South Korea Employer of Record

South-Korea-employer-of-record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in South Korea, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in South Korea―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in South Korea and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in South Korea

In South Korea, numerous labor laws govern the relationship between employers and employees. Relevant statutes include the Labor Standards Act, the Framework Act on Employment Policy, the Employment Security Act, the Act on Equal Employment and Support for Work-Family Reconciliation, the Industrial Accident Compensation Insurance Act and the Trade Unions and Labor Relations Adjustment Act. At least 30 other statutes also apply. The Ministry of Employment and Labor is the principal agency governing employment policies.

Since employment in South Korea is highly regulated, compliant employment contracts are an essential business need. As your employer of record and PEO in South Korea, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in South Korea

As you look to hire employees in South Korea, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours
The standard workday in South Korea is eight hours, with a 40-hour workweek. Overtime is not required as long as the average number of weekly hours over a two-week period does not exceed 40 and neither workweek exceeds 48 hours. The maximum number of hours worked per seven-day workweek, including overtime, is 52.

Employees get one day off per week with pay, typically Sunday.

Employees are entitled to a 30-minute unpaid break for every four work hours, or one hour for every eight work hours.

Employers cannot require female employees to work between 10 p.m. and 6 a.m. or on holidays unless they give consent.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

  • The minimum wage is decided annually by the labor minister in consultation with the Minimum Wage Council.
  • Effective January 1, 2021, the hourly minimum wage is 8,720 KRW per hour.
  • Employees who perform night work, e.g., between 10 p.m. and 6 a.m., must be paid 150% of their regular wages unless workers’ representatives agree to compensatory time off instead.
  • Overtime is compensated at 150% for overtime work of less than eight hours and 200% for eight hours or more.
  • Collective agreements may regulate the minimum wage or legal salary range.

As your employer of record in South Korea, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Bonuses are not mandatory in South Korea, though many companies offer them to incentivize and reward performance.

Probationary period
Probationary periods may last for up to two years, although a duration of three months is more common.

Termination and severance
Terminating employees in South Korea is difficult. According to the law, employers may not fire, lay off, suspend or transfer a worker, cut a worker’s pay or take other punitive measures without just cause.

Employers must provide either 30 days’ notice or 30 days’ compensation in lieu of notice except in the following cases:

  • When employees are hired on a daily basis for a period of less than three months
  • When employees are hired for a fixed period of two months or less
  • When workers are employed on a monthly basis for less than six months
  • When seasonal employees are contracted for a period of six months or less
  • When probationary employees are employed for less than three months
  • When workers cause considerable harm to the business or intentionally damage workplace property
  • When it is impossible to continue business because of extraordinary circumstances such as natural disaster, armed conflict or bankruptcy

As your employer of record in South Korea, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in South Korea

When negotiating terms of an employment contract with a candidate in South Korea, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Pregnant employees carrying one child are entitled to 90 days of maternity leave, at least half of which must be taken after giving birth. Employers pay full wages for the first 60 days, and the rest is covered by the Employment Insurance Fund if the employee will have participated for at least 180 days by the end of maternity leave.

Pregnant employees carrying two or more children are entitled to 120 days of maternity leave, with 75 days paid by the employer. These benefits also apply to employees who have experienced miscarriage or stillbirth, with some modifications.

Pregnant workers who are within the first 12 weeks of pregnancy or beyond the 36th week can reduce their working hours by two hours a day with no reduction in pay.

Employees are entitled to paid time off for prenatal doctor visits. Women with children under 1 year may take two paid nursing breaks per day of 30 minutes each.

Employees may not be fired during maternity leave or within 30 days of returning to work.

Vacation
Employees are entitled to vacation days as follows:

  • In the first year of employment: 11 days’ paid leave
  • Employees who have worked for their employer for at least one year: 15 days
  • Employees with at least three years of employment: 15 days plus one additional day for every two years of service
  • Employees who work less than 80% of the annual workdays (not counting days off due to occupational injuries, illness or maternity leave): One day for every full month of attendance

Total days off may not exceed 25 per year.

Paid leave is forfeited if not used within one year of being earned unless the failure to use the leave was caused by the employer, and employers are required to begin reminding employees to use their annual leave on July 1 of each year.

Under a Working Hours Savings System, employees can take leave in lieu of compensation for hours worked on extended holiday or night work or they can work extended holiday or night work hours to make up for hours they use for leave.

Holidays
The law requires employers to offer Labor Day as a paid holiday. Employers with 30 employees or more must offer additional holidays, and those with at least five employees will be required to do so as of January 1, 2022. Which holidays will be required has not been stipulated.

The following are public holidays in 2021:

  • New Year’s Day
  • Korean New Year (Seollal) (3 days)
  • Independence Movement Day (Sam Il Jul)
  • Children’s Day (Uhrininal)
  • Buddha’s Birthday
  • Memorial Day
  • Independence Day (Kwang Bok Jul)
  • Harvest Moon Festival (Chuseok)
  • National Foundation Day (Kae Chun Jul)
  • Christmas Day

Sick leave
Employers are required to pay employees for sick leave only in cases of work-related injury or illness, although in practice, many employers offer paid sick leave for non-work-related illnesses with a doctor’s note.

Employers are required to give female employees one day of menstruation leave per month if requested.

Employees may not be fired during occupational injury leave or within 30 days of returning to work.

Health coverage
All South Korean residents are covered by National Health Insurance (NHI). Anyone living in South Korea for six months or more must register. NHI is financed via government subsidies, employee/employer contributions and a tobacco tax, and covers roughly 50% to 80% of medical costs. Employers with more than five employees are required to provide private health insurance, which covers the remaining costs, and they must pay for half of an employee’s monthly premiums.

As your employer of record in South Korea, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pension
South Korean citizens are eligible for retirement at 61, which will increase to 65 by 2033. The National Pension Scheme is financed by equal contributions from employers and employees. The maximum contribution is 9%.

Workers’ compensation
Most employers are required to participate in the Industrial Accident Compensation Insurance system, which provides benefits for employees who incur work-related injuries or diseases. Premiums are determined by the Ministry of Employment and Labor based on employers’ accident records. Additional damages may be pursued in civil court in cases of negligence.

Workers’ compensation is provided to employees who need medical care and/or cannot work as a result of a work-related injury or disease for more than three days in order to cover the costs of medical care. During the period of medical treatment, an employee is paid 70% of their average wage. Those who remain disabled after two years of medical care are paid a lump sum.

Other benefits
Employers with more than 300 female employees or more than 500 total employees are required to provide childcare facilities at work.

Employer social costs will cover a large portion of employee benefits in South Korea, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.

Employee onboarding with an employer of record in South Korea

We write and validate all local employment contracts, streamlining the onboarding process for you and your South Korea employees—all you have to do is provide relevant information and review and approve the employment agreement.

As your employer of record in South Korea, we will:

  • Schedule a welcome call to discuss HR and employment information for South Korea, as well as answer any questions
  • Prepare a customized employment contract in English and in Korean (or other local language)
  • Share the employment contract and benefits information with the new employee for signature and review
  • Gather tax and banking information from the employee to set up payroll
  • Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

 

Partner with Safeguard Global as your employer of record and PEO in South Korea

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in South Korea. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

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