Employer of Record in South Korea

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

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.

In South Korea, employers must adhere to strict regulations regarding working hours and overtime to ensure compliance with labor laws and promote employee well-being. The standard workweek is capped at 40 hours, with a maximum of 12 hours of overtime permitted.

Overtime work must be mutually agreed upon and is compensated at a rate of at least 1.5 times the regular hourly wage. It is crucial for employers to provide adequate rest periods, including a minimum of 30 minutes for breaks after 4 hours of work, and ensure compliance with night shift and weekend work regulations, which may involve additional compensation. Additionally, when the perceived temperature reaches 33°C, employers must provide a minimum 20-minute break every two hours.

Employers should be mindful of industry-specific exceptions, such as in healthcare and transportation, where extended working hours may apply. Additionally, managerial and exempt employees may not be subject to the same working hour restrictions, but this varies based on their specific roles.

Starting January 1, 2025, South Korea's minimum wage is 10,030 KRW per hour, which is 1.7% higher than last year. For a full-time worker doing 40 hours a week, that adds up to about 2,096,270 KRW per month.

This wage applies equally to all workers, whether full-time, part-time, temporary, or foreign, to make sure everyone is treated fairly. Interns and trainees usually get this wage too, except during some probation periods. Every year, the government checks the economy, like inflation and jobs, to decide if the wage should change. Employers have to follow these rules to avoid fines and pay workers fairly.

In places like Seoul where living costs are higher, it's important to know the difference between minimum wage and a living wage.

Setting up a local legal entity in South Korea can be time-consuming and expensive. It often involves complex paperwork, local representation, banking, registrations, and ongoing tax filings, which isn't cost-effective if you're simply looking to hire a few employees or test the market. An Employer of Record removes these barriers entirely. Instead of spending months establishing a presence, an EOR lets you hire and onboard employees within days while staying fully compliant.

This enables faster market entry and greater agility. Whether you’re launching a pilot program, supporting a regional client, or adding specialized talent, you don't need to commit to long-term infrastructure to explore new business opportunities. The EOR handles local employment logistics while you retain day-to-day oversight of your hires. This model lets you scale up or down based on business needs, giving you more flexibility with less overhead and risk.

Employers in South Korea must manage key payroll and employment tax obligations, including income tax withholding, social security contributions, and local income tax, all of which have strict deadlines to ensure compliance. Accurate calculations and timely submissions are essential to avoid penalties and maintain smooth operations.

Employers are required to register with the relevant authorities, adhere to progressive tax rates, and ensure compliance with contribution rates for programs like National Pension and Health Insurance. The National Pension contribution rate is 4.5% each for employers and employees (9% total), with a maximum base value of 6,370,000 KRW effective July 1, 2025. The National Health Insurance premium rate for 2025 remains at 7.09%, with employers and employees each contributing approximately 4.004% including long-term care insurance. Leveraging payroll management software can greatly assist businesses by automating tax calculations, consolidating payroll data, and simplifying compliance processes in South Korea.

One of the biggest risks in global hiring is payroll mismanagement. In South Korea, even small errors in tax reporting or social contribution payments can trigger audits, fines, or reputational damage. For companies without in-country expertise, the risk isn’t worth taking. An Employer of Record removes this burden by owning the legal responsibility of payroll, executing every step with built-in compliance.

Key Ways an EOR Supports Payroll in South Korea:

• Mitigates Compliance Risk: Oversees all legal obligations for payroll, tax filings, and recordkeeping.
• Local Regulatory Expertise: Interprets and applies South Korea’s latest labor and tax changes in real time.
• Free Processing: Reduces mistakes in wage calculations and reporting through built
• Payroll Record Management: Maintains compliant payroll audit trails and documentation for each employee.

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.

In South Korea, leave policies are designed to support employees' well-being and work-life balance. Annual leave entitlements are based on tenure and attendance, with employees earning additional days as their service length increases.

While there is no statutory requirement for paid sick leave, employers often provide it as part of their internal policies. Maternity, paternity, and parental leave provisions are well-defined, offering support to parents during critical family periods. Paternity leave entitlement in South Korea is 20 working days, effective from February 23, 2025. Maternity leave is 90 days (120 days for multiple births), with an extension to 100 days for premature births from February 23, 2025. Parental childcare leave is available for up to one year, with the possibility of extending to one and a half years in certain cases from February 23, 2025. Employers should stay informed about these regulations and implement best practices to ensure compliance and foster a supportive work environment.

South Korea mandates several key employee benefits, including the National Pension Scheme, National Health Insurance, Employment Insurance, Workers' Compensation Insurance, and provisions for maternity and paternity leave, as well as paid annual leave. These benefits are designed to ensure the well-being and financial security of employees.

Additionally, many employers offer supplemental benefits such as private health insurance, life and disability insurance, well-being programs, flexible working hours, home office assistance, and additional retirement benefits to attract and retain top talent. Employers must adhere to the legal requirements governing mandatory benefits and consider offering supplemental benefits to enhance employee satisfaction and competitiveness in the job market.

In South Korea, benefits play a central role in attracting and retaining top talent. Employees often expect more than just a paycheck – they're looking for stability, healthcare coverage, pension plans, and other perks that show a company is invested in their well-being. If you're not familiar with what’s standard or required, you risk falling short. An Employer of Record helps bridge that gap by administering a locally competitive benefits package that meets both legal requirements and employee expectations.

An EOR doesn't just check boxes, they make sure your employees receive benefits that are timely, properly communicated, and well-managed from the moment they’re onboarded. From managing healthcare contributions to adjusting for regional differences in leave or bonus entitlements, an EOR acts as both a legal and operational partner. The result is a better employee experience, less administrative burden on your internal team, and greater confidence that your offer is aligned with what top candidates in South Korea actually want and need.

In South Korea, employment termination is strictly regulated under the Labor Standards Act (LSA) to protect employee rights and ensure fair treatment. Employers must have a justifiable reason for dismissal, such as gross misconduct, insubordination, or economic necessity. A minimum notice period of 30 days is required, except in cases of severe misconduct where immediate termination may be allowed. Employees who have completed at least one year of continuous service are entitled to severance pay, calculated as one month's average wages per year of employment, which must be paid within 14 days after termination.

The termination process in South Korea involves proper documentation, written notice, and final compensation settlements, including wages, unused leave, and severance pay. Employees are protected against unfair dismissal, and non-compliance with legal procedures can lead to reinstatement and back pay. Employers handling redundancies or collective dismissals must follow strict legal procedures, including consulting employees or their representatives. Understanding and adhering to these regulations is crucial for employers to avoid legal disputes and ensure compliance with South Korea's labor laws.