Definitive Guide to Hiring in South Korea

Hiring in South Korea

Hiring employees compliantly in South Korea means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in South Korea so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in South Korea; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in South Korea

Employment laws in South Korea are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on South Korea employment laws and South Korea policies here.

Employee Probation Period

• The LSA and other labor laws do not limit the duration of a probationary period. 
• However, most Korean companies set a probationary period of between three and six months.

Annual Leave in South Korea

• Companies with full-time salaried employees are legally required to provide 15 days of paid annual leave after one year of service with the company.
• An additional vacation day is paid for each two years of service thereafter.
• The statutory vacation days earned per year are capped at 25 days.

Holidays in South Korea

South Korea celebrates thirteen national public holidays as well as additional public holidays that vary by state:

Maternity Leave South Korea

• Female employees are entitled to 90 days of maternity leave. 
• The start date can be agreed to by the employer and the employee, however 45 consecutive days of leave must be taken after the birth.
• The company or Employment Insurance pays for the leave, depending on the size of the company.

Paternity Leave South Korea

• Fathers are entitled to 10 days of paternity leave

Sick Leave in South Korea

• There is no legal requirement for employers to provide leave to employees for non-work related illnesses or injuries. 
• It is not uncommon, however, for companies to provide paid sick leave whether or not an injury or illness is work related. 
• Employers are required under the Labor Standards Act to provide paid leave for work-related illnesses or injuries. 
• Sick pay paid to an employee cannot be recovered from the state

Working Hours in South Korea

• South Korea's working hours are 8 hours/day and 40 hours/week

Overtime in South Korea

• Employees are allowed to work a maximum of 12 hours of overtime
• The employer shall pay 1.5 times or more of the ordinary wage for regular overtime work.

Termination of Employment in South Korea

• The Korean Labor Standards Act mandates that employees under “contract” or “regular employees” may only be terminated for “justifiable reason attributable” to the employee or “urgent managerial necessity” after the completion of the employee’s probationary period.
• The Korean Labor Standards Act places the burden on the employer to prove a “justifiable reason to terminate.” 
• According to the Korean Supreme Court, the reason must be “directly attributable to the employee.” 
• Stealing, missing an excessive number of days of work, and violating laws related to the job, have all been deemed sufficient to terminate. 
• Prior to termination, an attorney should be contacted to allow your company not to terminate an employee in violation of law.
• An employer must provide employees with at least 30-days’ notice or they can pay the employee 30 days of salary in lieu of the notice as a dismissal notice allowance.
• Employment contracts often provide for longer notice. 
• As a contractual matter, an employee may be entitled to reasonable notice of termination (which can be as much as 12 months) in particular circumstances.
• A full-time employee is entitled to receive severance pay equal to one month’s salary for each year of employment if they have worked for at least one year and they have worked for more than 15 hours per week or more than 60 hours per month. 
• Severance pay is to be paid within two weeks of termination.

Notice Period in South Korea

• An employer must provide employees with at least 30-days’ notice or they can pay the employee 30 days of salary in lieu of the notice as a dismissal notice allowance.
• Employment contracts often provide for longer notice. 
• As a contractual matter, an employee may be entitled to reasonable notice of termination (which can be as much as 12 months) in particular circumstances.

Severance in South Korea

• A full-time employee is entitled to receive severance pay equivalent to the average wage of 30 days for each year of service.

South Korea Salary and Wages

13th/14th Month Salary in South Korea

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• There is no evidence that bonuses are customary.

There are four types of social security contributions in Korea, namely: National Pension (NP), National Health Insurance (NHI), Employment Insurance (EI), and Worker’s Compensation Insurance (WCI).

National Pension (NP)

• Assuming the employee is enrolled as a 'workplace-based insured person' under the NP scheme, employers are required to contribute an amount equal to 4.5% of salaries to the national pension fund. 
• Employees are also required to contribute an amount equal to 4.5% of their salaries. 
• As such, the total contribution rate is 9% of salaries per annum with both the employer and the employee splitting the 9% contribution equally. 
• The employee contributions to the NP scheme are deductible in calculating taxable income.
• National pension contribution is capped at a monthly salary of KRW 5,530,000, and the maximum monthly pension contribution to be paid by an employee is KRW 248,850 (subject to change every July) for the period from July 2022 to June 2023.

Immigration South Korea

Long term Visa (E7 Visa)

• E-7 visa is issued to foreigners participating in activities specially designated by the Ministry of Justice through a contract with public/ private organization in Korea. 
• In short E-7 is a general work visa for foreigners in Korea. A foreigner who wishes to work during his or her stay in Korea should hold a sojourn status that allows employment. 
• A foreigner who is neither an investor nor a dispatched professional but plan to work in Korea may apply for an E-7 visa. 

Value Added Tax (VAT) in South Korea

• All corporations and individuals that supply goods or services, regardless of whether for profit or not, are subject to 10% VAT. 
• VAT is levied on supplies of goods and services, and on the import of goods into the country.
• Certain basic commodities such as farm products, health services, government transactions and other specified transactions are exempt from VAT. 
• Exported goods are zero-rated, i.e. no VAT is applied on the final sale.

Mandatory Benefits in South Korea

• These are mandatory benefits as postulated by law
• These include annual leave, public holidays, sick leave, maternity leave, parental leave, overtime pay, notice period, and severance pay.
• Statutory benefits also include social security benefits

Payroll Accrual in South Korea

Country Accruals Additional Information

Description

Payroll Accruals Additional Information

Accrued Benefits in South Korea

Why use Global Expansion to hire in South Korea

Establishing a branch office or subsidiary in South Korea can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because South Korea labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by South Korea law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into South Korea. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our South Korea Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.