Global PEO Services (GPS) helps companies hire employees in South Korea without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in South Korea, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with South Korea labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in South Korea. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
South Korea - Country Overview
South Korea is a trading and economic hub in the Eastern and Central Africa along with growing transportation facilities, and thriving financial/communication services. The country has an innovative market-based economy with a liberal foreign trade policy. South Korea mainly relies on foreign assistance for developing its economy as more than 60% of its industries are owned by enterprises overseas. The combined value of imports and exports equals 40% of GDP, which again reflects the significance of foreign trade. Due to its fast-paced industrialization, South Korea is an ideal destination for foreign investors for setting up their operations.
South Korean Won
A democratic republic with 3 principal branches of government: executive, legislative, and the judiciary.
Gyeonggi, Jeju, Gangwon, South Gyeongsang
Employment Contracts in South Korea
Employers must enter into work contracts with their employees that specify:
- Work hours
- Wages, and
- Working conditions
Contracts must specify the minimum conditions mandated by law. The labor law doesn’t make any distinction between contracts, be it for part-time, permanent, or temporary employees.
Working Hours in South Korea
The standard work schedule is 8 hours per day and 40 hours per week, though the law also has provisions for flexible work hours. Employers can ask employees to work beyond the normal work hours without paying overtime, provided that the average weekly hours over 2 weeks don’t go beyond 40 and that no workweek goes beyond 48 hours. Work hours can exceed 52 hours a week or 12 hours a day if workers’ representatives agree and the average weekly hours over 3 months don’t exceed 40. The law has provisions for increasing the flexible work – from 2 weeks to 1 month (under employment rules) and from 3 months to 1 year (under a workplace agreement).
Under a Working Hours Savings System, employees can take leave in lieu of compensation for their night shifts or an extended holiday. They can also work on an extended holiday or do night shifts to make up for time used for leave. Workers’ representatives and employers can come up with work arrangements based on a particular company’s situation.
Overtime is hours worked beyond the standard work schedule of 40 hours per week. Work hours are averaged over 2 weeks or more under a flexible work schedule. Employees receive 1.5 times of regular wages for overtime work or compensatory time off if workers’ representatives agree.
Employers can’t ask employees to work more than 12 hours of overtime in a week. Women are not allowed to work for more than 2 hours of overtime each day or 6 hours per week.
Employee Leave in South Korea
Leave due to Sickness
Employers need to pay employees for sick leave only when it is an occupational injury or illness. Many employers offer paid sick leave after receiving proof of illness from a doctor.
Employers need to provide 1 day of menstruation leave per month to a female worker upon request.
Child Care Leave
Women with children less than 3 years old qualify for 10 and half months of child care leave that is paid by the Employment Insurance Fund and maternity leave.
Benefits are 40% of normal wages and must be a minimum of 500,000 won/month and a maximum of 1,000,000 won/month.
Every worker, regardless of sex, qualifies for child care leave. If both parents work, combined leave cannot be more than 2 years, i.e., 1 year for each parent. Any employer that refuses to provide child care leave may be penalized up to 5 million won. Childcare leave should be given to eligible employees and must be registered in each employee’s work record.
Fathers can take 3 days off within the initial 30 days after childbirth.
South Korean men are required to serve 2 years of military duty, and complete periodic training conducted later on. Employers can’t penalize employees for work days missed due to military service. A skills-retention subsidy is provided to companies that assist veterans with high school diplomas to develop their vocational skills.
Pregnant women get 90 days of maternity leave, a minimum half of which should be taken after delivery. Employers are required to pay standard wages to a worker on maternity leave for the first 60 days. Thereafter, the Employment Insurance Fund covers the remaining wages if the woman has contributed to the fund for a minimum of 180 days by the end of the leave. These benefits also apply to women who go through stillbirths or miscarriages with slight adjustments.
Employers must give employees who are pregnant with 2 or more fetuses 120 days of paid maternity leave that can be used after or before birth.
Women with children aged less than 1 year can take 2 paid nursing recesses of maximum 30 minutes each workday.
Employee Benefits in South Korea
The current legal retirement age is 61 and will rise to 65 by 2034. The National Pension Scheme is a social insurance program that receives equal contributions from employees and employers. Maximum contribution that can be made are 9% that is divided equally between the employee and the employer.
Both employers and employees contribute to state pension service. The national pension scheme is administered by the National Pension Service (NPS). All employees whether Koreans or foreigners aged between 18 and 59 who work or live in South Korea are required to contribute to the NPS. A company with 5 or more employees must begin making contributions to the NPS. Otherwise, employees need to manage their own contributions individually.
Employer contributes 2.995% of regular monthly wage.
Workplaces and businesses employing 1 or more regular workers are required to subscribe to employment insurance.
Both employers and employees contribute 0.65% of the total wage individually. An additional contribution called ‘occupational ability development’ ranges from 0.25 – 0.85% based on the company’s size.
Workplaces and businesses with 1 or more regular workers are required to subscribe to industrial accident compensation insurance.
The employer contributes from 0.6 to 0.34% of the total wages, depending on the business type.
Employers are required to subscribe to the Industrial Accident Compensation Insurance system, which offers benefits to workers who sustain work-related diseases or injuries. Premiums are decided by the Ministry of Employment and Labor on the basis of employers’ accident records.
Proof of negligence on employer’s behalf is not required for granting compensation, but additional damages can be demanded in civil court in cases related to negligence. Any compensation awarded in civil court will be drawn from worker’s salary.