Wages in Korea: Overtime, Severance and Pension Refund

Korean wage law is detailed and, importantly for you, applies on identical terms to foreign workers. Three entitlements are worth knowing by heart: wages must be paid in full directly to you, overtime carries a premium on top of your hourly rate, and severance accrues after a year of service. A fourth, the pension refund, is money many people leave behind on the plane.

How wages must be paid

The rules exist because they were abused. Wages must be paid:

In currency, directly to the worker. Not to an agent, a broker or a relative.
In full, with deductions only where the law or a written agreement allows them.
At least monthly, on a fixed, regular date.
With a payslip showing the calculation.

Deductions for accommodation or meals are permitted but must be agreed and documented, not simply taken. If a figure appears on your payslip that was never in your contract, that is a question to ask, and if the answer is unsatisfactory it is a complaint you can make. Dispute information covers how.

The national minimum wage is reviewed every year and applies to you exactly as to a Korean colleague. Check the current figure before accepting an offer rather than relying on a number from a previous year.

Overtime and premiums

This is where a lot of unpaid money hides. For covered employees, work beyond normal hours attracts a premium on top of the ordinary hourly rate, and so does night work and work on holidays. The premiums can stack: night overtime is paid at a higher multiple than either alone.

	Broadly
Ordinary hours	Your base hourly rate
Overtime	Base rate plus a statutory premium
Night work, within defined hours	Base rate plus a premium
Holiday work	A premium, rising beyond a threshold of hours
Overtime at night	The premiums combine

Two things follow. Unpaid overtime is recoverable, not something to absorb. And the claim depends on records, so keep your own daily note of hours worked from your first week, independent of anything the company keeps. A handwritten diary or a phone note is accepted evidence.

Small workplaces are exempt from some provisions, and senior or supervisory roles can be treated differently, so the detail depends on where you work. Worker rights covers the hours framework the premiums sit on.

Reading your payslip

Worth doing once properly, because almost nobody checks and the errors are usually in the employer's favour.

A Korean payslip separates base pay from allowances and premiums, then lists deductions. The allowances matter more than they look: some are included in the calculation of your overtime rate and your severance, and some are not, which is why two jobs with the same headline monthly figure can be worth noticeably different amounts over a year.

On the deduction side you should see the four major insurances and income tax withheld. Check they are there. Missing insurance deductions mean you are probably not enrolled, which costs you cover now and can surface at your visa extension later.

If a line appears that was never in your contract, ask for it in writing. Worker rights covers the enrolment obligation, and visa extension covers why an employer's lapse becomes your problem.

Severance pay

After one year of continuous service you are entitled to severance on leaving, and it is an entitlement rather than a gift. It is calculated from your average wage over your final period of employment and your length of service, and it is payable whether you resign or are dismissed.

Several points that catch people:

It accrues for foreign workers on the same basis as anyone else.
It is payable shortly after you leave, within a statutory window.
Resigning does not forfeit it. A manager suggesting otherwise is wrong.
Some employers operate a retirement pension scheme instead, which is a different mechanism reaching the same end.
Severance is taxed under its own favourable rules rather than as ordinary salary. Tax covers that.

Leaving just short of a year costs you the whole entitlement, which is worth knowing when timing a resignation.

The pension refund most people forget

If you have been employed in Korea you have been paying into the national pension, and your employer has been paying alongside you. When you leave the country for good, what happens to it depends on your nationality.

Three possible positions:

A lump-sum refund on departure, where your country has a social security agreement with Korea or grants reciprocal treatment to Koreans.
Contributions counted toward your own country's pension, where a totalisation agreement exists.
Neither, where there is no agreement and no reciprocity.

Find out which applies to you long before you leave. It affects whether you want those years credited in Korea or at home, and the sums involved are not small after a few years of contributions. The pension service can tell you, and the claim is normally made shortly before or after departure with your passport, bank details and residence card.

Your exit checklist

Treat the last month as one task, because the pieces interact:

Final wages and severance, within the statutory window.
An early tax settlement with your last salary. Tax covers it.
The pension claim, on the basis that applies to your nationality.
Health insurance deregistration, or premiums keep accruing. Health insurance enrolment covers it.
Your housing deposit returned, which is usually the largest sum.
One bank account kept open until all of the above has landed. Banking covers closing properly.

Where this goes wrong

Deductions never agreed in writing.
No independent record of hours. It is what makes an overtime claim work.
Resigning at eleven months and losing severance entirely.
Believing severance is forfeited by resigning. It is not.
Flying home without claiming the pension, or checking whether you can.
Closing every account before the final payments arrive.

Where to go next

Worker rights covers the entitlements behind these numbers, and dispute information covers what to do when the money does not arrive.