G-P’s Global Growth Platform™ makes it possible to start obtaining services in the South Korea in minutes via our global entity infrastructure – allowing your company to expand your global footprint without the hassle of entity setup and management. G-P provides services in South Korea for its customers through the assistance of one or more professionals capable of meeting the demands expressed by the customer.
Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of global expansion and compliance for you — so you can focus on the global opportunities ahead.
You’ll have peace of mind knowing you have a team of dedicated experts to support your growth. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Hiring in South Korea
Over 50 million people live in South Korea, half of which reside in Seoul’s metropolitan area. The government in South Korea encourages entrepreneurship and market competition, making it an attractive location for growing businesses.
When negotiating terms of an employment contract with employees in South Korea, it may be useful to keep the following practices in mind.
Employment contracts in South Korea
South Korea employment contracts are typically indefinite. However, fixed-term, part-time, and temporary contracts are becoming more common.
Fixed-term contracts generally cannot exceed 2 years (with few restricted exceptions). After this period, employees must be accorded the same rights and benefits as those stipulated in indefinite contracts. Part-time employees are entitled to the same working rights as employees who do the same job full-time, in proportion to the hours worked.
In South Korea, it’s best practice to put a strong, written employment contract in place, which spells out specific terms, such as the job description, compensation, benefits, working hours, holidays, annual paid leave, sick leave, and termination requirements. An offer letter and employment contract in South Korea should always state the salary and any compensation amounts in won rather than another currency.
Working hours in South Korea
Employers must grant employees a minimum of 1 paid day off per week under South Korea’s labor law; Sunday is generally designated as the paid weekly day off, and many employees work a half day on Saturday.
The maximum workweek is currently 52 hours, comprising 40 regular working hours per week with up to 12 hours of overtime. If an employee works overtime, it needs to be compensated at a rate of at least 50% on top of their regular salary.
Holidays in South Korea
Below is a list of national holidays in South Korea — keep in mind that these days may undergo occasional adjustments:
- New Year’s Day
- Lunar New Year’s Day (Seollal)
- Independence Day
- Children’s Day
- Buddha’s Birthday
- Memorial Day
- Liberation Day
- Chuseok harvest festival
- National Foundation Day
- Hangeul Day
- Christmas Day
- Election day
- Election Act
- Labor Day
If an employer wishes to substitute a paid holiday for another working day, they must execute a written agreement with the employee representative.
Vacation days in South Korea
Companies with full-time salaried employees are legally required to provide 15 days of paid annual leave after 1 year of service.
- An additional vacation day is paid for each 2 years of service thereafter.
- The statutory vacation days earned per year are capped at 25 days.
Sick leave in South Korea
There is no legal requirement for employers to provide leave for non-work-related illnesses or injuries; however, it’s a common practice. Employees will generally use their annual paid leave as personal sick days if paid sick leave is not available.
Employers are required under the Labor Standards Act to provide paid leave for work-related illnesses or injuries. All companies regularly employing 5 or more employees must pay the insurance premiums set out by the Industrial Accident Compensation Insurance Act. The industrial accident compensation insurance covers relevant sick pay incurred in relation to work-related illness or injury.
Maternity/paternity leave in South Korea
Pregnant employees are entitled to 90 days of maternity leave. The start date can be negotiated between the employer and the employee, but 45 consecutive days of leave must be taken after the birth.
Non-birthing employees are entitled to 10 days of paternity leave.
The company or employment insurance pays for the leave, depending on the size of the company. Benefit pay also depends on company size.
Parents who have worked for an employer for more than 1 year may be eligible for parental leave, subject to the following conditions:
- The leave applies to parents whose children are under 6 years old.
- Each parent is eligible for up to 1 year of leave.
- Parents cannot take leave at the same time.
- The parent is entitled to 40% of their monthly income from employment insurance.
Health insurance in South Korea
Universal healthcare in South Korea is provided by compulsory National Health Insurance (NHI).
Employees and employers must contribute to the National Health Insurance. The contribution rate is dependent on the employee’s salary, but both the employer and employee each pay 50% of the contribution.
South Korea supplementary benefits
Employers often provide additional supplementary health and life insurance benefits to enhance talent retention efforts.
In general, we recommend budgeting 18% on top of the total cost of employment for the minimum cost of employer-paid statutory benefits in South Korea.
Bonuses
It’s common for companies in South Korea to pay incentives or performance-based bonuses.
Termination and severance in South Korea
Probationary periods are common in South Korea. While there is no specific maximum, probationary periods are usually 3 to 6 months — and employers must have just cause to dismiss an employee during this time, which is an extremely high standard in South Korea. Failure to prove just cause generally makes the termination voidable, and the employee will have the right to be reinstated.
When terminating an employee, employers must provide at least 30-days’ notice or pay 30 days of salary in lieu of notice. Bear in mind that employment contracts may demand longer notice periods. However, during the first 3 months of employment, employers are not required to provide the standard 30-day notice period.
By law, full-time employees are entitled to receive statutory retirement benefit scheme pay equal to 1 month’s salary for each year of employment as long as they have worked for more than 15 hours per week or more than 60 hours per month. This statutory retirement benefit scheme is to be paid within 2 weeks of termination.
An employee may file for unfair dismissal within 3 months of the date of dismissal. The primary unfair dismissal remedy is reinstatement. If that is not appropriate, compensation equivalent to the salary from the date of dismissal to the judgment of the case may be awarded.
Taxes in South Korea
South Korea follows a progressive income tax rate, where taxes rise as income increases. There are additional rates for local income taxes. Additionally, all employees are enrolled in a mandatory social security system, with both employers and employees contributing to a national health insurance based on the employees’ salary.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
Contact us today to learn more.