South Korea and Vietnam both have statutory tenure-based severance — but different “measuring sticks”: Korea pays 30 days’ average wages per year of continuous service (on the last 3 months’ average wage), Vietnam pays 0.5–1 month’s wage per year (on the last 6 consecutive months’ average). In a mass layoff, the averaging-period difference can materially change total cost.
South Korea: 30 days’ average wages per year — paid within 14 days
Article 8 of the Employee Retirement Benefit Security Act: employers must pay severance of at least 30 days’ average wages for each year of continuous service, to employees with 1+ years of continuous service averaging 15+ hours a week, at workplaces with 5+ regular employees.
Average wage means total wages for the 3 months immediately before the severance obligation arises, divided by total calendar days in that period (per the Labor Standards Act, Article 2). If below the ordinary wage, the ordinary wage applies. Payment deadline: within 14 days of retirement (Article 9) — late payment is penalised.
Critically: folding severance into monthly salary is prohibited — agreements to pay severance in monthly instalments alongside wages are unlawful and void (except interim settlements for statutory reasons under Article 3 of the Enforcement Decree). Korean firms cannot “pre-pay” severance through payroll to soften a layoff shock.
Vietnam: 0.5 month/year (severance) and 1 month/year (job-loss)
Article 46 of the Labour Code 2019: severance allowance 0.5 month’s wage/year (12+ months of regular work; UI-covered time excluded). Article 47: job-loss allowance 1 month’s wage/year, minimum 2 months’ wages for structural/technological change or economic reasons — no UI deduction.
Wage base: average of the 6 consecutive months before termination — double Korea’s 3-month window. For workers with volatile pay (quarterly bonuses, seasonal overtime), Vietnam’s 6 months “smooth” volatility better than Korea’s 3 — favouring the employer when the last 3 months are a high-pay peak season, and the worker when reversed.
Rate comparison: Korea’s 30 days’ average wages/year equals roughly 1 month’s wage/year — matching Vietnam’s job-loss rate (Article 47), double the ordinary severance rate (Article 46, 0.5 month/year). But note: Korea applies 1 month/year to all qualifying separations (including voluntary), while Vietnam applies 1 month/year only to economic/structural job loss.
Side by side: the 3-month or the 6-month window?
Average-wage computation: Korea’s 3 months are sensitive to pay volatility near separation (Tet bonuses, overtime bunched into the last 3 months inflate severance). Vietnam’s 6 months are steadier, less “puffed up” by one spike quarter. When budgeting cuts, Korean employers must model the seasonal effect of the final 3 months.
Payment deadline: Korea’s 14 days are very tight — cash must be ready before announcement. Vietnam has no hard 14-day rule like Korea’s, but late payment is penalised with interest. In practice, mass layoffs in both countries need cash prepared weeks ahead.
Coverage: Korea requires 1+ continuous years plus 15 hrs/week average plus 5+ employee workplace — part-timers under 15 hrs/week are excluded. Vietnam: 12+ months of regular work — no weekly-hours or headcount thresholds. Part-timers in Vietnam still qualify with 12 months.
No folding into salary: neither country lets firms “pre-pay” severance through monthly wages to dodge the obligation — Korea voids such agreements; Vietnam likewise rejects the method in disputes.
Practical recommendations
First, when budgeting Korean cuts, simulate the last-3-months average wage per worker group — do not simply multiply the current monthly salary. Second, prepare cash for Korea’s 14-day deadline — the tightest among the compared countries. Third, in Vietnam, classify Article 46 vs 47 correctly from the start — the gap is double (0.5 vs 1 month/year) and UI-time treatment differs entirely.
Frequently asked questions
How is Korean severance computed?
Under Article 8 of the Employee Retirement Benefit Security Act: at least 30 days’ average wages per year of continuous service, for employees with 1+ continuous years averaging 15+ hours a week, at workplaces with 5+ regular employees. Paid within 14 days of retirement.
How do Korea’s 3-month and Vietnam’s 6-month average wages differ?
Korea: total wages of the 3 months before separation divided by total days — sensitive to volatility (bonuses, overtime bunched into the last 3 months inflate severance). Vietnam: 6 consecutive months’ average — steadier, “smoothing” seasonal swings.
Can severance be folded into monthly salary in Korea?
No — Korean law prohibits and voids agreements to pay severance in monthly instalments with wages (except statutory interim settlements). Firms cannot “pre-pay” to soften a layoff shock.
Which Vietnamese rate matches Korean severance?
Thirty days’ average wages/year is roughly 1 month’s wage/year — matching the job-loss allowance (Article 47), double ordinary severance (Article 46: 0.5 month/year). But Korea applies it to all qualifying separations; Vietnam applies 1 month/year only to economic/structural job loss.
How should cash be prepared for mass layoffs?
In Korea: the 14-day deadline is very tight — prepare before announcement. In Vietnam: no hard 14-day mark, but late payment draws penalties and interest. Both call for completed calculations and budgeted reserves before notifying cuts.
For detailed advice on workforce reductions and compliance in South Korea or Vietnam, companies may contact FLAT Law Firm.
This article has been quality-reviewed by the FLAW AI Legal Council. Content was prepared by the FLAT Law Firm AI Legal Council and has not been reviewed by a human lawyer.
