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Employer Of Record in South Korea

Employer Of Record (EOR) In South Korea

Skuad’s Employer of Record (EOR), South Korea, helps organizations expand their business in the South Korean market and enable them to recruit employees without actually establishing a company in South Korea. Skuad’s autonomous and progressive global HR platform helps to manage various organization activities like payroll, hiring and onboarding of talent, tax and employment law compliance, benefits, etc in South Korea.

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South Korea At A Glance

Population: 51.82 Million (2021)

Currency: Korean Republic Won

Metropolis: Seoul

Languages: Korean, English

GDP: 1.80 Trillion

Employment In South Korea

All employment and labor laws apply to both residents as well as foreigners. Let us take a closer look into the entitlements and laws pertaining to employment in South Korea. For establishing an organization in South Korea, it is compulsory to have complete knowledge of all the South Korean labor laws. However, these laws are complex and different from other countries. Therefore, it is advisable to get in touch with a Korean Employment Law Consultant who is well aware of all the rules and regulations of South Korea for both residents and foreigners to make the process simpler.

Entitlements Explanation
Statutory Working Hours 8 hours per day and 40 hours per week.
Overtime Eligibility An employee can work overtime for 12 hours per week. But, the employer must pay an extra 50% of the wage in the case of overtime work by an employee.
Paid Public Holidays The list of public holidays in South Korea is provided below:
  • New Year: January 1
  • Lunar New Year (Seollal): December 31 to January 2 (According to the Lunar Calendar).
  • Independence Movement Day (Sam Il Jul): March 1.
  • Children's Day (Uhrininal): May 5.
  • Buddha's Birthday: April 8 (According to Lunar Calendar).
  • Memorial Day: June 6.
  • Independence Day (Kwang Bok Jul): August 15.
  • Harvest Moon Festival (Chuseok): August 14 to August 16 (According to the Lunar Calendar).
  • National Foundation Day (Kae Chun Jul): October 3.
  • Christmas: December 25.
Holiday Pay The mandatory paid holidays for employees are -
  • Sunday
  • Labour Day: May 1

Employees are entitled to 50% extra wage for working eight hours and 100% extra wage for working more than eight hours on holidays.

Employees who have worked for a whole year can avail 15 days of annual paid leave.

Employees who don’t complete a full year of work or have an attendance of less than 80% in a year can avail of one day of annual leave for each month of full employment with total attendance.

After one year of service, employees can avail of an additional paid vacation day for every 2 years of service after that, for a maximum of 25 days.

Medical Leave Employees are entitled to take time off in the case of work-related injury or sickness as per the Rules of Employment. However, employees are not permitted to take time off in case of any non-work-related injury or sickness.
Maternity Leave

Women employees can avail of 90 days of maternity leave and 120 days in case of the birth of twins. But, the employers must pay for a minimum of 60 to 75 days if the maternity leave is available in the case of twins. The remaining 30 to 45 days will be paid for by the government.

Employees can avail maternity leave in the case of premature birth and miscarriages too.

  • 5 days of leave for 11 weeks of pregnancy.
  • 10 days of leave for employees entering into the 12th to 15th week of pregnancy.
  • 30 days of leave for employees entering into the 16th to 21st weeks of pregnancy.
  • 60 days of leave for employees entering into the 22nd to 27th week of pregnancy.
  • 90 days of leave for pregnancies that lasted for 28 weeks and above.
Annual Leave Accrual Entitlemen The annual leaves are provided to the employees based on the duration of their service.
  • Employees can avail one day of annual leave in their first year if they have completed one month of work.
  • After the employees get 80% of attendance or above in the first year, they can avail of 15 days of leave in the following year.
  • The number of annual leaves increases every two years up to a maximum of 25 days.
Here’s a table for the annual leaves of an employee in South Korea :
Year of Service Days of Leave
1 1
2 15
3 15
4 16
5 16
6 17
- -
- -
22 25
Leave Expiry An employee has the privilege to get full bEmployees must remember that if they don’t use their annual leaves in a particular year, the unused leaves do not add up in the following year. The leaves expire and employees must pay wages for the expired leaves too. However, employers need not pay wages for the unused leaves if they follow these steps:
  • The employer should inform employees about the number of unused annual leaves and send a notice asking them to submit a leave plan of using the remaining leaves.
  • The employee doesn’t submit a leave plan or avail of any leave despite such notice.
  • The leave notice must be provided within six months before the annual leave expires.
Leave Cash Out The leave cash out or severance payment are paid at the time of termination regardless of the reason for termination. The leave cash out is equal to the minimum 30 days of wages for each year of continuous employment
Accrued Leave At Termination Accrued leave is paid at the time of termination of employment. Accrued Annual Leave is based on the years of continuous employment and is capped at 25 days per year.
Employee Protection and Anti-discrimination Rights The South Korean Constitution and Labour Standards Act strongly condemn discrimination against employees based on their gender. Based on the Work-Family Balanced Assistance Act and Equal Employment Opportunity:
  • Employers are responsible for preventing sexual assaults and harassment at the workplace.
  • Employers must maintain safe and pleasant working conditions.
  • Employers must prohibit gender discrimination in recruitment, promotion, retirement, employment, and so on.
  • Employers must educate employees at least once a year on the prevention of sexual assaults.
  • The Equal Employment Act forbids employers from taking any harmful measures if an employee files a complaint.
Confidentiality of Personal Information According to the Personal Information Protection Act (PIPA),
  • The employee has the right to question, ask for corrections, or suspend the use of his/her personal information by the employer.
  • An employer must take the consent of an employee before collecting, processing, or transferring the employee’s personal information.
  • The employer is responsible for storing and protecting the employee’s personal information.

To ensure compliance with the South Korean employment laws, Contact Skuad.

Contractors Vs. Full-time Employees

During the hiring process, the most tricky situation that an employer faces is whether to choose contract employees or full-time employees. A contractor promises better pay and works for a specific time, whereas a full-time employee is a long-term worker who depends entirely on the employer. However, both contractors and full-time workers have their own pros and cons, so it is essential to carefully choose either of them depending on different aspects such as situation, work nature, tasks, strategies, comfort, etc.

The table given below portrays the differences between a contractor and a full-time employee.

Full-time Employees Contractors
1) Full-time employees follow specific work timings set by the employer. 1) Contractors have their own work hours.
2) Before joining, employees go through a training period. 2) Contractors do not receive any training.
3) Employees receive payroll. 3) Contractors receive payment only after the delivery of their service.
4) Employees depend entirely on their employers. 4) Contractors take complete responsibility for their work.
5) Employees have job security. 5) Contractors do not have job security.
6) Employees follow a sequence to complete a set of tasks. 6) Contracts have a flexible working style.

Both employees and contractors are different from each other. However, from a business perspective, it is better to hire contractors initially and turn them into full-time employees.

Perks of hiring a contractor and turning them into a full-time employee

  • You can have a secured customer base and intellectual property.
  • The process of recruitment becomes much easier.
  • It saves you a lot of time and money.
  • There is less scope for lawsuits and legal action.
  • It ensures instant productivity and can expand your entity in a short span.

Hiring In South Korea

The hiring process in South Korea is not too different from that of any other country. However, there are several employment laws that are responsible for the relationship between employers and employees. The employment landscape in South Korea is governed by laws such as the Act on Equal Employment and Support for Work-Family Reconciliation, the Framework Act on Employment Policy, the Employment Security Act, and so on.

According to the South Korean employment laws, it is mandatory to have an employment agreement with the employees. Skuad makes sure that the employment contract meets all the requirements for every employee. However, the recruitment process is the same for full-time employees as well as contractors.

The step-by-step process of the recruitment process is as follows

Step 1: Korean Language Entrance Examination (EPS TOPIK).

Step 2: Medical Examination.

Step 3: Job Application.

Step 4: Job Seekers Record is sent to Human Resource Development (HRD) Korea.

Step 5: Job Seekers Record is approved by HRD Korea.

Step 6: Employers apply to the Ministry of Employment and Labour (MOEL) for foreign worker employment.

Step 7: Selection of employees by the employer and allotting of employment permits by MOEL.

Step 8: Signing of the employment agreement of South Korea at EPS Korea.

Step 9: Employer applies for the Certificate of Confirmation of Visa Issuance (CCVI), and the Ministry of Justice issues the certificate.

Step 10: The employees arrive in South Korea.

Step 11: Training of employees.

Step 12: Employees receive work.

Most companies hire their workforce through popular job search platforms. Some of the best job searching platforms for employment in South Korea are JobKorea, Jobplanet.com, Seramin, Alba.co, Findjobs.co.kr, Jobs in Korea, Glassdoor, Craigslist and more.

There are several benefits and disadvantages to hiring employees through job portals. Below is a table showing the pros and cons of hiring through job searching platforms.

Pros Cons
1) It’s cost-effective. 1)It is tricky to measure their effectiveness and talent.
2) Saves a lot of time. 2)There is a lot of scope to attract fraud applicants.
3) Makes the recruitment process simple. 3) Technical issues and glitches.
4) Ability to reach a wider audience across the world. 4) It is not the most professional way of hiring.
5)Online hiring provides a means of communication with employees. 5) May end up missing good employees in this process.

If you are concerned about this crucial process, partnering with Skuad’s local HR will take care of all matters related to overseas employment. Skuad enables organizations to hirehires talented full-time employees and contractors and onboards them to South Korea with employment contracts that obey all the local laws via its unified employment platform. Its global HR platform also takes care of payrolls and manages all the legal and administrative issues such as documentation, taxation, compliances, etc.

For more information and queries, talk to Skuad’s experts by submitting your personal information here.

Probation And Termination

The standard probation period in South Korea is between three to six months, and, in some cases, it can end up being two years. For more information on the probation of employees in South Korea, connect with Skuad by booking a demo.

Termination of employment

Topics Explanation
Notice For Termination Of Employment in South Korea Based on the laws of South Korea, employers cannot fire, suspend, transfer, cut payoff, or lay off employees without a strong reason. Employees must receive termination 30 days in advance. However, employers need not issue a notice in the following cases -
  • If the employee has been working for less than 3 months.
  • If it is difficult to maintain business due to natural disasters, bankruptcy, armed conflict, or other unavoidable reasons.
  • The employee commits any wrongful act intentionally that affects the business or organization badly.

EOR Solution South Korea

Working with an Employer of Record Service (EOR) in South Korea will ensure that you do not face any logistical and legal issues while expanding your market in South Korea. Skuad helps you deal with various aspects such as hiring employees, securing work permits, making sure all the employment laws are obeyed, onboarding, payroll services, contracts, taxation, etc., so that you can run your business in South Korea without any legal and regulatory challenges.

Outsourcing employment through an Employer of Record

Before expanding your entity in South Korea, it is crucial to decide whether you want to hire employees from your own company or outsource employees through an EOR to fulfill your duties.

Types Of Visas In South Korea

Visa Category Explanation
E-5 Professional Under the South Korean laws, the E-5 Professional visa is for national certificate professionals who engage in professional work such as medical, accounting, law, etc. It is valid for up to one year.
C4 Short Term Employee This visa is for employees who wish to work in South Korea for less than 90 days. C4 Short Term Employee Visa is for people who work in industries like modeling, music, arts, advertising, etc.
H1 Working Holiday Visa This visa is for people who want to work for a short term in South Korea along with a signed MOU or other Working Holidays Policy Agreements.
D-7-1 Intra Company Transferee Visa (Foreign Company) This visa is for people with at least one year of work experience at a foreign company who has been transferred to their respective branch in South Korea.
D-8-4 Technology and Business Startup Visa This visa is for people who have technical skills or intellectual property along with a bachelor’s degree or higher educational qualification.
D-7-2 Intra Company Transferee (Domestic Company) This visa is for people who have worked in an overseas company for a minimum of one year and have been transferred to the headquarters in South Korea for training purposes.
D-8-2 Business Venture This visa is for people who have established a business venture in South Korea.

How to obtain a South Korean visa

The employees are required to submit the following documents to obtain a work visa.

  1. Employment Contract
  2. Letter of Assignment
  3. The certificate of establishment of an organization
  4. A copy of a license
  5. Degree certificate
  6. Visa application
  7. A standard photocopy
  8. A passport copy

Learn more about work visas in South Korea by reaching out to Skuad.

Work Permit In South Korea

South Korea doesn’t have a concept of work permits. The immigration process only requires visas. For more details regarding work permits, reach us through Skuad.io.

Payroll And Taxes In South Korea

As an overseas organization, you should be aware of all the payroll and tax information before setting up a payroll in South Korea. By partnering with an EOR such as Skuad, the EOR provides payrolls for all the employees in South Korea along with taxes, security payments, and so on.

There are four types of payroll in South Korea.

  1. Remote Payroll
  2. Fully Outsourced Payroll
  3. Internal Payroll
  4. Local Payroll

Remote Payroll - When an overseas company payrolls resident employees in South Korea, it is called Remote Payroll.

Fully Outsourced Payroll - When an organization outsources the payroll of their employees to a third-party company that takes care of the payroll, it is called Fully Outsourced Payroll.

Internal Payroll - Large organizations run their own payroll outsourcing in South Korea for their employees to grow their entity; this is called Internal Payroll.

Local Payroll - When an organization takes the help of a local company to manage its payroll processes, but the organization remains responsible for compliance issues, it is called Local Payroll.

Taxation in South Korea

The table given below lists the taxes in South Korea:

Rate of Income Tax Percentage (Including Local Income Tax)
Upto 12 million KRW 6%+0.6
12 - 46 million KRW 15%+1.5%
46 - 88 million KRW 24%+2.4%
88 - 150 million KRW 35%+3.5%
150 - 300 million KRW 38%+3.8%
300 - 500 million KRW 40%+9.4%
500 million KRW and above 42%+17.4%
National Pension 9% up to 4.86 million KRW
National Health Insurance 6.6% of monthly payroll + 10.2% of health insurance premium for long-term care insurance
Unemployment Insurance 1.6% of monthly payroll
Industry Accident Compensation Insurance 0.7% to 34% (Based on the industry)

Incorporation

There is no limit to business opportunities in South Korea. Before setting up a business in South Korea, you must consider various factors such as the type of your business, trade agreements, legal laws, taxes, language, cultural factors, free economic zones, the hiring process, and so on. Based on the subsidiary laws of South Korea, you have a choice in setting up any of the business structures such as a company, a foreign branch, or a liaison office. However, each business structure comes with its own set of subsidiary laws.

The process of incorporating a holding company in South Korea is as follows:

  • Create your Company Seal.
  • Select a bank for Capital Deposit.
  • Register your entity.
  • Register at the Court Registration Office.
  • Complete your Business Registration.
  • Pay the Social Security Registration fee.
  • Establish your workplace.
  • Fulfill the employment rules.

However, establishing a company in South Korea is not as easy as it sounds. Skuad makes the process simple for you by taking the responsibility of an EOR and helping you in successfully expanding your business in South Korea. Learn more about Skuad here.

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