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Country Introduction – South Korea
Capital – Seoul
Currency – South Korean Won
GDP – $1,710 Billion (2022)
Language – Korean
Major Religions – Buddhism, Confucianism and Christianity
Population – estimated 51,361,809 Million as of August 2022
South Korea has an export-oriented economy and is the world’s leading producer of displays and memory semiconductors and the second largest producer of ships. Identified as one of the G-20 major economies, South Korea’s mixed economy is ranked as the 10th largest economy by nominal GDP. The growth of the high-tech industry has spurred the birth of South Korean brands such as Samsung, Hyundai, LG and SK. These helped transform South Korea into one of the world’s major economies and a leading exporter of cars and electronic goods. Other booming industries include: IT, education, drama, shipbuilding, mining, construction and tourism.
South Korea is also known as the world leader in internet connectivity. Approximately 92% of the country’s population are internet users, and they boast the world’s fastest average connection speed. No wonder why the stardom of Korean Drama and Korean Pop artists are extremely boosted online.
Contract of Employment
South Korea’s employment contract is an agreement stating employment conditions and should be made into a written/printed document with both the employer and employee’s signature affixed on it, keeping one copy for reference. This usually includes:
– Legal name and identification number of employees
– Designation, employment period, contractual work hours and location
– Probationary period
– Wages (basic salary, overtime rate, allowance, end-of-year payments and any other items
– Annual paid leaves
– Statutory holidays
– Employee benefits
– Constituent items, calculation methods and payment of methods of wages
While there is no statutory requirement regarding the probationary period, most companies in South Korea set a probationary period of 3 months.
Any termination should be in accordance with South Korea’s Labour Standards Act (LSA). Employer is required to give 30 days’ termination notice to the employee. Such advance notice requirement does not apply to those with a probationary period of 3 months or less. LSA requires employers to determine if the employee’s performance is satisfactory within the 3 months. The termination notice should be in writing, with stated reasons for termination and date of turnover.
Failure to comply with the procedural requirements may result in the termination being deemed to be without just cause, which may entitle the terminated employee to reinstatement and back pay.
Generally, South Korea has a statutory limit working week of 40 hours/week, also allowing for 12 hours of paid overtime on weekdays and 16 hours on weekends, other companies manufacturing companies such as the automobile industry operate at a non-stop basis.
On a regular basis, employees are allowed to do 12 hours of paid overtime on weekdays and 16 hours including weekends. The employer must pay an additional 50% of ordinary wages for overtime. Some industries and professions may have a separate policy around this, depending on the job’s demand.
Employers shall grant any employee who has worked not less than 80% of one year a paid leave of 15 days. Employees are entitled to an additional one day of annual leave after continuously working for the employer for two years excluding the first working year.
The total number of annual leave shall not exceed 25 days.
According to the LSA, annual leave shall be terminated by time limitation if it has not taken for one year unless the leave has not been utilised for reasons due to the employer. If employees are unable to utilise all the annual leave due to the employer, employer shall encash the annual leave to employee after the effective of the next leave year.
There are no statutory obligations for private companies to pay sick leave in South Korea. However, if an employee is injured in the work premises, the employer is required under the Labour Standards Act to provide paid leave for work-related illnesses or injuries. On the other hand, employees are entitled to use their annual paid leave as personal sick days if paid sick leave is not available.
Working mothers are entitled to 90 days of maternity leave, of which 60 are fully paid. The other 30 days are paid at a percentage of the mother’s monthly income. Prior to childbirth, the 45 days leave may be utilized and the other 45 days after.
Working fathers are also entitled to 10 days of paternity leave. This current policy is only applied for biological parents. While according to the government, public officials who are adoptive parents can have 20 days of parental leave.
13th Month Pay
There is no legislation for 13th-month payments in South Korea. However, companies may opt to give out bonuses up to their liking.
VAT / GST:
VAT was introduced in Korea in 1977 at a standard rate of 10.0% and has remained at this rate throughout.
Income tax regulations treat any foreign national who stays in South Korea for 183 days or more in a tax year as resident for tax purposes. Foreign nationals who are considered residents are subject to income tax on all their worldwide income in the same way as South Korean nationals.
Non-resident foreign nationals are only taxed on South Korea-sourced income.
Income tax is charged on employment income given the following rates:
– 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 up to KRW1 billion: 42% (plus KRW174.60 million).
– Income of KRW1 billion and above: 45% (plus KRW384.60 million).
South Korea has implemented 4 schemes of social insurance, which are: National Pension, National Health Insurance, Employment Insurance and Industrial Accident Compensation Insurance. All of 4 are operated by the Government and employers are obliged to enroll their employees into these schemes and give rightful contributions.
– National Pension: 4.5% c/o the employer, 4.5% c/o the employer.
– National Health Insurance: 3.83% c/o the employer, 3.83% c/o the employee.
– Employment Insurance: 1.05% to 1.65% c/o the employer, 0.8 % c/o the employee.
– Industrial Accident Compensation Insurance: 0.7% to 18.6% c/o the employer, no employee contribution.
There are 11 public holidays in South Korea:
– January 1st – New Year’s Day
– 1st day of 1st Lunar Month (3Days) – Korea’s New Year Holiday
– March 1st – Independence Action Day
– 8th day of 4th Lunar Month – Buddha’s Birthday
– May 5th – Children’s Day
– June 6tth – Memorial Day
– August 15th – Liberation Day
– October 3rd – National Foundation Day
– 15th day of 8th Lunar Month (3Days) – Chuseok/ Mid-Autumn Festival
– October 9th – Hangeul Day (Korean Alphabet Day)
– December 25th – Christmas Day
Under the Act on the Guarantee of Employees’ Retirement Benefits (Retirement Benefit Act), employers must either set up a corporate pension scheme or pay a retirement benefit at the end of the employment relationship.
For any employee who has worked for at least one year for the employer, the retirement benefit must be equivalent to at least 30 days’ average wage for each year of continuous employment. The average wage is based on wages paid in the three months immediately preceding termination.
Retirement benefits apply to voluntary retirement as well as termination of employment for cause. Companies that relied on statutory retirement benefit can adopt a corporate pension scheme by obtaining the consent of the:
– Labour union that represents most of the employees.
– Majority of the employees if there is no such union.
– Once established, the company must file the scheme’s byelaws with the Ministry of Employment and Labour.
Work and Residence Permits (Expatriates)
The most straightforward part about South Korean visas are the costs. The fees are standard and paid in USD, with prices varying depending on the number of entries you are seeking for your visa to grant you.
South Korea allows both online and physical visa applications such as follows:
– E-visa application (via the visa portal)
– Visa application (via Korean diplomatic missions abroad)
– Confirmation of visa issuance application (via the visa portal)
– Confirmation of visa issuance application (via Korean immigration offices)
The type of job you are planning on doing determines how you should apply for a visa.
No matter the type of work visa you apply for, the application is only obtained if you apply through a sponsor (perfect example is your employer) or a visa agency. The latter can be found with the help of InterNations. Visas (both e-format and regular) can be obtained by the applicant or with the help of a sponsor.
After you have lived in South Korea long enough to qualify for the F-5 visa, you can start the application process for your permanent residency. The required documents depend on what type of visa you had before, and which type of F-5 visa you are getting, but usually you will need to provide:
– Alien Registration Card (ARC)
– Filled-out application form
– Proof of income or financial aid
– House Rental contract
– Proof of clear criminal record
– KIIP certificate (level 5)
– Other documents you might need include proof of education, marital status, or capital