Hire, manage, and pay employees in South Korea

You can hire in South Korea either by setting up a local legal entity or by using an Employer of Record (EOR).

With your own entity, you register with the National Tax Service (NTS), enroll employees in the four major social insurances, and manage compliance with laws like the Labor Standards Act yourself.

With an EOR such as Rippling, the EOR becomes the legal employer in South Korea. They handle employment contracts, payroll, taxes, and social insurance while you manage the employee’s day to day work. This is usually faster and less complex if you are just entering the market or have a smaller team.

Under Korean law, employees receive statutory protections, while independent contractors do not.

• Independent contractors set their own hours, use their own tools, can subcontract work, often work for multiple clients, and usually perform project-based or time-limited work. They handle their own taxes and social security.
• Employees work under the employer’s direction regarding when, where, and how they work, use company tools, cannot subcontract their duties, and usually work continuously for one employer. They are entitled to benefits, severance, and employment protections under the Labor Standards Act.

If you manage someone like an employee but call them a contractor, courts may treat them as an employee, which can trigger back pay, unpaid benefits, and penalties for misclassification.

Employers must pay at least the national minimum wage and follow strict rules on wage payment timing and methods. Most employees are paid monthly, on a fixed date, and wages must be paid in full and directly to the worker.

You are also responsible for calculating and paying your share of social insurance and withholding the employee share. Typical employer contributions include:

• National Pension
• National Health Insurance and Long Term Care Insurance
• Employment Insurance
• Industrial Accident Compensation Insurance
• Resident (local) tax

You must withhold employee contributions to those programs and also withhold and remit national and local income taxes on a progressive rate schedule.

The standard workweek is 40 hours, usually five days of eight hours each. Hours beyond this count as overtime, which is generally capped at 12 hours per week. Some sectors can exceed this if employees receive at least 11 hours of rest between shifts.

Key rules include:

• Overtime is paid at least 1.5 times the regular hourly wage, with higher rates for night work and public holidays.
• Employees working at least 4 hours get a 30 minute break; at 8 hours they get at least a 1 hour break.
• Employees must receive at least one rest day per week.
• Annual leave starts at 11 days and scales up with years of service for employees who maintain at least 80 percent attendance.
• There are statutory entitlements for maternity, paternity, parental, adoption, and childcare leave, plus protections like breastfeeding breaks after maternity leave.

At will employment does not exist in South Korea. Employers must have just cause and follow fair procedures to terminate an employee. Valid reasons include serious misconduct, underperformance that has been documented, or genuine business needs like restructuring.

Key termination rules:

• At least 30 days’ notice or 30 days’ pay in lieu is required, except in serious misconduct cases.
• Severance pay is mandatory for employees with at least one year of continuous service and is typically one month of average wages per year of service, paid within 14 days of termination.
• Poorly documented or arbitrary terminations can be ruled invalid, leading to reinstatement or compensation.

Many foreign employers use an EOR to help manage just cause standards, notice, and severance so terminations stay compliant with Korean labor law.