Payroll & Employment Guide: South Korea

Employment Contract

Contracts may be full-time or part-time and either fixed-term or open-ended. All contracts must be written and specify:

• Working hours
• Compensation & pay terms
• Leave entitlements
• Notice periods
• Termination rules
• Social insurance coverage

Notice Periods

Minimum 30 days notice is required for most terminations.

Termination of Employment

Employment may end due to:

• Contract expiry
• Redundancy
• Mutual agreement
• Serious misconduct
• Performance grounds (with documentation)

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Employee Benefits

Mandatory Benefits

• Paid annual leave
• National Pension contributions
• Health Insurance
• Employment Insurance
• Industrial Accident Insurance
• Maternity & paternity leave

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Leave Policies

Annual Leave:

11 days for first year → increases with tenure (up to 25 days)

Sick Leave:

Not strongly mandated; depends on contract or company policy. Some illnesses covered under national health insurance.

Parental Leave:

• Maternity leave: 90 days (paid)
• Paternity leave: Up to 10 days (paid)
• Additional childcare leave available under statutory limits

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Healthcare

• Universal National Health Insurance (NHI)
• Employer and employee jointly contribute
• Many employers offer private top-up insurance

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Taxes in South Korea

South Korea uses a progressive income tax structure.

Personal Income Tax Rates:

~6% to 45% (progressive, varies by income level)

• 0% to 30% progressive slabs
• Lower tax rates up to higher income thresholds
• Applicable cess and surcharges may apply

Social Contributions:

Employers must deduct and remit:

• Employee National Pension
• Employee Health Insurance + long-term care
• Employee Employment Insurance

Employers also pay:

• Employer share of pension, health, employment, and industrial accident insurance

These deductions ensure compliant payroll under Indian tax law.

Payroll in South Korea

Employers must pay salaries according to the contract and ensure compliance with Korea’s strict payroll and social insurance requirements.

Base Salary

Must meet Korea’s statutory minimum wage.

Payment Schedule

• Typically monthly, on the same date each month
• Paid in KRW

Additional Payments

• Bonuses (common)
• 13th-month payments (not mandatory but practiced in some companies)

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Taxes and Social Security

Employer Contributions

Approx.9–12% of salary, including:

• National Pension (4.5% employer)
• Health Insurance (approx. 3.5%)
• Employment Insurance (0.9–1.5%)
• Industrial Accident Insurance (0.7–1%)

Employee Contributions

Similar contributions deducted from salary.

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Payroll Reporting

Monthly:

• Social insurance filings
• Tax withholding submissions

Annual:

• Year-end tax settlement
• Employee income certificates

Key Deadlines:

• Salary: Monthly fixed date
• Contributions: Monthly
• Annual payroll filings: As required by NTS

Payroll Currency: KRW

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Legal Regulations

Legal Regulations:

South Korea’s labour rules are defined by:

• Labour Standards Act
• National Pension Act
• National Health Insurance Act
• Employment Insurance Act
• Industrial Accident Compensation Act

Total Employment Cost:

Employer costs usually add 10–20% above gross salary

Minimum Wage:

KRW 10,000–10,500/hour

Probation Period: 3 months

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Work Permits & Visas for India

Foreign nationals require work authorization, such as:

Common Permits:

• E-7 (Specialty Occupation Visa)
• E-5 (Professional)
• D-8 (Investor / Foreign Direct Investment)
• Intra-company transfer routes

Processing involves employer sponsorship and documentation.

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Employer of Record (EOR) in South Korea

EOR services in South Korea enable businesses to hire employees quickly and compliantly without establishing a local Korean entity. This allows you to expand your team while avoiding complex administrative, payroll, and legal requirements.

Your EOR in South Korea handles:

• Legally compliant employment contracts aligned with Korean labor laws
• Payroll processing & tax withholding, including monthly reporting
• Social insurance contributions (National Pension, Health Insurance, Employment Insurance, Industrial Accident Insurance)
• Employee benefits management, including statutory and optional benefits
• HR administration, documentation, and employee support
• Full compliance with South Korean labor, tax, and social security regulations
• Onboarding and offboarding processes to ensure a smooth employee experience

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PEO Services in South Korea

PEO services in South Korea support companies that already operate through a local Korean entity but want to streamline HR functions, reduce administrative workload, and stay compliant with Korea’s detailed labor and tax regulations.

A PEO in South Korea manages:

• End-to-end HR processes, including employee records, onboarding, documentation, and day-to-day HR support
• Payroll processing & benefits administration, including tax deductions, social insurance contributions, and statutory leave
• Compliance and regulatory reporting, ensuring adherence to Korean labor laws and government requirements

• Employment contract drafting, updates, and ongoing contract management
• Employee lifecycle support, from onboarding to termination

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