Employer of Record in South Korea

Employment Laws and Regulations in South Korea

South Korea’s employment framework is governed primarily by the Labor Standards Act (근로기준법, enforced by the Ministry of Employment and Labor), with additional statutes covering retirement benefits (Employee Retirement Benefit Security Act), non-discrimination (Equal Employment Opportunity and Work-Family Balance Assistance Act), and minimum wage (Minimum Wage Act). Korean labour law provides strong employee protections, especially around dismissal, working hours, and the 52-hour weekly cap. Companies hiring through an employer of record in South Korea outsource these detailed compliance obligations to a local team that is registered with the Ministry of Employment and Labor and holds the permits needed to run payroll and sponsor visas.

Employment Contracts

Labor Standards Act Article 17 requires employers to specify working conditions in writing at the time of hiring, covering wages, working hours, paid holidays, and annual paid leave. The contract must be delivered to the employee and should be in Korean, though bilingual Korean/English contracts are standard practice for foreign-invested companies. Both fixed-term and indefinite-term contracts are permitted under the Act on the Protection, etc. of Fixed-term and Part-time Workers; a fixed-term employee who has worked continuously for more than two years must generally be converted to an indefinite-term employee unless a statutory exception applies (Paul Hastings: South Korea Employment Law).

Working Hours and Overtime

The standard Korean workweek is 40 hours across five days, with a daily limit of 8 hours under Labor Standards Act Article 50. Employers must give at least a 30-minute break for shifts over four hours and a one-hour break for shifts over eight hours. Overtime must be mutually agreed in writing and is capped at 12 hours per week, giving a hard ceiling of 52 total working hours per week for all businesses with five or more employees. Overtime, night work, and holiday work premiums are set out in Article 56 of the Labor Standards Act.

Managerial and supervisory staff covered by Article 63 are exempt from working-hour limits and overtime premiums, but they remain entitled to night-work premiums. Korean employers cannot buy their way out of the 52-hour cap, even with employee consent; breaches can result in criminal penalties under Article 110 of the Labor Standards Act.

Minimum Wage

The statutory minimum wage for 2026 is KRW 10,320 per hour, up 2.9% from KRW 10,030 in 2025. Based on the standard 209 working hours per month (40 hours a week plus 8 weekly paid rest hours), the monthly minimum wage equates to KRW 2,156,880. The rate was set by the Minimum Wage Council on 10 July 2025 and formally notified by the Ministry of Employment and Labor, effective 1 January 2026 (Korea.net: 2026 Minimum Wage). The minimum wage applies uniformly across all industries and regions and covers both Korean and foreign workers, including those on E-7 and E-9 visas.

Probation Period

The Labor Standards Act does not cap the probation period, but Korean labour market practice sets the standard probation at 3 months, with up to 6 months accepted for senior or complex roles. The probation clause must be written into the employment contract or the company’s rules of employment (취업규칙) to be enforceable. During probation, an employee with less than 3 months of continuous service may be dismissed without the 30-day notice under Article 26 of the Labor Standards Act, but broader unfair-dismissal protections still apply once the probation exceeds 3 months, and Korean courts have consistently ruled that probationary dismissal still requires “justifiable cause.”

Leave Entitlements

South Korea’s statutory leave framework is set by the Labor Standards Act and the Equal Employment Opportunity and Work-Family Balance Assistance Act, and funded partly by Employment Insurance for parental leave. Annual leave accrues from the first month of service, statutory maternity leave runs for 90 days, and paternity leave was doubled to 20 days in early 2025.

Annual Leave

Under Labor Standards Act Article 60, an employee who completes one full year with at least 80% attendance is entitled to 15 days of paid annual leave. Employees in their first year accrue 1 day of leave per completed calendar month (up to 11 days). From the fourth year of service, employees earn 1 additional day of paid leave for every 2 further years of tenure, capped at 25 days per year. Unused leave can be paid out at year-end as a leave allowance (연차수당) when the employer has complied with the mandatory leave-usage notice procedure.

Sick Leave

There is no statutory paid sick leave in South Korea for non-work-related illness, and employers are not required to grant paid time off for personal illness. Employees usually apply their annual paid leave to cover sickness absences. For work-related injuries or illness, Industrial Accident Compensation Insurance pays medical expenses and wage replacement, and the employer must grant the time needed for recovery under Article 23 of the Labor Standards Act, which prohibits dismissal during a work-injury recovery period plus 30 days thereafter.

Maternity Leave

Female employees are entitled to 90 days of paid maternity leave (120 days for multiple births) under Labor Standards Act Article 74, with at least 45 days (60 for multiple births) taken after the birth. The first 60 days are paid by the employer at 100% of ordinary wages (small and medium-sized enterprises can claim reimbursement from the government up to a cap); the remaining 30 days are paid by Employment Insurance. From 23 February 2025, maternity leave is extended to 100 days if the newborn requires neonatal intensive care (Lockton: South Korea Family Leave).

Paternity Leave

Under the 2025 amendment to the Equal Employment Opportunity and Work-Family Balance Assistance Act, paternity leave was doubled from 10 to 20 days with effect from 23 February 2025. Fathers may split the leave into up to four separate periods and must use it within 120 days of the child’s birth. The leave is fully paid, with Employment Insurance covering the wage support for eligible small and medium-sized enterprises for the full 20 days.

Other Statutory Leave

• Parental (childcare) leave: Up to 1 year of unpaid leave per parent for each child under 8 years old or in the second grade of elementary school (extended to 12 years old under the 2025 amendment), funded by Employment Insurance.
• Family care leave: Up to 90 days per year to care for a sick family member, unpaid at the employer level but partly subsidised by Employment Insurance.
• Menstrual leave: 1 day per month of unpaid menstrual leave under Article 73 of the Labor Standards Act, on request.
• Voting, reserve forces training, and civic-duty leave: Paid time off for voting, reserve military training, and mandatory civic duties as required under Korean law.

Korean leave entitlements are governed principally by the Labor Standards Act and are funded through a mix of employer payroll and Employment Insurance. The summary table below consolidates the statutory minimums so employers can see, at a glance, how much paid time off a South Korean hire is entitled to. The most important takeaway is that annual leave accrues from the very first month of work, unlike many countries that require a qualifying period.

Statutory Employee Benefits

Beyond paid leave, Korean employers must provide a specific set of statutory benefits. Most are funded through the Four Major Insurances (4대보험), administered by separate government agencies, plus a mandatory retirement benefit governed by the Employee Retirement Benefit Security Act.

• National Health Insurance (NHIS): Mandatory coverage for all employees and dependants, including long-term care insurance. Employer and employee each contribute approximately 4.0674% of the monthly wage in 2026 (National Health Insurance Service).
• National Pension (NPS): Retirement pension contributions of 9% of eligible monthly income, split equally between employer and employee, with a scheduled increase to 13% by 2033 (National Pension Service).
• Employment Insurance (고용보험): Covers unemployment benefits, job training, and parental leave payments. Employee pays 0.9%; employer pays 1.15–1.75% depending on company size.
• Industrial Accident Compensation Insurance: Fully employer-funded at 0.7–1.9% of payroll depending on industry risk classification; employees pay nothing.
• Retirement pension (퇴직연금) or severance reserve: Employers must maintain either a Defined Benefit or Defined Contribution retirement pension plan, or a statutory severance reserve, under the Employee Retirement Benefit Security Act, accruing at least 30 days’ average wage per year of service.
• Meal and transportation allowances: Not mandatory, but widely paid as non-cash benefits; up to KRW 200,000 per month of meal allowance is exempt from income tax (PwC Korea: Individual Deductions).

Recent Regulatory Updates (2026)

Several employment-law changes took effect in 2025 and 2026 that affect employer of record payroll and HR workflows. Paternity leave was extended from 10 to 20 days under the 2025 amendment to the Equal Employment Opportunity and Work-Family Balance Assistance Act (effective 23 February 2025), the qualifying child age for reduced working hours during childcare was raised from 8 to 12, and maternity leave was extended to 100 days where the newborn requires neonatal intensive care.

The 2026 minimum wage was officially notified by the Ministry of Employment and Labor on 5 August 2025 at KRW 10,320 per hour (2.9% higher than 2025) with effect from 1 January 2026. The National Pension contribution rate is scheduled to rise by 0.5 percentage points per year until 2033, starting with the 9.5% total rate for 2026, in line with the pension reform passed by the National Assembly in March 2025 (Lockton: NPS Rate Increase).

Separately, the flat 19% foreign-worker income tax election was extended once again and remains available to foreign employees who begin Korean employment on or before 31 December 2026, for up to 20 years from the first day of Korean work.

Work Permits and Visas in South Korea

Work Permit Requirements

Who Needs a Work Permit

Any non-Korean national who wants to work in South Korea must hold a visa that explicitly permits employment. Tourist (B-2), short-term business (C-3-4), and student (D-2) visas do not authorise paid work. Permanent residents (F-5), marriage migrants (F-6), and overseas Korean (F-4) visa holders can work without sponsorship. All other foreign employees need an employer-sponsored visa, most commonly the E-7 Specially Designated Activities visa for professionals or the D-8 corporate investment visa for executives of foreign-invested companies.

Eligibility and Required Documents

For the most common employer-sponsored category, the E-7-1 professional visa, the applicant must hold a recognised bachelor’s degree plus at least one year of relevant work experience, or a three-year associate degree plus three years of relevant experience, or at least five years of verifiable experience in the designated occupation. The standard application package includes a passport, the sponsoring employer’s business registration certificate, the employment contract, proof of the applicant’s degree and career history (with apostille or consular authentication), and the Certificate of Eligibility application (사증발급인정서 신청서) filed at the local immigration office.

Processing Time and Validity

Certificate of Eligibility processing normally takes 2–4 weeks at the Korea Immigration Service. Once issued, the applicant converts the certificate into a visa at the Korean embassy or consulate in their home country in 1–2 weeks. The initial E-7 visa is issued for up to 2 years and can be renewed, with the first 90 days of residence triggering the alien registration card (외국인등록증) requirement at the local immigration office (HiKorea: Korea Immigration Service).

Renewal Process

E-7 renewal applications must be filed at least 2 months before the visa expires, with the renewed employment contract, updated payroll records, and tax and social insurance payment proofs. The Korea Immigration Service verifies that the sponsoring employer is still active, meets the minimum-wage threshold for the E-7 category (KRW 31.12 million per year for E-7-1 in 2026), and has no outstanding labour complaints. Employees can continue working during renewal review provided the application was filed before expiry.

Common Visa Types for Foreign Workers

South Korea’s work visa framework is governed by the Immigration Act and administered by the Ministry of Justice through the Korea Immigration Service. An employer of record that holds a registered Korean office can sponsor most of the employment-based categories below; some long-term residency visas (F-2, F-5) must be applied for by the individual once eligibility conditions are met.

• B-2 Tourist visa: Short-stay tourism only; no paid work permitted.
• C-3-4 Short-Term Business: Meetings, market research, contract negotiation; no paid employment.
• D-2 Student visa: Full-time degree study; limited part-time work only with prior immigration office approval.
• D-10 Job-seeker visa: Up to 6 months to job-hunt in Korea; not a work permit itself.

How an EOR Handles Work Permits

An employer of record in South Korea can act as the sponsoring entity for most employment-based visas, including E-7 Specially Designated Activities and D-7 Intra-Company Transfer. The EOR prepares the Certificate of Eligibility application, files it at the local immigration office, and supplies the sponsoring company’s business registration, tax payment certificate, and financial statements that immigration officials review. Once the Certificate is issued, the employee applies for the visa at the Korean embassy in their home country. Work-visa hires extend the onboarding timeline described in the Typical Onboarding Timeline section by four to eight weeks, depending on nationality and the current processing queue at the Korea Immigration Service. For highly regulated categories such as E-9 Employment Permit System workers, a local Korean entity is generally required and an EOR cannot act as sponsor.

Payroll, Taxes, and Social Security in South Korea

Employer Contributions

Korean employers contribute to the Four Major Insurances and must also maintain a retirement pension plan for employees with at least one year of service. The 2026 rates for the National Pension Service and National Health Insurance Service apply from 1 January 2026 and are cited from the respective agency notices.

Employee Contributions

Korean employees contribute to three of the Four Major Insurances through monthly payroll deduction. They do not contribute to Industrial Accident Compensation Insurance, which is fully employer-funded. The long-term care insurance component is itemised separately on the payslip but calculated as a fixed percentage of the NHIS contribution.

Income Tax

South Korea applies progressive national income tax rates from 6% to 45% on residents, plus a 10% local income tax that is calculated on the national tax due (not on taxable income), administered by the National Tax Service. The thresholds below are annual taxable income figures. Foreign employees may elect, in writing, a flat 19% income tax rate for up to 20 years from first Korean employment, provided employment began on or before 31 December 2026 (PwC: Korea Individual Taxes).

Add a flat 10% local income tax on top of the national tax liability, so the effective top marginal rate for a resident is 49.5%. Withholding is calculated monthly using the Simplified Tax Withholding Table published by the National Tax Service, and reconciled through the year-end tax settlement each January.

Payroll Cycle

Korean payroll is almost always monthly and paid by bank transfer into the employee’s Korean bank account. Pay days are typically set for the 10th or 25th of the month, and employers must deliver a Korean-language payslip showing gross pay, the four major insurance deductions, national and local income tax withheld, and net pay. Withheld income tax is paid to the National Tax Service by the 10th of the following month, and Four Major Insurance contributions are paid to the respective agencies by the same deadline. Year-end tax settlement for employees is filed by the end of February, and the individual income tax return (종합소득세) is due by 31 May for anyone with additional income beyond employment.

13th Month Salary and Bonus Pay

A 13th month salary is not mandatory in South Korea under the Labor Standards Act. Most Korean employers, however, pay seasonal bonuses around the Lunar New Year (Seollal) and Chuseok holidays, and it is common in multinational companies to structure compensation as 12 months of base salary plus 1–3 months of performance bonus. When paid, these bonuses are taxable as ordinary employment income and subject to the same Four Major Insurance contributions as base salary. Some Korean employers also pay an annual leave allowance (연차수당) for unused paid leave at year-end; this is an entitlement under Labor Standards Act Article 60 when the employer has complied with the mandatory leave-usage notice procedure.

Cost of Hiring Through an EOR in South Korea

EOR Service Fees

EOR service fees in South Korea typically range from $300 to $600 per employee per month, with most providers billing a flat monthly rate rather than a percentage of salary. The fee covers employment contracts, payroll processing, tax and social insurance filings, statutory benefits administration, and HR support. Visa sponsorship, background checks, additional benefits administration, and severance accrual funding may carry additional set-up charges, but day-to-day compliance is included in the standard monthly fee.

Total Employment Cost Breakdown

The table below illustrates the full employer cost of hiring a South Korean employee on an annual gross salary of USD 60,000 (roughly KRW 82 million at the assumed rate), including the Four Major Insurances, the retirement pension reserve accrued under the Employee Retirement Benefit Security Act, and the EOR service fee. Figures are converted at 1 USD ≈ 1,370 KRW, April 2026.

The worked example shows the total employer cost for a USD 60,000 gross salary reaches roughly 29% above base, driven primarily by the retirement pension reserve (8.33%) and the Four Major Insurances. The EOR fee is typically the smallest category in percentage terms for mid-range salaries, while the retirement reserve and national pension are the two largest.

Ready to hire in South Korea? Get started with RemotePeople. We handle employment contracts, payroll, tax withholding, and full South Korea compliance. No local entity needed.

Benefits of Using an EOR in South Korea

Korean labour law is highly protective, Four Major Insurance filings are monthly, and the retirement pension system adds an extra layer of compliance that catches out foreign buyers. An employer of record turns that complexity into a predictable monthly invoice. The benefits below are the reasons most companies choose an EOR over opening a Korean subsidiary for their first few hires.

• Speed to market: You can onboard a South Korean employee in 1–2 weeks through an EOR, compared with the 2–3 months typically needed to incorporate a Korean corporation, register with the National Tax Service, and open the social insurance accounts.
• Compliance assurance: The EOR handles the Labor Standards Act, the Employee Retirement Benefit Security Act, and the Four Major Insurances filings, shielding you from the fines and criminal sanctions attached to Korea’s labour and tax statutes.
• Cost efficiency for small teams: A monthly EOR fee of $300–$600 is cheaper than running a Korean entity with its own tax agent, labour attorney, office lease, and HR headcount for fewer than 15 hires.
• Local expertise: EOR providers in South Korea have Korean-language HR teams who know how to draft a valid 근로계약서, file the monthly 원천징수 (tax withholding) return, and navigate the 연말정산 year-end tax settlement.
• Scale flexibility: You can add or release employees through an EOR without the cost of winding down a Korean corporation; Korean entity dissolution requires Supreme Court Registry filings, tax clearance, and a public notice period of at least two months.
• Risk mitigation: The EOR absorbs the employer-side misclassification risk under Korea’s strict worker-classification tests, plus the severance and retirement-pension accrual risk under the Employee Retirement Benefit Security Act.
• Employee experience: Workers receive a Korean employment contract, enrolment in all Four Major Insurances, and the statutory retirement pension, which means the same benefits framework as employees of a local Korean company.

Hiring through a reliable employer of record in South Korea lets you focus on product and go-to-market while local experts handle payroll, tax, and Korean labour compliance.

Termination and Offboarding in South Korea

Notice Periods

Under Labor Standards Act Article 26, an employer must give at least 30 calendar days’ advance notice before dismissal, or pay 30 days’ ordinary wages in lieu of notice. The notice period does not apply to employees who have worked continuously for less than 3 months, or where the dismissal is for just cause attributable to the employee and mutually confirmed in writing. Korean courts apply a strict “justifiable cause” test to all dismissals beyond the initial 3 months of service, so notice alone does not make a dismissal lawful.

Dismissals for just cause still require written notice of the reasons, and collective dismissals trigger a 50-day consultation period with the labour representative and a Ministry of Employment and Labor notification. Mutual-agreement terminations (권고사직) remain the most common way Korean employers end employment while avoiding unfair-dismissal litigation.

Severance Pay

Severance pay (퇴직금, toejikgeum) is mandatory for employees who have completed at least one year of continuous service and who work 15 hours or more per week (averaged over 4 weeks), under the Employee Retirement Benefit Security Act. The statutory minimum is 30 days of average wage per year of continuous service, pro-rated for partial final years, and must be paid within 14 days of the employee’s last working day unless a written deferral agreement is signed.

Calculation Method

Severance is calculated as “average wage × 30 days × continuous years of service.” The average wage is the total wages earned in the 3 calendar months preceding the last working day, divided by the number of days in that period, and it includes overtime pay, bonuses earned during those months, and annual leave allowance. The examples in the table above apply this formula to standard tenure tiers; partial final years are pro-rated to the day.

Caps and Exceptions

There is no statutory cap on severance; the entitlement grows linearly with tenure. However, employees with less than one year of service or who work fewer than 15 hours per week (on a 4-week average) are excluded. Severance can be funded through a Defined Benefit or Defined Contribution retirement pension plan, which many Korean employers now use in place of the traditional in-house reserve. Dismissal for just cause does not remove the severance obligation; severance is paid regardless of the reason for termination.

Grounds for Termination

Korean dismissal law is built around the “justifiable cause” standard in Article 23 of the Labor Standards Act. Acceptable grounds include gross misconduct, repeated poor performance despite documented warnings and improvement plans, criminal conduct that affects the employment relationship, and economic redundancy that meets the four criteria in Article 24 (urgent managerial need, effort to avoid dismissal, fair selection standards, and consultation with worker representatives). Protected categories include employees on maternity, paternity, or childcare leave, workers during the post-injury recovery period, union representatives during their term, and employees who have reported labour-law violations to the Ministry of Employment and Labor. Unfair-dismissal claims can be filed with the Labor Relations Commission within 3 months of the termination date.

EOR vs. Other Hiring Models in South Korea

EOR vs. Setting Up a Local Entity

An EOR wins on speed and cost for small teams, and removes the need to understand Korean corporate and tax filings from day one. A local Korean corporation becomes the better option once a team exceeds roughly 15 employees or the business needs a local bank account, office lease, or Korean government contracts. Some companies start with an EOR for market testing and migrate to a corporation once headcount justifies the ongoing administrative overhead.

The EOR’s monthly per-employee fee scales linearly with headcount, while a Korean corporation’s fixed overhead (tax agent, office lease, HR, legal) is relatively constant. At around 15–20 local hires, the two cost curves usually cross, which is why many EOR clients use the model as a 12–36 month bridge while they prove commercial traction.

EOR vs. Hiring Independent Contractors

South Korea applies a “reality over form” test when classifying workers. Korean courts and the Ministry of Employment and Labor look at factors such as who sets the work schedule, whether the worker uses the company’s tools, the degree of integration into the hiring company’s organisation, whether the worker is economically dependent on the principal, and the duration of the engagement. If a contractor relationship is deemed to be de facto employment, the hiring company can be liable for back-dated social insurance contributions, unpaid wages, severance, and administrative fines from the Ministry of Employment and Labor, so contractor arrangements are only appropriate for genuinely independent, project-based work.

Because Korean misclassification enforcement has tightened since the 2022 Supreme Court decisions on platform workers, an EOR is the safer choice for any role that would otherwise look like employment. RemotePeople’s contractor management solution covers genuinely independent engagements where a contractor relationship is appropriate, while the EOR model covers everything else.

EOR vs. PEO (Professional Employer Organization)

South Korea does not have a separate PEO licence or regulated co-employment framework. The domestic equivalent is a labour-dispatch (파견) arrangement under the Act on the Protection of Dispatched Workers, which is heavily restricted to specific occupations and limited to two years. In practice, foreign companies without a Korean corporation choose an EOR; those with an existing Korean entity use payroll outsourcing or an HR services provider rather than a US-style PEO.

The EOR model is the right choice when you do not have a Korean corporation, while a PEO-style arrangement only becomes relevant once a Korean entity already exists. For most inbound market-entry scenarios, EOR is the faster, cheaper, and more compliant path to hiring.

Public Holidays in South Korea

South Korea has 11 statutory public holidays in 2026, with substitute Mondays granted when certain holidays fall on a Saturday or Sunday under the Regulation on Closure Days for Public Offices. All holidays are paid days off for private-sector employees under Labor Standards Act Article 55.

Work performed on any of the above holidays must be paid at 150% of ordinary wage for the first 8 hours and 200% beyond 8 hours, under Labor Standards Act Article 56. Payroll teams should also watch for the substitute Monday (대체공휴일) rules and the three-day Seollal and Chuseok clusters, which significantly reduce productive days in February and September.

How to Get Started with an EOR in South Korea

• First, define the role and compensation: Draft a job description, target annual salary in KRW, and start date. RemotePeople uses this to size the Four Major Insurance contributions and the retirement-pension reserve for your cost estimate.
• Second, request a quote: Send the role details and any planned benefits to your RemotePeople account manager. We return a gross-to-total cost breakdown within 24 hours, including the EOR fee, payroll taxes, and statutory benefits.
• Third, sign the EOR agreement: Once you approve the quote, we sign a service agreement with your company and begin drafting the Korean employment contract for your hire.
• Fourth, onboard the employee: RemotePeople delivers a bilingual Korean/English employment contract, obtains the employee’s signature, registers them with NPS, NHIS, EI and IACI, and confirms the start date.
• Fifth, run payroll and stay compliant: RemotePeople processes monthly Korean payroll, files taxes and Four Major Insurance contributions, and issues the employee’s year-end tax settlement, while you focus on managing the work.

Ready to hire in South Korea? Contact RemotePeople to get a personalised EOR quote and start building your South Korea team in as little as two weeks.

Building a wider East Asia team? RemotePeople also supports hiring through our Japan EOR, Singapore EOR, China EOR, and Taiwan EOR services, so you can standardise contracts, payroll, and compliance across the region.