Employer of Record in South Korea

Businesses can only operate smoothly in South Korea if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in South Korea below, to avoid any compliance issues.

Employment Contract Requirements

In South Korea, employment contracts must be written and can be in a foreign language. Both indefinite and fixed-term employment are allowed, but the latter cannot exceed 2 years. If it does, the employee becomes permanent. Mandatory contract elements include:

Onboarding Process

We can help you get a new employee started in South Korea quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in South Korea

The standard workweek in South Korea is 8 hours per day and 40 hours per week.

Overtime in South Korea

Hours worked beyond the standard 40 hours per week are categorised as overtime and compensated at 150% of the regular pay rate, increasing to 200% for night work post 10 pm. Night work (between 10 pm and 6 am).

There is a cap of 12 hours on weekly overtime, and the overall work hours, inclusive of overtime, must not surpass 52 hours per week.

Probation Period in South Korea

In South Korea, probation periods for permanent employees are optional and usually last 1-3 months. Employers seldom terminate contracts after probation/training due to the associated unemployment costs for the company.

Fiscal Year in South Korea

1 January - 31 December is the 12-month accounting period that businesses in South Korea use for financial and tax reporting purposes.

Payroll Cycle in South Korea

The payroll cycle in South Korea is usually monthly, with employees being paid on the last working day.

Minimum Wage in South Korea

The minimum wage for employees in South Korea is typically 9,860 KRW per hour, amounting to ~2,060,740 KRW per month for a typical 40 hour work week.

Bonus Payments in South Korea

South Korea does not have legislation mandating 13th-month payments.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 10.46% on top of the employee salary in South Korea.

Employee Payroll Tax Contributions

In South Korea , the typical estimation for employee payroll contributions cost is around 9.4%.

Individual Income Tax Contributions

Individual income tax in South Korea follows a progressive rate structure, ranging from 6% to 45%. The tax is calculated based on the taxpayer's income, with higher rates applied to higher income brackets.

Pension in South Korea

The South Korean National Pension is set at 9% of annual salaries, divided equally between employers and employees. This comprehensive program encompasses old-age, disability, and survivor's pensions, providing income security and contributing to national welfare in the event of retirement, disability, or death for South Korean citizens.

In South Korea, work permits and visas are necessary for employers hiring foreign workers. The application process involves submitting various documents, paying visa fees, and meeting specific eligibility criteria. Key visa types include the E-2 (Foreign Language Instructor), E-7 (Specialty Worker), E-4 (Technological Expert), and D-8 (Business Investment). Employers must ensure compliance with local labor laws, manage visa sponsorship, and oversee renewals or extensions for foreign workers. The process can take 2 to 4 weeks, and work permits typically last 1 to 3 years, depending on the visa type.

Mandatory Leave Entitlement in South Korea

The annual leave entitlement in South Korea is 11 - 25 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In South Korea

In South Korea, 11 public national holidays are observed each year:

Paid Time Off in South Korea

South Korean employment contracts grant a minimum of 11 days of paid leave per year after 1 year of service, plus public holidays. This increases to 15 days after 2-3 years, and from the third year onward, an additional day is added every 2 years, with a cap at 25 days. Carryover of unused leave is at the employer's discretion.

Maternity Leave In South Korea

In South Korea, pregnant employees receive 90 days of paid maternity leave, extendable to 120 days for complex births. This leave, covering 45 days before and after the due date, is funded by a combination of Social Security and employer contributions.

Large companies pay the full rate for the initial 60 days, with Social Security covering the remaining 30 days. Meanwhile, employees in small companies receive complete government coverage for the entire 90-day period.

Paternity Leave In South Korea

Fathers in South Korea are entitled to mandatory paid paternity leave for 10 days. The employer covers 5 days, while the remaining 5 days are paid by Social Security. This leave can be taken within 90 days from the child's birth.

Sick Leave In South Korea

South Korea does not have statutory sick leave entitlements. However, it is a common practice for employers to provide sick leave as a benefit.

Parental Leave In South Korea

Parents with children under 8 in South Korea can request up to a year of full-time or part-time childcare leave. The request, submitted 30 days in advance, is supported by Social Security. If taken within the first year of the child's birth, either or both parents receive 100% of their monthly income during the leave.

Injury Leave

Employees experiencing work-related injuries in South Korea are eligible for three months of paid leave, receiving 70.00% of their regular salary during this period.

Termination Process in South Korea

In South Korea, employers are not permitted to terminate employees at will; terminations must be justified. Acceptable justifications for compliant terminations include:

• Voluntary employee resignation
• Mutual agreement
• Unilateral decision by the employer (based on employee misconduct or criminal offenses, neglect of duties, receiving 3 warning letters, inability to perform assigned duties, engaging in criminal conduct while on duty, and business failure leading to imminent bankruptcy)
• Contract expiration

Notice Period in South Korea

There is no mandatory notice period in the South Korean Labour Law unless specified in the employment contract or company manual. Nevertheless, it is customary to give 1 month notice to employees.

Severance in South Korea

Under the statutory severance pay system in South Korea, employees, regardless of the reason for termination, including voluntary resignation, are entitled to severance pay if they have been employed for at least 1 year. This pay amounts to 30 days of their average wage, which includes bonus pay from the preceding 3 months, for each year of continuous service.