Does this apply to DC pension plan members?

DC plans involve annual contributions of at least 1/12 of salary. This calculator is designed for DB plans or statutory severance pay.

How is severance taxed in Korea?

Severance pay is subject to retirement income tax, which uses a separate, more favorable tax schedule than regular income. The tax is calculated using a formula that accounts for your total tenure — the longer you worked, the lower the effective tax rate on your severance. This calculator provides a simplified post-tax estimate, but for large severance amounts or complex situations (e.g., multiple interim settlements), consult a tax advisor for precise figures.

Can I calculate severance if I worked part-time or had irregular hours?

Yes, as long as you were classified as a regular employee (not an independent contractor) and worked continuously for at least one year. For part-time employees, the average wage is computed from actual earnings over the last three months, so lower hours result in proportionally lower severance. Enter your actual total pay received during the last three months regardless of hours worked.