Do Foreigners Get Severance Pay in Korea? Everything You Need to Know

Note: This article was written by a professional with over 3 years of experience working in a Korean company.

Do Foreigners Get Severance Pay in Korea? Everything You Need to Know

One of the most important financial benefits of working in South Korea is Severance Pay, locally known as "Toejikgeum" (퇴직금). Many expats wonder if they are eligible for this benefit just like Korean citizens. The answer is a resounding YES.

In Korea, labor laws protect all employees regardless of their nationality. If you meet certain criteria, your employer is legally obligated to pay you severance when you leave the company.

1. Who is Eligible?

To receive severance pay, you must satisfy two main conditions under the Employee Retirement Benefit Security Act:

Duration of Service: You must have worked for the same employer for at least one consecutive year.
Working Hours: You must have worked an average of 15 hours or more per week (or 60 hours or more per month).

Note: It doesn't matter if you are on an E-2, E-7, or F-series visa; the law applies to all legal foreign workers.

2. How Much Will You Get?

The general rule for calculating severance pay is:

One month's worth of average salary for every year you worked.
Formula: (Average Daily Wage x 30 days x Total Days of Service) / 365

If you worked for 3 years, you should roughly receive an amount equal to three months of your salary.

3. Departure Guarantee Insurance (출국만기보험)

For certain visa holders (such as E-9 and H-2), the severance pay is often managed through Departure Guarantee Insurance.

The employer pays monthly premiums to an insurance company.
When you leave Korea or change your job, you claim this insurance money as your severance pay.
If the insurance amount is less than the legally calculated severance pay, the employer must pay you the difference.

4. What to Do If Your Employer Refuses to Pay?

If you meet the requirements but your employer refuses to pay, you have legal recourse.

MOEL (Ministry of Employment and Labor): You can file a petition with the Ministry. They have a dedicated service for foreigners to help resolve unpaid wage issues.
Timeline: Severance pay must be paid within 14 days of your resignation.

Conclusion

Severance pay is your hard-earned money and a vital part of your financial planning in Korea. Make sure to keep track of your contract dates and salary slips to ensure you receive the correct amount when you move on to your next adventure.

Did you know you were eligible for severance pay? If you're unsure about your calculation, feel free to ask in the comments! For more tips on working in Korea, check out our guide on [Korean Annual Leave].

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