Hire employees in South Korea

Home to global brands like Samsung, LG, Hyundai and KIA, South Korea is a great hiring destination for multinationals searching for fresh talent. According to the OECD, South Korea is the country with the most educated youth in the world – measured by the percentage of people aged between 25 and 34 with a completed tertiary education degree. A particularly high number of students graduate in science and technology.

However, many graduates find it challenging to find a position as there aren’t enough local job opportunities. This shortage of employment positions plays in favour of overseas employers who thus have a large number of highly talented professionals to choose from.

Employment contracts always have to be in writing. Mandatory elements for the contract include wages, working hours, weekly paid days off, paid annual leave and notice periods. As for the contract language, it is possible to draft the contract in a foreign language.

Both indefinite and fixed-term employment agreements are possible. The latter cannot be concluded for a period of more than 2 years. If the employment relationship continues after the end of the 2-year period, the employee gains the status of a permanent employee.

Probation Period

Although not explicitly stated by law, the first 3 months of employment count as a probation period. During this time, employers can end the employment relationship without giving notice.

Working Hours and Breaks

A normal work week is 40 hours, with 8 hours being a full working day. During an 8-hour day, the employee must have a 1-hour rest break. Furthermore, every employee must receive at least one rest day per week which is usually Sunday.

Overtime

Any working hour which exceeds the 40-hour standard counts as overtime. Usually, overtime work is paid at a rate of 150% of the employee’s normal wages. Overtime mustn’t exceed 12 hours per week.

Employees in South Korea usually get paid once a month.

Minimum Wage

The national minimum wage in South Korea is currently (February 2023) fixed at KRW 9,620 per hour and KRW 2,020,000 per month.

Sick Pay

There is no obligation to provide sick pay nor sick leave to sick or injured employees unless the injury or illness is work-related. In that case, the employer must pay 70% of the employee’s normal wages during a 3-month period.

Bonuses

There is no law that mandates the payment of a 13th month’s salary or a similar bonus.

Employees and employers in South Korea are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

up to 24%

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• Corporate tax: 9% to 24% (9.9% to 26.4% including local income tax)

• Local tax: 1% – 2.5%

• VAT (standard rate): 10%

Employees

up to 45% *

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Individual income tax rates: 6% to 45%

There also is an additional local income tax.

Social security

Employers

up to 29%

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• 4.5% national pension (lower limit: KRW 15,750; upper limit: KRW 248,850)

• 3.924% health insurance (includes long-term care insurance)

• 1.15% to 1.75% unemployment insurance (depending on the number of employees and industry type)

• 0.7% to 18.6% industrial injury compensation insurance

Employees

up to 9.5%

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• 4.5% national pension (lower limit: KRW 15,750; upper limit: KRW 248,850)

• 3.924% health insurance (includes long-term care insurance)

• 0.9% unemployment insurance

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

During their first year of employment, employees are entitled to one paid day off for every month they worked with the employer. Upon completion of their first year of service, PTO increases to 15 days. After 3 years with the employer, the annual leave entitlement increases by 1 day for every additional 2 years of service. The maximum is 25 days.

In addition, the country observes 12 public holidays – depending on the year, the government might declare additional public holidays.

Maternity Leave and Paternity Leave

Maternity leave is 90 days, i.e. 45 days before and after birth. During the first 60 days, the employee receives her full wages. The other 30 days are paid at a lower rate by Social Security. In case of multiple births, maternity leave is extended to 120 days, with 75 fully-paid days.

Fathers are entitled to 10 days of paternity leave which can be divided into two separate leave periods. The leave must be taken within 90 days after the birth.

Parental Leave

Parents are allowed to take one year of parental leave until their child reaches the age of 8. This leave is paid by Social Security at varying rates of:

• 80% for the first 3 months

• 50% for months 4 to 6

Starting from the 7th month of parental leave, the leave is unpaid. The government plans to extend parental leave from one year to one year and a half.

Additional Leave and Benefits

There are several types of additional leave employees can claim, including:

• 90 days of leave to care for a family member

• Education leave which allows them to reduce their working hours during 1 year for educational purposes

Once the initial 3 months of employment are over, employers need a valid reason to dismiss an employee, such as misconduct, dishonesty or negligence. Fixed-term contracts automatically end on the date on which they expire.

The notice period for employers is 30 days. Pay in lieu of notice is possible. No notice must be given during the first 3 months of employment, or in case of unexpected business disruption resulting in liquidation (e.g. after a natural disaster), or in cases of negligence or intentional offence.

There is no severance pay as such but employers must either create and pay into a corporate pension scheme or pay a retirement bonus when the employment relationship ends. The latter must equal 30 days’ pay for each year of service.