Hire in South Korea
South Korea PEO &
Employer of Record
Hire & manage teams remotely in South Korea without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Business Language
Korean
Salary Currency
Korean Won (KRW)
Payroll tax
16.43% - 34.93%
Payroll Cycle
Monthly
Time zone
UTC +8
Capital city
Seoul
Hire Employees in South Korea
The NNRoad Advantage ☺
Pay as you go
Global account manager
Compliance
Fast Onboarding
Foreigner Visas
Platform
Employer of Record in South Korea
01.
Candidate Selection
02.
Employee Onboarding
03.
Compliance & Payroll
04.
Payroll Reporting
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in South Korea
01.
Compliance & Payroll
02.
Payroll Reporting
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in South Korea
Employee Income Taxes:
Individual income taxes in South Korea are imposed on residents who earn income both inside and outside the country. Korea’s tax rates range from 6% to 45% depending on the amount of income earned. There are various deductions and tax credits available to reduce the taxable income, such as for medical expenses, education expenses, and charitable donations.
The tax year in South Korea runs from January 1st to December 31st, and taxpayers must file their tax returns by May 31st of the following year. Failure to comply with tax regulations may result in penalties and fines, and tax evasion is a criminal offense punishable by imprisonment or fines.
Tax Brackets
15%: 12 million – 46 million KRW
24%: 46 million – 88 million KRW
35%: 88 million – 150 million KRW
38%: 150 million – 300 million KRW
40%: 300 million – 500 million KRW
42%: 500 million – 1 billion KRW
45%: > 1 billion KRW
Sample Calculation
35% * 62 million = 21.17 million
24% * 42 million = 10.08 million
15% * 34 million = 5.1 million
6% * 12 million = 0.72 million
21.17+10.08+5.1+0.72 = 37.07 million
Yearly income tax = 37.07 million KRW
Employer Costs in South Korea
Employer costs in South Korea can vary depending on several factors, including the size of the company, industry, and the employee’s position. Employers in South Korea are required to contribute to several mandatory benefits, such as the National Pension Scheme, Employment Insurance, and Industrial Accident Compensation Insurance. The employer’s contribution to these programs is based on a percentage of the employee’s salary, with the employee also required to contribute a portion.
In addition to mandatory benefits, employers may offer additional benefits, such as health insurance, retirement plans, and bonuses. These additional benefits can be used as a way to attract and retain employees in a highly competitive job market. Employers must also comply with labor laws, including minimum wage regulations and rules on working hours and overtime pay. Understanding and complying with these requirements can be complex and time-consuming, which is why many companies choose to work with a Global PEO service provider to manage their employer costs and compliance in South Korea.
Employer Contribution
4.50%: National Pension
1.05%-1.65%: Employment Insurance
0.73%-18.63%: Worker Accident Compensation Insurance
3.68%: National Health Insurance
Employee Contribution
4.50%: National Pension
0.8%: Employment Insurance
3.68%: National Health Insurance
Benefits & Insurance in South Korea
Korea has five mandatory social security systems and insurances. These are the national pension, healthcare insurance, unemployment insurance, industrial accident compensation, and long-term care for senior citizens. Benefits and insurance in South Korea are an important aspect of employee compensation and can help companies attract and retain top talent. The benefits provided by the South Korean government covers minimum necessities and employers usually offer benefits such as pension and healthcare as incentives to attract talents.
Pension Fund
The National Pension Service (NPS) serves as a mandatory public pension scheme designed to provide income security and financial support to the elderly population in South Korea. It is one of the largest pension funds in the world, both in terms of assets under management and the number of participants.
The NPS operates on a pay-as-you-go basis, where current workers contribute a portion of their monthly salary to the pension fund, and these funds are then used to pay the benefits of current retirees. The pension system is structured to ensure intergenerational fairness, with the aim of guaranteeing a stable income for retirees while distributing the financial burden across the working population.
Healthcare Insurance
The National Health Insurance (NHI) system in South Korea provides affordable and comprehensive healthcare coverage to all residents, including foreign workers. Employers are required to contribute to the NHI program, with the amount based on the employee’s salary. Additionally, employers may offer supplementary health insurance or dental insurance to provide additional coverage.
Extra Benefits
In addition to mandatory benefits, employers may offer additional benefits, such as paid time off, bonuses, and flexible work arrangements. Offering comprehensive benefits and insurance packages can be a complex process in South Korea due to the language and cultural barriers. Working with a Global PEO service provider can help companies navigate these challenges and ensure compliance with local regulations.
Working Hours in South Korea
Working hours in South Korea are regulated by the Labor Standards Act, which sets the maximum weekly working hours at 52 hours, including up to 12 hours of overtime. The law also mandates that employees must have at least one day off per week and at least 15 days of paid annual leave. However, some industries, such as manufacturing, may have different regulations, and employers may ask employees to work longer hours during busy periods.
Working Hours Per Week
In recent years, the South Korean government has been taking steps to reduce the country’s notoriously long working hours to improve work-life balance and productivity. For example, the “52-hour workweek” was introduced in 2018, which limits weekly working hours to 52 hours, and employers who violate the regulations can face fines. Employers must also provide additional pay for overtime work, and employees who work more than eight hours a day are entitled to a 50% wage increase for the additional hours worked.
Termination Laws in South Korea
Termination laws in South Korea are designed to protect employees from unfair dismissal and discrimination. The Labor Standards Act outlines the legal requirements for termination, including providing advance notice to employees and justifiable reasons for dismissal. Employers must provide written notice of termination to employees, and the notice period varies based on the length of employment, with a minimum of 30 days for employees with more than three months of service.
Employers may only terminate employees for justifiable reasons, such as poor performance, violation of company policies, or downsizing. Discrimination based on factors such as age, gender, race, or nationality is prohibited, and employers must provide severance pay to employees who are terminated due to company restructuring or downsizing. Failure to comply with termination laws can result in penalties and legal action. Working with a Global PEO service provider can help companies navigate termination laws in South Korea and ensure compliance with local regulations.
Severance
Severance pay in Korea is mandatory even if the employee resigns on his own will. Terminated employees are entitled to 30 days severance pay.
Notice Period
Employers must give a 30 days notice before termination of an employee’s contract.
Employment Contract in South Korea
Employment Contract
Employment contracts in South Korea should be written in Korean and spell out the job title, duties, salary, benefits, working hours, and the length of the contract. The contract must be written in Korean and should be signed by both the employer and employee.
In South Korea, employment contracts can be either fixed-term or indefinite-term. Fixed-term contracts are typically used for project-based or seasonal work and are limited to two years, while indefinite-term contracts are used for permanent employees. Employers must provide notice to employees before terminating their contracts and provide justifiable reasons for dismissal.
The Labor Standards Act sets out the minimum requirements for employment contracts, and employers must comply with local regulations. Working with a Global PEO service provider can help companies ensure compliance with local regulations and provide support throughout the employment contract process.
Probation Period
Probation periods in South Korea are generally between 1 and 3 months.
Types of Leaves in South Korea
South Korea has several types of leave entitlements for employees, including annual leave, sick leave, and maternity/paternity leave. All employees are entitled to at least 15 days of paid annual leave per year, with additional days granted based on seniority. Sick leave is provided for employees who are unable to work due to illness or injury, with up to 90 days of paid leave per year provided by the employer.
Maternity leave is available for female employees who are pregnant, with up to 90 days of leave provided by law, with the possibility of additional unpaid leave. Paternity leave is also available for male employees, with up to 10 days of paid leave provided by the employer. Employees may also be entitled to other types of leave, such as bereavement leave, family care leave, and special leave.
Annual Leave
Employees employed for 1 year are entitled to 11 days paid leave per year.
Employees employed for 2-3 years are entitled to 15 days paid leave per year.
Employees employed for more than 3 years are entitled to 15 days paid leave plus 1 day for every additional 2 years of employment. Capped at 25 days paid leave.
Sick Leave
Sick leave in South Korea is decided by the employer, but most employers offer sick days.
Maternity Leave
Female employees are entitled to 90 days of paid maternal leave and 120 days of paid maternity leave in case of multiple births. The employer pays for the first 60 (75 in case of multiple births) days. The Employment Insurance Fund covers the remaining days.
Paternity Leave
New fathers in Korea are entitled to 10 days of paid paternity leave.
Public Holidays in South Korea
Public holidays in South Korea are regulated by the Labor Standards Act and the Act on the National Holidays. There are 16 national holidays in South Korea, including New Year’s Day, Lunar New Year’s Day, Independence Movement Day, Buddha’s Birthday, Labor Day, Memorial Day, Children’s Day, Buddha’s Enlightenment Day, Memorial Day for the Korean War, Liberation Day, Chuseok (Korean Thanksgiving), and Christmas Day.
Employers are required to provide employees with a day off on these holidays, and if employees are required to work, they must receive additional compensation, such as extra pay or a day off in lieu. In addition to national holidays, there are regional holidays that vary by province and city. Understanding and complying with public holiday regulations is important for employers to maintain compliance and support employee well-being.