Employer of Record in South-Korea

An Employer of Record (EOR) in South Korea is a company that legally hires employees on your behalf. This means you can build a team in South Korea without having to set up a local entity. The EOR handles all the HR tasks like payroll, taxes, benefits, and compliance with South Korean labor laws. You manage your team's day to day work, while the EOR takes care of the legal and administrative responsibilities of employment. For EOR services, you can consider a provider like Rivermate.

How an Employer of Record (EOR) Works in South Korea

Using an EOR in South Korea simplifies the process of hiring employees. Here is a typical breakdown of the steps:

• You Find the Talent: You identify the candidate you want to hire in South Korea.
• The EOR Hires Them: The EOR legally employs the worker on your behalf. They create a locally compliant employment contract.
• Onboarding: The EOR manages the onboarding process, including all necessary paperwork.
• Payroll and Benefits: The EOR handles payroll, taxes, and administers employee benefits according to South Korean law.
• Ongoing HR: The EOR continues to manage HR and legal compliance for your employees.
• You Manage the Work: You direct your employee's daily tasks and responsibilities.

Why use an Employer of Record in South Korea

Using an EOR in South Korea offers a straightforward way to expand your business and hire talent in the country. It allows you to enter the market quickly and efficiently, without the complexities of establishing a legal entity.

Here are some key benefits:

• Speed to Market: You can hire employees and start operations in weeks, instead of the months it can take to set up a company.
• Compliance: South Korea has complex labor laws. An EOR ensures you comply with all local regulations, reducing the risk of penalties.
• Cost-Effective: It is often more affordable to use an EOR than to establish and maintain your own legal entity in South Korea.
• Focus on Your Business: By outsourcing HR and administrative tasks, you can concentrate on your core business activities and growth.
• Access to Top Talent: An EOR makes it easier to hire the best talent in South Korea by offering competitive and compliant benefits packages.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in South-Korea includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in South-Korea.

Hiring in South Korea is a mix of respecting tradition and following modern labor laws. Building relationships is key. Companies often find new hires through personal networks and university recruiting events. The country's workforce is highly educated and a significant player in industries like electronics, cars, and shipbuilding. South Korea's Labor Standards Act (LSA) is the main law governing employment. It covers everything from employment contracts to working hours and termination.

Employment contracts & must-have clauses

When you hire an employee in South Korea, you need a written employment contract. It’s best practice to provide this in Korean and to state salary information in Korean won. The contract should be clear and cover all the important details of the job.

Here are the essential clauses to include:

• Job description: Clearly define the employee's role and responsibilities.
• Salary and compensation: Detail the base salary, any allowances, and how it will be paid.
• Working hours: Specify the daily and weekly work schedule.
• Paid leave: Outline the annual leave entitlement.
• Termination: Explain the notice period and conditions for ending the employment.

There are two main types of employment contracts in South Korea:

Probation periods

You can include a probation period in the employment contract. This is typically for three months. During this time, you can assess the employee's performance. If you need to terminate the employment during the probation period, you still need a valid reason, but the requirements are less strict than for a regular employee.

Working hours & overtime

The standard workweek in South Korea is 40 hours, usually eight hours a day, five days a week. The total weekly hours, including overtime, cannot exceed 52 hours.

• Standard hours: 40 hours per week.
• Overtime: Any work beyond the standard 8-hour day or 40-hour week is considered overtime.
• Overtime pay: Overtime work must be paid at a rate of at least 150% of the employee's regular hourly wage.

The government has discussed changes to allow for more flexible workweeks, but the 52-hour cap remains a key regulation.

Public & regional holidays

South Korea has several public holidays. While only Labor Day (May 1st) is a mandatory paid holiday by law, most companies provide paid time off for all public holidays.

Here are some of the major public holidays:

• New Year's Day
• Seollal (Lunar New Year)
• Independence Movement Day
• Children's Day
• Buddha's Birthday
• Memorial Day
• Liberation Day
• Chuseok (Korean Thanksgiving)
• National Foundation Day
• Hangeul Day
• Christmas Day

Hiring contractors in South Korea

Hiring independent contractors is becoming more common in South Korea, especially in the IT sector. This can offer flexibility and reduce some of the administrative tasks and costs associated with full-time employees.

However, you need to be careful about worker classification. If a contractor is treated like an employee, they could be legally reclassified as one. This is known as misclassification and can lead to significant risks for your business, including:

• Back pay for overtime and benefits: You could be liable for unpaid overtime, severance pay, and other benefits the worker would have received as an employee.
• Unpaid social security contributions: You may have to pay backdated social security contributions.
• Fines and penalties: The authorities can impose fines for misclassification.

An Employer of Record (EOR) can help you avoid these risks. An EOR legally employs the worker on your behalf, ensuring compliance with all local labor laws. This means the EOR handles payroll, taxes, benefits, and all the legal responsibilities of an employer. By using an EOR, you can work with talent in South Korea without the risk of misclassifying them as independent contractors.

In South Korea, handling compensation and payroll means following a clear set of rules. You must pay your employees monthly and provide a payslip that details all deductions like taxes and social security. All employment contracts and pay should be in the local currency, the South Korean Won (KRW).

Payroll cycles & wage structure

The payroll cycle in South Korea is typically monthly, with payments made on a fixed day each month. There is no legal requirement for a 13th-month bonus payment.

For new hires, you can have a probation period of up to three months. During this time, you can pay 90% of the minimum wage if the employment contract is for at least one year.

A key part of compensation is severance pay, which is mandatory for employees who have worked for you for at least one year. You must provide a minimum of one month's salary for each year of service.

Overtime & minimums

The standard workweek is 40 hours, with a maximum of 8 hours per day. You can have up to 12 hours of overtime per week. You must pay employees at least 150% of their regular wage for overtime hours. Work performed late at night, between 10 p.m. and 6 a.m., requires a higher premium.

The minimum wage in South Korea is set annually. For 2024, the minimum wage is KRW 9,860 per hour.

Employer taxes and contributions

As an employer, you are responsible for contributing to several social security funds. These contributions are a percentage of an employee's salary.

Employee taxes and deductions

Employees also contribute to social security and pay income tax. You deduct these from their monthly salary.

In South Korea, benefits and leave are a serious part of the work culture. The government sets clear minimums for employers to follow. This ensures you provide fair and competitive support for your team. Think of these requirements as the foundation for building a great place to work.

Statutory leave

South Korean law outlines several types of mandatory leave.

• Annual Leave: Employees who have worked for a full year receive 15 days of paid leave. For every two additional years of service, they get one extra day, up to a maximum of 25 days. Employees with less than a year of service earn one day of paid leave for each month they work.
• Maternity Leave: Female employees are entitled to 90 days of maternity leave. This increases to 120 days for multiple births. The employer pays for the first 60 days, and the government's employment insurance covers the rest.
• Paternity Leave: Male employees get 10 days of paid paternity leave.
• Parental Leave: Employees with a child under eight years old can request up to one year of parental leave.
• Family Care Leave: You can take up to 90 days of unpaid leave to care for a family member, used in 30-day increments. A shorter, 10-day option is also available.
• Fertility Treatment Leave: Employees can take three days of leave per year for fertility treatments, with the first day being paid.

Public holidays & regional holidays

Companies with five or more employees must provide paid time off for public holidays.

Typical supplemental benefits

To attract and keep top talent, many companies offer more than the legal minimum.

How an EOR can help with setting up benefits

Setting up and managing employee benefits in a new country is complex. An Employer of Record (EOR) simplifies this process.

An EOR acts as the legal employer for your team in South Korea. This means they handle all the administrative and legal tasks related to employment. They ensure your benefits packages comply with local laws, from paid leave to insurance contributions.

Using an EOR helps you:

• Stay Compliant: An EOR keeps up with South Korea's changing labor laws, so you don't have to. They make sure your employment contracts and benefits are always in line with current regulations.
• Save Time: You avoid the lengthy process of setting up a local legal entity. An EOR can get your team operational in a fraction of the time.
• Attract Talent: An EOR can help you create competitive benefits packages that meet local expectations. This makes your company more attractive to skilled professionals.
• Reduce Risk: The EOR takes on the responsibility for compliance, which minimizes your risk of legal issues or penalties.

Let's walk through what terminating and offboarding an employee in South Korea involves. The process is stricter than in many other countries. South Korean law strongly protects employees, so you can't dismiss someone without a "just cause." This means you need a significant, justifiable reason directly related to the employee's conduct or a pressing business need. Simply deciding to let someone go is not an option. You must follow specific legal procedures to ensure the termination is lawful.

Notice Periods

When terminating an employee, you must provide at least 30 days' written notice. This notice should clearly state the reasons for the termination and the final date of employment.

There are a few situations where this 30-day notice is not required:

• The employee has worked for less than three months.
• The employee has committed a serious offense, like causing significant damage to the company.

If you prefer, you can choose to pay the employee 30 days of their regular wages instead of having them work the notice period. This payment is separate from any severance pay.

Severance Pay

Employees who have worked for you for at least one year are entitled to severance pay. The law requires you to provide this payment to eligible employees when they leave your company.

Here’s how it generally works:

• Calculation: The typical severance amount is equivalent to one month's average wages for every year the employee worked for you.
• Payment Deadline: You must pay all final wages and severance within 14 days of the employee's last day.

How Rivermate Handles Compliant Exits

At Rivermate, we manage the entire offboarding process to ensure you remain compliant with South Korean labor laws. We take the complexity off your hands.

Here is how we handle a typical exit:

1. Consultation: First, we talk with you to understand the situation and confirm there is a "just cause" for termination.
2. Documentation: We prepare all necessary written documents, including the termination notice with a clear explanation for the dismissal.
3. Notice and Payment: We ensure the employee receives the legally required 30-day notice or the equivalent payment in lieu of notice.
4. Final Payments: We calculate and process all final payments, including outstanding wages, unused leave, and the correct severance amount. We make sure these are paid within the legal 14-day timeframe.
5. Clear Communication: We maintain clear and direct communication with you and the employee throughout the process to prevent misunderstandings.

Our goal is to make the process as smooth and clear as possible, protecting you from legal risks and ensuring your former employee is treated fairly according to the law.

Navigating South Korea's visa and work permit system is essential for any company looking to hire talent in the country. To legally employ someone in South Korea, they need the correct visa that permits work. The government links the right to work directly to a person's visa status and their employer. This means foreign nationals can only perform work that their visa allows and at the specific workplace approved by immigration. For any long-term employment, a proper work visa is necessary.

Employment visas & sponsorship realities

An Employer of Record (EOR) can sponsor work visas for your employees in South Korea, but there are practical limits. The EOR must be a registered legal entity in the country to sponsor foreign workers. This is the most common path for companies hiring full-time international talent.

Here are some key points about employment visas:

• E-7 Visa: This is a common visa for foreign nationals with special abilities and is designed for specific occupations that require specialized skills.
• Other E-series visas: South Korea offers a range of employment visas for different professions, such as professors (E-1), foreign language instructors (E-2), and researchers (E-3).
• Sponsorship is mandatory: For most long-term work visas, employer sponsorship is a requirement. Independent contractors or freelancers are not eligible for these types of visas.
• Location-specific: Work permits are often tied to a specific work location. If an employee needs to move to a different office or change employers, they may need to get approval from immigration authorities.

An EOR simplifies the process by managing the visa application, documentation, and ensuring compliance with South Korea's labor laws. This allows you to onboard talent without setting up your own local entity.

Business travel compliance

For short-term business trips, you need to follow a different set of rules. These visits are for activities like meetings, market research, or contract negotiations, not for paid work.

Here’s what you need to know for short-term visits:

• Visa-free travel: Many nationalities can enter South Korea for up to 90 days for business or tourism without a visa.
• Korea Electronic Travel Authorization (K-ETA): While typically required for visa-free entry, there is a temporary exemption for citizens of many countries, including the U.S., through December 31, 2025.
• C-3-4 Business Visitor Visa: For those not eligible for visa-free entry, the C-3-4 visa is for short-term business activities. It is important to note that this visa does not permit for-profit work.
• C-4 Short-Term Employment Visa: If the trip involves temporary paid work for up to 90 days, the C-4 visa is the appropriate choice.

Always check the latest requirements before traveling, as immigration rules can change. For any stay longer than 90 days, a visa is required.