South Korea PEO & Employer of Record

Wehireglobally provides an International PEO and global Employer of Record service in South Korea to companies willing to enter the South Korean market or recruit local/ex-pat employees in this country.

The traditional approach requires establishing a subsidiary in South Korea. However, our solution allows you to start the operations in South Korea within a few days hence saving time and money. WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

South Korea Fast Facts

Population: 51,780,000 (est) 

Land Area: 100,363 km² 

Capital: Seoul 

Local Currency: South Korean Won (KRW) 

GDP per capita: $34,866 

GDP in currency: $1.6 trillion

South Korea is a developed country that ranks seventh in the Asia and Oceania region on the Human Development Index (HDI). South Korea has one of the world’s highest life expectancies, despite an ageing population and a declining fertility rate. Its economy is the world’s tenth-largest in terms of nominal GDP. Its citizens have access to one of the world’s fastest Internet connections and the world’s densest high-speed railway network. The country is the fifth-largest exporter and the eighth-largest importer in the world.

The constitution sets out the rights of employees while the Labor Standard Act of Korea (LSA) covers the formalities of labor relations. Article 32 of the Constitution, The Labor Standards Act (LSA), Other statutes and related regulations govern various aspects of employment.

Hiring, Negotiating and Doing Business in South Korea

Necessity of written employment contract

A written employment contract is not required by the Labour Standards Act (LSA). Certain terms relating to wages, working hours, annual paid leave, and weekly holidays, as well as other terms and conditions such as workplace, job description, start and end dates of work, recess hours, wage determination, calculation, and payment method, must, however, be in writing. When the employee signs the employment contract, the employer must provide these written terms to the employee. After the employment contract ends, the employer must keep a copy for at least three years. Even if there is no written agreement, either party may claim that a verbal or implied agreement exists. If proven, a verbal or implied agreement is enforceable.

The language of the employment contract does not have to be Korean.

Meanwhile, in the case of part-time employees, the document has to be in written form.

Different forms of engagement: employment, contracting, work with private entrepreneur

Employees have the right to form a labour union with which they can negotiate a collective bargaining agreement with their employer. In general, only union members are covered by the CBA. As a result, employment conditions for union members and non-union members may differ. 

However, according to S35 Labour Union and Labour Relations Adjustment Act, the CBA will also apply to the non-union employees engaged in the same work at the same workplace or in the same business, if both a majority of the employees normally engaged in a given type of work at a given workplace or in a given business are union members, and the general employment rules contain conditions less favourable than those under the CBA.

South Korea Employment Contract

Types of employment agreements

• Temporary Workers 

Employers are prohibited from using fixed-term employees for more than two years under the Fixed-Term Employees Act. When a fixed-term employee works for an employer for more than two years, the employee is considered to be employed indefinitely. There are a few exceptions to this rule.

• Agency Workers

While there is no such thing as agency workers, the Dispatched Workers Act governs the use of other companies’ employees through “worker dispatch” from a temporary employment agency. A company is prohibited from using dispatched workers in direct production processes and can only use them in 32 specific business roles under the Dispatched Workers Act. Computer consulting, travel guide services, and security services are among them. Employers who dispatch or use dispatched workers in violation of the Dispatched Workers Act may face penalties.

Furthermore, if a dispatched employee has worked for the company for two years, the dispatched employee may be considered an employee of the company. There are a few exceptions to this rule. Dispatched workers’ working conditions should be consistent with those of the company’s regular employees who do the same or similar jobs. If the company doesn’t have any regular employees who do the same job, the new employee must be given at least the same working conditions as a dispatched employee. Failure to comply may result in criminal penalties.

• Part-time Workers

Part-time workers’ terms and conditions should be based on the proportion of the working hours that they spend doing the same job as full-time workers (section 8, Fixed-term Employees Act). 

The following items should be included in any agreement:

• Name and address of both the company and the employee 
• Salary 
• Working hours 
• Details of holiday entitlement and paid annual leave 
• General working conditions 
• Location of work 
• Job description 
• The number of times an employee can take sick leaves

Working Hours

The Labour Standards Act (LSA) imposes a maximum of 52 hours a week working week. The maximum regular work hours per week is 40 hours while anything higher is regarded as overtime.

There is a required rest break of one hour for every eight hours of work or 30 minutes for every four hours of work. There is no exception for shift workers.

Overtime

In most cases, an employee can agree to work an extra 12 hours per week in overtime. For overtime, the employer must pay an additional 50% of the regular wage. Work done between the hours of 22:00 and 6:00 a.m. is referred to as night work. For night work, the employer must pay an additional 50% of the regular wage. Employees must be paid 50 per cent more for working eight hours on a holiday and 100 per cent more for working more than eight hours on a holiday.

Vacation leave in South Korea

An employee with a full year of service is entitled to 15 days of paid annual leave. Employees who have not worked for a full year or who have less than an 80% attendance rate in a year are entitled to one day of paid annual leave per month of full employment with perfect attendance. After the first year, an employee with more than three years of service is entitled to an additional one day of paid leave every two years, up to a maximum of 25 days (section 60, LSA).

South Korea Maternity Leave

Pregnant women have the right to take time off work to prepare for and recover from the birth of their child. A minimum of 45 days of paid leave must be granted before and after the birth, for a total of 90 days. This leave of absence should begin about 45 days before the due date of the baby. Even if the birth is delayed, the employer must pay the employee for at least 45 days after the child is born to allow the employee to recover.

Furthermore, if an employee is pregnant for 16 weeks or more, has an abortion, or gives birth to a stillborn child, the employer must provide 30 to 90 days of leave, depending on the length of the pregnancy.

When a worker at a company is eligible for preferential support after having a child, the employer should pay 90 days of wages from the employment insurance. The first 60 days must be calculated using the employer’s regular wage. Unemployment insurance will cover you for the remaining 30 days.

The amount of maternity leave pay is determined by the worker’s regular wage on the first day of the leave, but it cannot exceed 4.05 million won for the entire 90-day period.

If a worker’s ordinary wage exceeds 1.35 million won per month, the employer is responsible for the difference.

South Korea Severance Laws

An employer must give 30 days’ notice of termination or 30 days’ pay in place of notice if the employee is terminated.

However, if: 

• It is impossible to maintain the business due to a natural disaster or other unavoidable reason, advanced notice may not be required.
• Any intentional wrongful act or omission by the employee has a serious negative impact on the company’s business or operations.
• The employee has only been with the company for three months.

Severance payments

Employers must comply with the Employee Retirement Benefit Security Act (Retirement Benefits Act) in one of two ways: 

• Severance pay is paid at the end of a job relationship. 
• Or a retirement pension system is set up with the consent of the employees. 

Each employee who has worked for at least one year is entitled to severance pay equal to 30 days’ average wages for each year of continuous employment. Wages for the three months preceding termination are used to calculate average wages. Both voluntary retirement and termination for cause are covered by severance payments.

South Korea Tax

Income Tax regulations regard any foreign national who stays in Korea for 183 days or more as resident for tax purposes. Foreign nationals who are tax resident are subject to income tax on all worldwide income in the same way as Korean nationals. Non-resident foreign nationals are only taxed on Korean sourced income.

The following rates of taxation charged on employment income:

• Income of up to KRW12 million: 6%.
• Income from KRW12 million up to KRW46 million: 15% (plus KRW0.72 million).
• Income from KRW46 million up to KRW88 million: 24% (plus KRW5.82 million).
• Income from KRW88 million up to KRW150 million: 35% (plus KRW15.90 million).
• Income from KRW150 million up to KRW300 million: 38% (plus KRW37.60 million).
• Income from KRW300 million up to KRW500 million: 40% (plus KRW94.60 million).
• Income of KRW500 million and above: 42% (plus KRW174,60 million).

Social security contributions are:

• National pension: 9% of monthly salary up to KRW4.86 million. The contribution is shared equally by the employer and the employee.
• National Health Insurance: 6.67% of monthly salary plus 10.25% of the health insurance premium for long-term care insurance. The employer and the employee share the contribution equally.
• Industrial Accident Compensation Insurance: the employer contributes between 0.7% to 34.04% of monthly salary, depending on the industry.
• Unemployment Insurance: 1.6% of monthly salary for unemployment insurance. The employer and the employee share the contribution equally. In addition, the employer contributes between 0.25% to 0.85% (depending on the size of the company) of monthly salary for job security and vocational capability insurance.

Health Insurance Benefits in South Korea

Compulsory National Health Insurance provides universal healthcare in South Korea (NHI). Employees and employers are both required to pay into the National Health Insurance system. The contribution rate is determined by the employee’s salary, and both the employer and the employee contribute 50%.

Additional Benefits in South Korea

Employers often provide additional supplementary health and life insurance benefits.  For customers using our employee leasing or PEO service, Wehireglobally advises on typical costs and arranges these benefits as required.

South Korea Holidays

Public holidays designated by the government are:

• New Year’s Day – Sat, 1 Jan 2022
• Seotdal Geumeum – Mon, 31 Jan 2022
• Korean New Year – Tue, 1 Feb 2022
• Independence Movement Day – Tue, 1 Mar 2022
• March 1st Movement Day – Tue, 1 Mar 2022
• Children’s Day – Thu, 5 May 2022
• Buddha’s Birthday – Mon, 9 May 2022
• Memorial Day – Mon, 6 Jun 2022
  
• National Liberation Day of Korea – Mon, 15 Aug 2022
• Chuseok – 9–12 Sept 2022
• National Foundation Day – Mon, 3 Oct 2022
• Hangul Day – Sun, 9 Oct 2022
• Christmas Day – Sun, 25 Dec 2022

Why Choose WeHireGlobally

• Wehireglobally has dedicated specialists in the relevant fields who will take care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment.
• Our seasoned team of professionals consists of people who are familiar with the economic landscape which ensures that business expansion is not the slippery slope it used to be. 
• Our staff are tested and reliable thereby simplifying the herculean task of getting trusted hands. This means your overseas team can be managed efficiently while minimizing cost and risk.

Wehirelobally can be the launchpad for your company into new markets through our experts who are ready to facilitate your entrance to new spheres of opportunities and it is easier than you think. Yes, with WeGH, expansion is easier than you think. Contact us now.