Employer of Record in South Korea

Guide to Hiring Employees in South Korea

Your guide to hiring employees in South Korea, covering the employment landscape, working customs, and local labor laws.

Hiring Employees In South Korea
Employer Of Record In South Korea

Capital City

Seoul

Currency

South Korean Won

 (

)

Timezone

GMT +9

Payroll Frequency

monthly

Tax Year

1 January - 31 December

Employer Tax

11.00%

Languages

Korean

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How to Hire In South Korea

Hiring in South Korea for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in South Korea in the following three ways:

  • Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in South Korea.
  • Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with South Korea’s labor laws and tax regulations.
  • Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

South Korea is recognised as one of the Four Asian Tigers and has attained the status of a "high-income country" according to the OECD. Following rapid economic growth since the 1980s, South Korea is acknowledged as one of the world's leading technologically advanced nations.

Ranked as the 14th largest economy globally and the 5th most business-friendly nation, South Korea's government has fostered an environment conducive to international companies, establishing robust economic ties with the majority of Asian countries.

The private sector flourishes in South Korea, home to globally renowned brands such as Samsung, LG, Hyundai, and Korea, which have gained fame as prominent manufacturers of electronics within the country.

Technological literacy is widespread among the South Korean population, with 96% of its citizens being internet users. Benefiting from a highly robust infrastructure, fibre optic internet connections are prevalent throughout the nation.

How to Employ 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.

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Payroll Management in South Korea

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.

Overview of Employment Taxes in South Korea

Employer Tax Contributions

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

Tax TypeTax Rate
National Pension4.50%
National Health Insurance3.55%
Long-term Care Insurance0.46%
Employment Insurance1.25%
Workers Compensation Insurance0.76% - 18.6%
Resident Tax0.50%

Employee Payroll Tax Contributions

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

Tax TypeTax Rate
National Pension (based on taxable monthly income, capped limit at 5,900,000 KRW)4.50%
National Health Insurance (monthly contribution capped at 3,911,280 KRW)3.55%
Long Term Care Insurance (monthly contribution capped at 345,600 KRW)0.46%
Employment Insurance (varies by industry, not capped)0.90%

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.

Income BracketTax Rate
0 - 12,000,000 KRW6%
12,000,001 KRW - 46,000,000 KRW15%
46,000,001 KRW - 88,000,000 KRW24%
88,000,001 KRW - 150,000,000 KRW35%
150,000,001 KRW - 300,000,000 KRW38%
300,000,001 KRW - 500,000,000 KRW40%
500,000,001 KRW - 1,000,000,000 KRW42%
1,000,000,001 KRW And above45%

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.

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The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in South Korea tailored to your needs.

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Leave Entitlements And Company Policies In South Korea

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:

HolidayDate
New Years Day1 January
SeollalJanuary, day changes yearly
March 1st Movement1 March
Childrens Day5 May
Buddhas BirthdayMay, day changes yearly
Memorial Day6 June
Liberation Day15 August
ChuseokSeptember, day changes yearly
National Foundation Day3 October
Hangeul Day9 October
Christmas Day25 December

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.

Employment Termination and Severance Policies in South Korea

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.

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FAQS

FAQs About Hiring In South Korea

What is the minimum wage in South Korea?

As of January 1, 2024, South Korea's minimum wage rates are:

  • KRW 9,620 per hour.
  • Applies across all sectors.
  • Reviewed annually, with adjustments based on economic factors.

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