---
title: "South Korea Termination & Severance 2026"
description: "South Korea severance: 30 days of average wage per year from year 1, payable even on resignation. Notice 30 days, final pay within 14 days."
canonical: https://www.teamed.global/country-hiring-guides/south-korea/termination-and-severance
---

South Korea · Termination child

Served by Teamed vetted partner-entity network in South Korea

# How do you *terminate an employee in South Korea* in 2026?

South Korea's severance pay triggers even when an employee resigns. After 1 year of continuous service, every employee earns 30 days of average wage per year worked, regardless of who ends the contract. You also need just cause to dismiss, 30 days advance notice, and all final payments cleared within 14 days.

Last reviewed 12 June 2026 · South Korea guide

![Seoul cityscape at dusk with the Han River and city lights below a deep blue sky.](/images/country-guides/south-korea-termination-severance.webp)

Illustration · Seoul, South Korea

Answer.cite this

South Korea requires just cause to dismiss any employee at a company with 5 or more workers. Just cause covers misconduct, poor performance, and genuine business necessity. You must prove it. The employee does not have to.

Every employee who completes 1 year of continuous service earns severance pay. The rate is 30 days of average wage for each year worked. This applies whether the employee resigns, is made redundant, or is dismissed for cause.

You must give at least 30 days of written notice before dismissal, or pay out that period instead. All wages and severance must reach the employee within 14 days of the last day. Late payment draws 14 days of 20% annual interest and can trigger criminal liability. ([Labour Standards Act](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG))

![A wooden desk with a Korean labour contract document, a pen, and a small potted plant.](/images/country-guides/south-korea-termination-polaroid-1.webp)

Written notice required

## What counts as valid grounds for dismissal in South Korea?

You need just cause to dismiss. South Korea's [Labour Standards Act](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG) Article 23 bans dismissals that are not justifiable. This applies to every employer with 5 or more regular workers.

The burden of proof sits with you. If a dismissed employee takes the case to the Labour Relations Commission, you must show the reason was legitimate and the procedure was followed correctly.

Valid grounds fall into three broad areas: employee conduct, employee capability, and business necessity. Courts and the Labour Relations Commission look at both the reason and the process.

### Conduct and capability dismissals

- **Serious misconduct**, theft, fraud, physical assault, deliberate damage to company property
- **Repeated misconduct**, sustained rule violations after documented warnings
- **Persistent underperformance**, where the employer has given genuine support and a clear improvement target
- **Loss of required qualification**, for example a licence legally needed to perform the role

For conduct and capability cases, you need documented warnings, a chance to respond, and a written record of the final decision. Skipping any of these steps weakens the just-cause argument even if the underlying reason is valid.

### Business-necessity (economic) dismissal

Korean courts apply a four-part test for redundancy under [Labour Standards Act Article 24](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG): the financial need must be urgent, you must have tried to avoid the redundancy, selection must be based on objective criteria, and you must consult with employee representatives at least 50 days before the dismissals. Failure on any of the four parts puts the dismissal at risk.

### Protected categories

Dismissal is automatically not valid if it is linked to pregnancy, maternity leave, parental leave, union membership or activity, reporting a workplace violation (whistleblowing), or disability. These protections apply from day one of employment, regardless of company size.

## How much notice do you give before dismissing a South Korean employee?

You must give at least 30 days of written notice before dismissal. You can pay out those days instead of working them. Either way, the obligation exists for any employee with 3 months or more of continuous service.

During the first 3 months of employment, the 30 days notice requirement does not apply. You can end employment without notice during this period, but just cause is still required at companies with 5 or more workers.

KLRI · Labour Standards Act Article 26

South Korea requires at least **30 days of written notice** before any dismissal, or a payment covering those 30 days of ordinary wages. The requirement does not apply to employees in their first 0 months of employment, or where a natural disaster or comparable force makes continued business operation impossible.

Source: [KLRI, Labour Standards Act (English), Article 26](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG)

| Employee tenure | Minimum employer notice |
| --- | --- |
| Under 3 months of service | None (just cause still required at 5+ worker firms) |
| 3 months of service or more | 30 days written notice, or pay it out |

The notice calculation uses **ordinary wages**, not average wages. The two figures can differ in Korea, where bonuses and allowances are treated differently depending on their regularity and conditionality. Ordinary wages cover fixed base salary and regularly paid allowances. Variable bonuses are typically excluded.

### Business-reason dismissal: the 50-day consultation window

For dismissals driven by business necessity under Article 24, you must notify employee representatives at least 50 days before the dismissals take effect and hold genuine consultations. This is separate from the 30 days individual notice requirement; both run in parallel on a planned redundancy.

## How is severance pay calculated in South Korea?

Every employee who works for 1 year or more earns severance pay. The rate is 30 days of average wage for each year of continuous service. Part-years are pro-rated.

This is the most important thing to understand about Korean employment. Severance is not a redundancy payment. It pays out on every termination, including resignation. Budget for it from day one.

The severance entitlement comes from the [Guarantee of Workers' Retirement Benefits Act (GWRBA)](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG) Article 8. It applies to employees working an average of 15 or more hours per week over the preceding four weeks.

### The average wage calculation

Average wage is the total wages paid in the last three months of employment divided by the total calendar days in that period. It includes base salary, regular bonuses, and most allowances. The final three-month average can be significantly higher than the monthly base if the employee received a large bonus in that window.

### How the formula works

Severance = (average daily wage) x 30 days x (total years of continuous service, including pro-rated partial years).

There is no cap on total severance under Korean law. An employee with ten years of service and a high final-quarter average wage can generate a very large severance obligation. Model this when you set offer terms.

### Severance funding: the retirement benefit system

Korean employers can fund severance in two ways. The traditional model is a book reserve on the balance sheet. The preferred model, and increasingly the expected one, is an external Defined Contribution (DC) or Defined Benefit (DB) retirement plan under the GWRBA. External plans ring-fence the money for employees and reduce balance-sheet exposure. Note: WTW reported in early 2026 that Korea is considering reforms to phase out book-reserve funding in favour of mandatory external plans. The timeline is not confirmed. When the reform details are finalised, the funding obligation may change but the per-year severance formula itself is not expected to change.

### Applies on resignation

An employee who resigns after 1 year or more of service is entitled to full statutory severance. This is not negotiable and cannot be waived in advance. Settlement agreements can adjust amounts above the minimum, but the minimum itself is not waivable.

## What procedure must you follow before dismissing a South Korean employee?

Process matters as much as the reason. Korean courts will look at whether you followed a fair process even if the underlying cause was valid. Get the steps right or you risk the dismissal being overturned.

An employee dismissed from a company with 5 or more workers can challenge the dismissal at the Regional Labour Relations Commission within 3 months of the dismissal date.

South Korea's [wrongful dismissal regime](https://www.shrm.org/topics-tools/employment-law-compliance/wrongful-dismissal-dispute-resolution-process-south-korea) uses an administrative route first: the Regional Labour Relations Commission (RLRC), then the National Labour Relations Commission (NLRC) on appeal, then the courts. The RLRC process is designed to be faster and cheaper than litigation, but the rulings carry legal weight.

### Remedies for unfair dismissal

The primary remedy in Korea is reinstatement plus back pay covering the period of unfair dismissal. A compensation-in-lieu order is possible if reinstatement is not practical. There is no statutory cap on compensation. The back-pay amount can be substantial in contested cases, particularly where the RLRC process runs for several months.

### Protected employees

Employees on maternity leave, paternity leave, or parental leave cannot be dismissed during the leave period. Union representatives and employees who have filed a workplace complaint carry heightened scrutiny on any dismissal decision.

1. Document the valid reason Anchor the dismissal to conduct, capability, or genuine business necessity under LSA Article 23 or Article 24. Write it down before you start the process, not after.
2. Issue written warnings For conduct and capability cases, give the employee a clear written account of the problem, the standard required, and the timeline for improvement. One undocumented verbal warning is not enough.
3. Allow time to respond Give the employee a genuine opportunity to address the allegation or meet the performance target. Document their response and any support you provided.
4. Serve written notice of dismissal Provide written notice of the decision stating the reason and the dismissal date. For companies with five or more workers, the reason must be legally justifiable and recorded in writing.
5. Calculate and pay severance by the deadline Compute severance under the GWRBA formula and pay it, along with all outstanding wages and leave, within the final-pay deadline. Missing this date triggers automatic penalty interest.

## Mutual termination: the agreed exit route

South Korea allows employers and employees to end employment by written mutual agreement at any time. This is the cleanest exit route when both sides want to move on.

A mutual termination agreement does not remove the severance entitlement. The employee still earns severance for any completed year of service. The agreement can provide for a payment above the minimum, which is common.

Korean mutual termination agreements typically include: confirmation of the agreed termination date, severance amount (at or above the GWRBA minimum), any additional payment for the waiver of other claims, a reference arrangement, and confidentiality terms.

The agreement must be genuinely voluntary. Courts have overturned "mutual" agreements where evidence showed pressure, coercion, or a misrepresentation of the employee's entitlements. Give the employee time to consider, put the terms in writing, and keep a signed copy.

### Timing and final pay

All wages, outstanding leave payments, and severance must be paid within **14 days of the agreed termination date**. This deadline applies to mutual terminations, redundancies, and dismissals alike. Late payment draws default interest at 20% per annum from day 14 plus one, and can result in criminal penalties for the employer under [Labour Standards Act Article 36](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG).

### Separation incentives

It's common for Korean employers to offer an enhanced payment above the GWRBA minimum to secure a clean mutual termination and a full waiver of additional claims. The incremental cost of a clean exit is usually far lower than the cost of a disputed dismissal running through the RLRC process.

## How Teamed runs South Korea terminations

Teamed is your legal [employer of record](/lp/employer-of-record) in South Korea. The cost is [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency. All termination procedures run through Teamed's South Korea partner team.

We handle the just-cause documentation, notice calculation, severance computation under the GWRBA formula, and the 14 days final-pay deadline. Everything runs on **one platform**. The decision on who to dismiss, why, and on what terms is always yours.

**Real HR and legal experts** handle your South Korea hires, from offer letter through every payroll run and year-end settlement. **An actual person**, not a bot or a pooled queue. There is **no setup fee** and **no exit fee**, and every employer cost **passes through at cost, itemised** on every invoice.

The split of responsibilities under EOR for South Korea terminations:

| What Teamed handles | What the client decides |
| --- | --- |
| Just-cause documentation and process record for each dismissal type | Whether to dismiss, why, and on what timeline |
| Notice period calculation and pay-in-lieu processing | Whether to work the notice or pay it out |
| GWRBA severance calculation using the three-month average wage | Whether to offer above the statutory minimum |
| 14 days final-pay reconciliation: wages, leave accrual, severance | Communication with the wider team |
| Mutual termination agreement drafting and employee guidance | The commercial terms and any enhanced payment |
| RLRC response coordination if a claim is raised | Settlement vs challenge strategy |

South Korea's severance liability is real money. An employee on five years of continuous service with a strong final-quarter average wage can generate a severance obligation equal to several months of fully-loaded cost. Teamed tracks the accrual in real time so the number never surprises you at exit.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A South Korea contractor who converts to payroll keeps their record, and that same employee can **graduate** from EOR to your own Korean entity without switching systems. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. EOR is the right model for your first South Korea hire, **until it isn't**. Start from the South Korea hiring overview.

Key sources: [KLRI Labour Standards Act (English)](https://elaw.klri.re.kr/eng_service/lawView.do?hseq=68845&lang=ENG), [SHRM Korea wrongful dismissal guide](https://www.shrm.org/topics-tools/employment-law-compliance/wrongful-dismissal-dispute-resolution-process-south-korea).

## Frequently asked questions

Does South Korea severance pay apply when an employee resigns?

Yes. Any employee with 1 year or more of continuous service earns severance pay on every termination, including voluntary resignation. The entitlement under the Guarantee of Workers' Retirement Benefits Act is not limited to employer-initiated exits.

How much notice must you give a South Korean employee before dismissal?

At least 30 days of written notice, or a payment covering that period at the ordinary wage rate. The requirement does not apply to employees in their first 3 months of service, but just cause is still required at companies with 5 or more workers.

How is South Korea severance pay calculated?

The formula is 30 days of average wage for each year of continuous service. Average wage is total wages paid in the final three months divided by the calendar days in that period. There is no cap on total severance. Part-years are pro-rated.

What is the deadline to pay severance after termination in South Korea?

All outstanding wages, unused leave, and severance must be paid within 14 days of the termination date. The parties can extend this by written agreement. Missing the deadline triggers default interest at 20% per annum from day 14 plus one, and can result in criminal liability for the employer.

When can an employee challenge a dismissal in South Korea?

An employee at a company with 5 or more regular workers can petition the Regional Labour Relations Commission within 3 months of the dismissal date. The primary remedy is reinstatement plus back pay. There is no statutory cap on compensation.

Does South Korea require a reason to dismiss an employee?

Yes, if the employer has 5 or more regular workers. Labour Standards Act Article 23 requires just cause for every dismissal. Employers with fewer than 5 workers are not bound by the just-cause requirement but must still pay severance if the employee qualifies.

Teamed Legal Operations

The severance-on-resignation rule catches foreign employers every time. They budget for redundancy. They do not budget for the long-tenured employee who hands in their notice in year four. The GWRBA formula does not care who ended the contract.

A note from Tom Price-Daniel

South Korea pays severance when employees leave. Not just when you let them go.  
30 days of average wage per year, from year 1, on every exit.  
Most employers model the redundancy cost. Few model the resignation cost. That gap is where the surprise lives.

Tom Price-Daniel · Co-founder, Teamed

## Related South Korea guides

- Hiring in South Korea, overviewparent
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Japan termination and severance](/country-hiring-guides/japan/termination-and-severance)neighbour
- [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Ministry of Employment and Labor (MOEL) and the Korea Legislation Research Institute (KLRI) before relying on any specific framework. Note: South Korea is actively reviewing reforms to the GWRBA retirement benefit system, potentially moving to mandatory externally-funded plans. Monitor MOEL notices for developments that could affect severance funding obligations.