Severance Allowance

According to the Korean standard labor law, all of employer should pay the Retirement allowance(=severance payment, retirement fund) to their employee(regular, contractor, freelancer, part-timer regardless of the employee status) a month salary for a year-long service.

When calculate this allowance, if an employer didn't buy a retirement fund at the bank, it's as follow formula;

- Last 3 months average salary*service months/12

If an employer buy the retirement fund at a bank under the name of their employee's account, an employer can pay it 8.34% of the monthly salary or yearly salary to the employee's account based on the contract with a bank and employee.

For more details, please visit the below MOEL website;

http://www.moel.go.kr/english/poli/poliLaw_view.jsp?tab=6&idx=260

If any questions, please feel free to contact me to jz@taxjz.com