Use
The separation payment is calculated by multiplying the service period months and the monthly average pay (which consists of the regular monthly pay plus the average bonus payment for a month based on the previous year).
For example, an employee joined the company on 01/03/1995 and resigned on 15/03/2000. He has a total of six months unpaid leave. To calculate the separation payment for this employee on his resignation date, you get (A+B) * C:
A |
Average payment in last three months |
(Part days in Dec. + Jan. + Feb. + part days in March) / 3 |
B |
Bonus earned from 16/03/1999 till 15/03/2000 |
(Periodic bonus + non-periodic bonus) / 12 |
C |
Service period |
(5 years +15 days) – 6 months |
Prerequisites
In Customizing for Payroll South Korea, you must have:
Activities
To calculate tax for separation payment, you need to define the calculation rule for employee’s service period. Then you check the separation payment deduction amount list according to employee’s service period, which is issued by the National Tax Service, to do the deduction for separation payment.