In short: if you worked for the same employer continuously for at least one year, averaging 15 or more scheduled hours a week over four weeks, you’re entitled to severance pay of at least 30 days’ average wages for every year of continuous service (Act on the Guarantee of Employees’ Retirement Benefits, Articles 4(1) and 8(1)). Your employer has 14 days from your retirement date to pay it, unless you both agree to extend that (Article 9(1)). A note on translations up front: the Act’s official English translation was published January 11, 2022, but the Korean text now in force was promulgated March 17, 2026 — so if you’re reading the English version, treat it as a guide; the Korean text governs where the two differ.

Who receives it

Two conditions come from Article 4(1) of the Act on the Guarantee of Employees’ Retirement Benefits. An employer must establish at least one retirement benefit scheme to pay benefits to retiring employees — but that obligation does not apply to (1) an employee whose continuous service period is less than one year, or (2) an employee whose average weekly working hours over a four-week period is less than 15 hours. Put the other way around: if your continuous service reached one year and your average weekly scheduled hours over a four-week period were 15 hours or more, you fall inside the scheme your employer is required to have.

Separately, Article 3 sets the scope of the whole Act: it applies to all businesses or workplaces employing employees, with two exceptions — a business employing only relatives who live with the employer, and private households with employed persons. Nothing in Article 3 carves out small employers by headcount. That said, the Addenda to Act No. 10967 (promulgated July 25, 2011), Article 8, set a transition for businesses regularly employing four or fewer employees. Under Article 8(1) of the Addenda, the retirement benefit scheme is treated as having taken effect for those businesses from December 1, 2010. Article 8(2) of the Addenda then phases in the actual level: for the period from December 1, 2010 to December 31, 2012, the severance pay, the defined-benefit-plan benefit amount, and the employer’s contribution level under the defined contribution plan or the individual retirement pension plan had only to reach 50% or more of the level otherwise set by Articles 8(1), 15, and 20(1) of the Act — but for the period from January 1, 2013 onward, the full level set by those same articles applies. Article 8(3) of the Addenda adds that the employment relationship’s parties may not lower existing working conditions on the strength of paragraphs (1) or (2). The upshot: since January 1, 2013, a workplace with four or fewer employees owes the same severance as any other employer.

Nothing in Articles 3 or 4 conditions eligibility on nationality, visa status, or citizenship — the test is continuous service length and average weekly hours, not who you are.

How much

Article 8(1) states the baseline: an employer that establishes a retirement allowance system (as opposed to a retirement pension plan — more on that below) must set it up so that a retiring employee is paid an amount equivalent to average wages earned for 30 days, for each year of continuous service.

The building blocks are:

Worked example. Say you were paid a flat monthly salary of ₩3,000,000 with no other regular pay, and your last three months before retirement were June, July, and August — 30 + 31 + 31 = 92 calendar days. Total wages paid over those three months: ₩3,000,000 × 3 = ₩9,000,000. Divide by 92 days: ₩9,000,000 ÷ 92 ≈ ₩97,826 per day — your average wage (Labor Standards Act, Article 2(1)6 and 2(2)). Over 3 years of continuous service, severance pay comes to roughly ₩97,826 × 30 days × 3 years ≈ ₩8,804,000 (Act on the Guarantee of Employees’ Retirement Benefits, Article 8(1)). The total number of days in the three-month period will vary — 89 to 92 days depending on which months fall in that window. An actual calculation can differ depending on how your pay is structured and on rules set by Presidential Decree: the first three months of probation, maternity or parental leave, work-injury leave and similar periods are taken out of the averaging period together with the wages paid for them (Enforcement Decree of the Labor Standards Act, Article 2(1)).

When it’s due

Article 9(1) sets a 14-day deadline: where an employee retires, the employer must pay the retirement allowance within 14 days from the date the grounds for payment arise — in other words, from your retirement date. The same provision allows the payment date to be extended, but only under an agreement between the parties, and only where special circumstances exist. Absent such an agreement, 14 days is the outer limit.

Article 9(2) and (3), added in 2021 and touched again by the 2026 amendment, also specify how the payment itself is made: it goes to the account of an individual retirement pension plan the employee designates (or a related account under Article 23-8(1)), rather than as a lump sum straight to the employee’s bank account — except where a Presidential Decree-specified ground applies, such as the employee retiring at age 55 or older. If you don’t designate an account, the employer transfers the allowance into an individual retirement pension account opened in your name (Article 9(3)).

If your company has a retirement pension (DB or DC) instead

Article 2 of the Act defines a “retirement benefit scheme” broadly to include a defined benefit plan, a defined contribution plan, a SME retirement pension fund plan, and the retirement allowance system under Article 8 — so the 30-day lump-sum formula above is only one of several forms this obligation can take. The two pension-plan forms are defined by what is fixed in advance:

Article 4(1) requires every employer to establish at least one retirement benefit scheme — of any of these types — for employees who meet the one-year/15-hour threshold, and Article 4(2) prohibits differentiating how the benefit or contribution calculation method applies within the same business. If an employer wants to newly establish a scheme or switch to a different type, Article 4(3) requires the consent of the majority trade union (or a majority of employees where no such union exists) — and if the employer later wants to change unfavorable details of an already-established scheme, Article 4(4) requires that same majority consent.

The formulas that actually run the two pension types track the same 30-day baseline as the lump-sum system, translated into pension terms:

Cashing out early: interim settlement

Article 8(2) allows an exception to the “pay only at retirement” rule: notwithstanding Article 8(1), an employer may, at an employee’s request and for a reason set by Presidential Decree such as a housing purchase, settle and pay out the retirement allowance for the employee’s continuous service to that point, before the employee actually retires. Once that happens, the continuous service period used to calculate any further retirement allowance restarts from the settlement date.

The Enforcement Decree, Article 3(1), lists the Presidential Decree grounds referenced in Article 8(2). As of the source consulted for this article, they are:

  1. A houseless employee purchasing a house in their own name.
  2. A houseless employee paying a jeonse deposit (under Article 303 of the Civil Act) or a rental deposit (under Article 3-2 of the Housing Lease Protection Act) for residential purposes — limited to once during the employee’s employment at a given business.
  3. Medical expenses exceeding 125/1,000 (12.5%) of the employee’s annual wage total, for an illness or injury requiring six months or more of treatment, for the employee, the employee’s spouse, or a dependent of the employee or spouse.
  4. The employee having been declared bankrupt under the Debtor Rehabilitation and Bankruptcy Act within 5 years counting backward from the date of applying for the interim settlement.
  5. The employee having received a personal rehabilitation commencement decision under the same Act, within that same 5-year window.
  6. The employer implementing a wage-reduction system tied to age, service length, or wage amount, in exchange for extending or guaranteeing the existing retirement age, through a collective agreement or work rules. 6-2. The employer and employee agreeing to shorten scheduled working hours by 1 hour a day or 5 hours a week or more, with the employee continuing to work under the shortened schedule for 3 months or more. 6-3. A reduction in the employee’s severance pay caused by the working-hour reduction under the enforcement of the partial amendment to the Labor Standards Act, Act No. 15513.
  7. Damage from a disaster, falling under grounds the Minister of Employment and Labor separately announces.

Article 3(2) of the Enforcement Decree requires the employer to keep records proving the interim settlement for 5 years after the employee actually retires.

If you don’t get paid

Two separate protections apply once an employer misses a severance payment.

There’s a parallel provision in the Labor Standards Act worth knowing: Article 36 requires an employer to pay wages, compensation, and all other money or valuables due to an employee who dies or retires, within 14 days of the payment obligation arising (again extendable by agreement in special circumstances), and Article 34 of the same Act confirms that for retirement benefit systems specifically, the Act on the Guarantee of Employees’ Retirement Benefits governs. In other words, the 14-day clock in the retirement benefits law and the 14-day clock in the Labor Standards Act for final pay are pointing at the same deadline for severance pay itself.

Where to go. Unpaid severance goes through the same routes as unpaid wages: a petition to the Ministry of Employment and Labor, filed online through its Labor Portal or at the regional employment and labor office for the workplace (the Ministry states a 25-day processing period, excluding Saturdays and public holidays), and, where the conditions of the Wage Claim Guarantee Act are met, a substitute payment from the Wage Claim Guarantee Fund that can cover the final 3 years of retirement benefits up to a cap. The petition and the simple substitute payment claim are set out step by step in Unpaid wages in Korea.

Three common misconceptions

“I was only ever on a 1-year contract, so I don’t qualify.” Article 4(1) measures the continuous service period, not the length of any single contract. The Act itself does not define when gaps between renewed contracts break continuity; that is settled by Ministry of Employment and Labor guidance and court decisions.

“Foreign workers are treated differently or excluded.” Nothing in Article 3 (scope of application) or Article 4(1) (the one-year/15-hour test) references nationality or visa status. The conditions are about your business’s category and your own service length and hours.

“A small company with only a handful of employees doesn’t have to pay severance.” Article 3 does not exempt small employers generally — the only exceptions are businesses employing solely the employer’s cohabiting relatives, and private households with employed persons. Businesses with four or fewer regular employees had a distinct transitional history under the 2011 Addenda described above, but that history is about phase-in and benefit levels during a past transition period, not a present-day exemption from the obligation itself.