Payroll and Benefits Guide - South Korea

South Korea
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Currency

South Korean Won (KRW)
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Capital

Seoul
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Employer Taxes

10.794% – 29.35%

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Date Format

yyyy/mm/dd
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

The country is famous for its K-Pop music industry, producing acts like BTS, Blackpink and Seventeen.

The world’s largest shopping complex, Shinsegae Centum City, is located in Busan, South Korea.

Traditional Korean clothing is called hanbok, and it is still worn on special occasions and during traditional festivals.

South Korea is home to major electronics companies like Samsung and LG.

The traditional martial art of Taekwondo originated in South Korea.

South Korea has 12 UNESCO World Heritage sites.

South-Korea

Contributions

Employee Payroll Tax

Contribution TypeRate
National Pension4.50%
National Health Insurance/td>3.545%
Long Term Care Insurance0.455%
Employment Insurance0.90%

Employer Payroll Tax

Contribution TypeRate
National Pension4.50%
National Health Insurance/td>3.545%
Employment Insurance1.15% – 1.75%
Long Term Care Insurance0.455%
Worker Accident Compensation Insurance0.644%-18.60%
Resident Tax0.50%/td>

Payroll

Payroll Cycle

The payroll cycles typically follow a monthly schedule, with payments usually on the last working day.

13th Salary

There are no legislations for 13th-month payments.

Work Hours and Week

In South Korea, the standard workweek consists of eight hours per day and 40 hours per week.

Overtime

All hours exceeding the standard 40 hours are paid as overtime and are regulated by employment contracts/collective agreements. In general, overtime is paid at 150.00% of the standard salary rate, increasing to 200.00% for night work (after 10 pm).
South-Korea

Leave

Paid Time Off

Minimum of 11 days paid leave a year, following the completion of one-year of service, in addition to public holidays.

Public Holidays

When specific public holidays occur on a weekend, they are observed on the subsequent working day as a replacement day off.

Sick Days

There are no statutory sick leave entitlements, however, it is common to give as a benefit.

Maternity Leave

All female employees are eligible for maternity benefits consisting of 90 days of paid leave, increasing to 120 days for multiple/complicated births. The maternity leave is generally taken 45 days before the due date and 45 days after.

The maternity payment is made by a combination of social security/governmental payments and employer payments. For larger companies in South Korea, the employer should pay the maternity pay at 100.00% of the regular salary rate for the first 60 days. After which, the social security/government will provide support allowance for the remaining 30 days (capped two million KRW per 30 days) and with the employer having the option to provide the sum of money for any difference to the employee’s regular salary rate. For small companies, the social security/government supports the employer throughout the 90 days.

Paternity Leave

The father is entitled to mandatory paid paternity leave of a total of 10 days, five paid by the employer and five days paid by the social security/government, from the date that the child is born up to 90 days.

Parental Leave

Parents of children under the age of eight can request a period of full-time or part-time childcare leave of up to one year. A request for leave should be sent to the employer at least 30 days before the start of the leave period, with an allowance paid by the social security/government.

With effect from 1st January 2022, should one or both parents take their parental leave during the first year of their child’s birth, both parents will be paid 100% of their monthly income, rather than as previously, only one parent received 100% while the other received a reduced payment of 80%.

Termination

Termination Process

The termination process is standard in South Korea and is usually based on two main reasons for termination. There is a requirement for the employer to prove a justifiable reason to terminate and that this reason is legally acceptable, as depicted within the Korean Labour Standards Act. Also, when laying off an employee in Korea, the employer must prove that an urgent managerial necessity exists before an employee is laid off.

Notice Period

According to South Korean general labor law, there is no mandatory notice period unless stipulated by your employment contract/company manual. However, it is common practice to provide one month’s notice.

Severance Pay

Employers must adopt a retirement benefit system. The default is the statutory severance pay system, whereby, upon the termination of employment for any reason (including employee resignation), where the employee has been employed for at least one year, the employee is entitled to severance pay of 30 days’ average wages (ie, all wages generally including any bonus paid within the previous 3 months) for each year of continuous service.

Probation Period

Probation Period

Probation periods in South Korea for permanent employees are optional and generally between one and three months. It is rare for employers to terminate a contract once the probation/training has been completed since the company must pay unemployment.

Immigration

Any foreigners coming to work in South Korea will need to be registered with the local immigration authorities within the first three months of their stay. The type of work permit and employment visa differs by the role in which the employee will be undertaking. To allow an employee to stay in South Korea for more than 90 days, the appropriate visa needs to be sought:

  • E-1 Professor Visa is aimed at foreigners to deliver lectures or do research in their field; it is valid for one year and can be renewed annually.
  • E-2 Foreign Language Instructor is aimed at foreigners who wish to teach a foreign language at a company/school/education infrastructure. It is valid for two years and can be renewed every two years.
  • E-3 Research is aimed at foreigners invited by a public or private institution to research natural science or advanced technology; it is valid for one year and can be renewed annually.
  • E-4 Technological Guidance is aimed at foreigners invited by a public or private institution to provide expertise in natural science or high technology; it is valid for one year and can be renewed annually.
  • E-5 Special Profession is aimed at foreigners that are architects, lawyers, physicians, accountants, and other internationally licensed professionals and hold Korean government permission to practice their field of expertise is valid for one year and can be renewed annually.
  • E-6 Culture and Art are aimed at foreigners who participate in musical, artistic, and literary activities; it is valid for one year and can be renewed annually.
  • E-7 Specially Designed Activities are aimed at foreigners invited to participate in activities designed by the Korean Ministry of Justice through a public or private organization. It is valid for one year and can be renewed annually.
  • D-5 Long-Term New Coverage is aimed at reporters working for foreign media (broadcast, newspapers, magazines, etc.). The single-entry visa is valid for three months and can be renewed in one-year intervals.
  • Alien Registration Card (ARC) Most people who are staying in South Korea for more than six months also need to obtain their Alien Registration Card (ARC).

VAT

The standard rate of VAT in South Korea is 10.00%.