A valid employment contract in South Korea must be in writing and clearly outline essential employment terms, including job duties, wages, working hours, rest periods, annual leave entitlements, and conditions for termination. The contract must comply with the Labor Standards Act, which sets minimum standards, and should be provided in Korean or both Korean and English for foreign employees, ensuring mutual understanding and legal validity.
Employer of Record (EOR) South Korea
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Globaine takes care of all compliance matters, including payroll, taxes, and legal obligations, while providing seamless hiring processes. Our platform ensures that every aspect of employee management in South Korea is handled efficiently and in full compliance with local regulations.
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The most affordable solution on the market, saving you time and money.
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We draft bilingual contracts that meet South Korean labor laws.
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in South Korea
An Employer of Record (EOR) is a third-party organization that manages all legal and administrative responsibilities of employing staff on behalf of another company. This includes payroll, tax compliance, employment contracts, benefits administration, and adherence to local labor laws. An EOR allows businesses to hire employees in new countries without establishing a local entity, enabling faster and compliant global expansion.
An EOR in South Korea helps businesses navigate strict labor laws, manage compliance requirements, and expand operations without establishing a local entity. EOR providers handle payroll, severance pay, employee benefits, and tax filings, enabling companies to scale efficiently while minimizing administrative burdens.
Employers are legally obligated to issue a written employment contract to the employee before their first working day. This written agreement prevents misunderstandings and ensures both parties are aware of their rights and responsibilities under South Korean labor laws.
Salary must be clearly stated in South Korean won (KRW), detailing all components, such as base pay, allowances (e.g., transportation or housing), overtime pay rates, and any performance or annual bonuses. Employers typically specify a monthly payment schedule in employment contracts, following the standard payroll frequency in South Korea.
Employment contracts in South Korea can include non-compete, confidentiality, and intellectual property clauses, especially for roles handling sensitive information or company secrets. These clauses must be reasonably limited in duration and geographic scope to be legally enforceable in South Korea. Employee consent is crucial, as restrictive clauses are carefully evaluated by the courts for fairness.
in South Korea
1. What are the key steps in employee onboarding in South Korea?
Onboarding in South Korea includes gathering a Resident Registration Number (RRN) for citizens or an Alien Registration Number (ARN) for foreign employees, which is essential for tax and social insurance registration. Employees must also set up a South Korean bank account for payroll deposits. During onboarding, it’s common to provide training on company policies, health and safety standards, and any specific job-related instructions.
2. When should employees complete pre-hire medical checks in South Korea?
Pre-hire medical checks are not universally required but are essential for certain roles, especially in healthcare, food services, and manufacturing sectors. Medical evaluations typically focus on physical and mental fitness and should be completed before employment begins to ensure compliance and suitability for the job.
3. What documents are required for onboarding in South Korea?
Onboarding documents include the signed employment contract, RRN or ARN, personal identification, South Korean bank details, and any work visas or permits for foreign nationals. Employers must register employees with the National Pension Service, National Health Insurance, and Employment Insurance System within 14 days of the employee’s start date.
4. Why businesses in South Korea need EOR services?
5. How does EOR in South Korea different from other countries?
in South Korea
The standard salary structure involves a monthly base salary, and allowances such as transportation or meal stipends. Many employers offer bonuses twice a year (summer and end-of-year), often tied to individual performance or company profit. Employees who have completed at least one year of service are entitled to severance pay equal to one month’s average wages per year of employment.
Employers are expected to reimburse remote employees for work-related expenses, which may include internet, phone, or utility costs if specified in the employment agreement. Payroll processing for remote workers remains the same, with monthly salary payments, applicable deductions, and tax withholdings.
For 2024, the minimum wage is KRW 9,860 per hour, translating to a monthly minimum of around KRW 2,062,320 for full-time employees, based on a 40-hour work week.
in South Korea
1. What are the income tax rates in South Korea?
Non-residents are subject to a flat 20% tax on income earned within South Korea, with no progressive tax rates. They are exempt from local income tax surcharges but must still report income and settle taxes to the NTS.
2. How does the tax system apply to non-residents?
Non-residents are typically taxed at a flat rate of 15% or the resident rate, whichever is higher, on their Singapore-sourced income. This ensures that both residents and non-residents contribute fairly to the country’s revenue.
3. When should tax returns be submitted?
Tax returns are filed by May 31 for the previous calendar year. Employers generally handle monthly tax withholdings, but individuals with additional income or tax credits must file an annual return.
4. What social security contributions are required?
Employers and employees contribute to four mandatory programs: health insurance (4.495% for both), pension (4.5% each), unemployment insurance (up to 1.3% employer-only), and industrial accident compensation (0.7-18.7%, employer-only). These contributions ensure access to benefits like healthcare, pensions, and worker protections.
in South Korea
After one year of service, employees are entitled to 15 days of paid annual leave, increasing by one day for every additional two years of employment, up to a maximum of 25 days. New employees can also receive one day of leave per month, up to 11 days, in their first year.
Employees may start using their annual leave after their first year of service. However, new hires are typically allowed one day of leave per completed month in the first year.
South Korea mandates 90 days of paid maternity leave (60 days at the employer’s expense, the rest covered by insurance) and 10 days of paid paternity leave. In addition, employees can request up to a year of unpaid childcare leave, available until the child turns eight.
There are 15 official public holidays, including New Year’s Day, Lunar New Year, Chuseok, and National Liberation Day. Companies generally provide paid leave on these holidays, although specific entitlements depend on company policy.
in South Korea
1. What benefits are mandatory in South Korea?
South Korea requires employers to contribute to the national pension, health insurance, unemployment insurance, and industrial accident compensation programs, which form the core of the employee benefits package. Together, they offer healthcare, income protection, and retirement security.
2. How are housing allowances structured in South Korea?
Housing allowances are optional but common, especially in Seoul and other high-cost regions. Employers often provide subsidies to cover part of the employee’s rental or housing costs, sometimes offering direct housing options instead.
3. When should meal allowances be provided in South Korea?
While meal allowances are optional, many companies offer daily meal stipends, typically capped at KRW 10,000 per day, which is tax-exempt within government-set limits.
4. What additional benefits are common in South Korea?
Many employers offer additional benefits like private health insurance, transportation subsidies, wellness programs, and educational assistance for employees’ children.
FAQs
1. What is EOR in South Korea?
An Employer of Record (EOR) in South Korea enables companies to hire employees without the need to establish a local entity. The EOR manages compliance tasks, including payroll processing, tax filings, and benefits administration, ensuring adherence to South Korean labor laws.
2.How long does it take to hire employees through Globaine's EOR in South Korea?
The hiring process can be completed in as little as 5 to 10 business days, depending on the necessary documentation and local requirements.
3. What types of contracts are available for employees in South Korea?
Employees can be hired under various contract types, including full-time, part-time, fixed-term, and temporary contracts, each complying with South Korean labor laws.
4. Can Globaine handle complex employment scenarios in South Korea, such as drafting bilingual contracts and managing terminations?
Yes, Globaine is equipped to manage complex employment situations, including creating bilingual contracts that meet local standards and overseeing termination processes in compliance with South Korean labor laws.
6. How does Employer of Record work in South Korea?
An EOR in South Korea acts as the legal employer, managing payroll, social contributions, and compliance with labor laws. By ensuring adherence to regulations such as severance pay and employee protections, the EOR allows businesses to hire and manage employees seamlessly in South Korea.
