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Calculating Korean Severance Pay for an October Resignation: 3-Month Wage and Unused Leave Guide

2026-10-04 · 3 min read

Employees in South Korea planning a job transition or career break with October 31 as their last working day often look ahead to calculate their estimated statutory severance pay (퇴직금).

While online calculators provide quick estimates, failing to define the official resignation date accurately, miscalculating the exact three-month wage period, or omitting the statutory 3/12 addition for annual leave allowances can lead to significant discrepancies between your personal estimate and the final settlement statement provided by human resources.

Understanding the exact statutory calculation rules under the Korean Labor Standards Act ensures that your baseline figures reflect the true compensation you are legally entitled to receive.

Defining the Official Resignation Date and the 3-Month Calculation Period

The foundational step in calculating Korean severance pay is correctly identifying the statutory date of resignation (퇴직일).

Under Korean labor regulations, the official resignation date is defined as the day immediately following your final working day.

Therefore, if your last working day at the company is October 31, your official resignation date to be entered into calculations is November 1.

The mandatory three-month wage calculation period covers the exact three calendar months preceding the resignation date, running from August 1 through October 31.

The total number of calendar days in this specific period is 92 days, calculated by summing the calendar days of August (31 days), September (30 days), and October (31 days).

The gross pre-tax wages earned across these exact three months serve as the core base for computing your average daily wage.

Applying the 3/12 Rule to Annual Bonuses and Unused Annual Leave Allowances

In addition to regular base monthly salary, contractual annual bonuses and compensation for unused annual paid leave (연차유급휴가수당) paid during the preceding 12 months must be incorporated into the average wage formula.

These annual allowances are not added in their full yearly amount; instead, a prorated portion representing three months—calculated as exactly 3/12 (or 25%) of the total annual payout—is added to the three-month gross wage sum.

For instance, if you received an annual unused leave allowance of 1,200,000 KRW over the past year, exactly 3/12 of that amount, which is 300,000 KRW, must be added to the three-month gross wage total before dividing by the 92 calendar days.

To handle these multi-step arithmetic steps without manual calculation errors, you can enter your hire date, official resignation date, three months of gross wages, and annual bonus figures directly into Korean Severance Pay Calculator to generate your statutory daily average wage and pre-tax severance estimate.

Important Exclusions and Calculation Considerations

Statutory severance pay in South Korea follows the legal formula: Average Daily Wage × 30 × (Total Days Employed / 365).

Employees with less than one continuous year of service (fewer than 365 days) are not eligible for statutory severance pay under the Labor Standards Act.

It is also critical to remember that the output generated by statutory formulas represents a pre-tax estimate.

The actual net payout transferred to your bank account will have Korean retirement income tax (퇴직소득세) withheld at the source.

Furthermore, statutory calculations may vary if your employment contract specifies an ordinary-wage floor substitution, if you have statutory excluded unpaid leave periods, or if your workplace utilizes a Defined Contribution (DC) retirement pension plan where monthly contributions are deposited directly into an individual financial account rather than a standard Defined Benefit (DB) severance calculation.

Before signing off on your final company settlement, running your numbers through Korean Severance Pay Calculator gives you a reliable reference benchmark to verify that no allowances or eligible service days were omitted.

Summary

Statutory severance pay represents earned compensation for your dedicated service and serves as vital financial support during career transitions.

If you are concluding your employment at the end of October, input your August through October gross salary and annual leave figures into Korean Severance Pay Calculator to check your estimated pre-tax severance entitlement in advance.