Overview
Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Onboarding
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax
Employer of Record services in South Korea offer extensive assistance with payroll cycles, including managing employer and employee contributions, ensuring compliance with minimum wage regulations, facilitating the hiring process for employees, contractors, and expatriates, conducting background checks, drafting employment contracts, facilitating onboarding procedures, managing employee benefits, administering social security programs, coordinating healthcare and insurance coverage, managing leave policies, taking into account public holidays, facilitating work permit and work visa processes, overseeing probation periods, notice periods, termination, and severance procedures, as well as providing guidance on personal income tax obligations.
| Overview | |
| Continent | Asia |
| Country | South Korea |
| Capital | Seoul |
| Time zone | UTC +9 |
| Total Time zones | 1 |
| Working hours per week | 40 |
| Working week | Monday–Friday |
| Typical hours worked | 8 |
| Personal Tax filing deadline | 5/1~5/31 following year |
| Financial Year | 1 January to 31 December |
| Currency | South Korean Won (KRW) |
| Date Format | yyyy/mm/dd |
| Fiscal Year | 1 January- 31 December |
Employer Payroll Contributions in South Korea
| Employers | % of Gross Salary |
| Employer Payroll Contributions | |
| National Pension | 4.5% (taxable monthly income capped at 5,240,000.00 KRW) |
| National Health Insurance | 3.92% (monthly contribution capped at 8,203,680.00 KRW) |
| Employment Insurance | 1.05% - 1.65% (varies by industry) (increasing to 1.15% to 1.75% effective from 1st July 2022) |
| Long term care insurance | 5.76% (monthly contribution capped at 345,600 KRW) |
| Worker Accident Compensation Insurance | 0.70%-18.60% (rate is dependent on the type of business) |
| Resident Tax | 0.5% |
| Total Employment Cost | 16.43% - 34.93% |
Employee Payroll Contributions in South Korea
| Employees | % of Gross Salary |
| Employee Payroll Contributions | |
| National Pension | 4.5% (taxable monthly income capped at 5,240,000.00 KRW) |
| National Health Insurance | 3.92% (monthly contribution capped at 7,047,900.00 KRW) |
| Long term care insurance | 6.86% (monthly contribution capped at 345,600 KRW) |
| Employment Insurance | 0.8% (varies by industry) (increasing to 0.90% effective from 1st July 2022) |
| Total Employee Cost | 0.16% |
Personal Income Tax in South Korea
| Income Tax | |
| Income Range | Tax Rate |
| up to 12 million KRW | 0.06% |
| 12 million to 46 million KRW | 0.15% |
| 46 million to 88 million KRW | 0.24% |
| 88 million to 150 million KRW | 0.35% |
| 150 million to 300 million KRW | 0.38% |
| 300 million to 500 million KRW | 0.4% |
| 500 million to 1 billion KRW | 0.42% |
| 1 billion and up KRW | 0.45% |
Minimum Wages in South Korea
| Minimum Wage | |
| Minimum Wage | The National Minimum Wage in South Korea is 9,160 KRW per hour. |
Payroll Cycle in South Korea
| Payroll | |
| Payroll Cycle | Monthly |
| 13th Salary | There is no legislation for 13th-month payments in South Korea. |
Hiring Options in South Korea
Employee
Individuals can be employed in South Korea either as regular workers on an indefinite basis or as non-regular workers on a fixed-term basis for up to 2 years. However, if a fixed-term employee is employed for a period exceeding 2 years, they may be considered as having an indefinite employment status.
Employees may work either full-time or part-time, depending on their arrangement with the employer.
Independent contractor
Companies must exercise caution when engaging independent contractors to ensure they do not inadvertently establish an employer-employee relationship, which would entail providing all the benefits and protections afforded to employees, such as severance pay and employment security. The key differentiating factor between employees and contractors lies in the level of supervision and control exercised by the company over the individual.
Agency worker
The engagement of agency workers in South Korea is regulated by the Act on the Protection of Temporary Agency Workers. These individuals, referred to as "dispatched workers," are employed by a temporary work agency and provide services to a user company under the direction and instruction of the user company. The employment relationship is established between the temporary work agency and the dispatched worker.
Employment Contracts and Policies in South Korea
Employment Contracts
According to the Labor Standards Act (LSA) in South Korea, it is mandatory for employers to have written employment contracts with their employees. These contracts must include essential details such as wages, working hours, recess periods, weekly paid days off, and paid annual leave. If an agreement does not meet the requirements set by the LSA and other applicable laws, it will be considered void to the extent that it fails to meet the legal standards.
Probationary Periods
While there is no fixed statutory period for probation, employers and employees can agree upon a probationary period. Typically, probation periods in South Korea last between 3 to 6 months.
Policies
Companies with 10 or more employees in South Korea are required to establish rules of employment. These rules must cover essential working terms and conditions as defined by the LSA, including working hours, wages, retirement, awards, discipline, safety and health, and holidays. When creating the rules of employment, employers must seek input from either the majority union representing the employees or, if no such union exists, a majority of the employees. These comments, along with the rules of employment written in Korean, must be filed with the Ministry of Employment and Labor (MOEL).
While there are no other mandatory policies, the Occupational Health and Safety Act (OHSA) establishes general standards for occupational health and safety. Most workplaces are required to form an industrial safety and health committee that regularly reports to the government.
Third-Party Approval
Rules of employment must be filed with the MOEL, but apart from that, there is no need for third-party approval in South Korea.
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