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Employment Laws

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South Korea

Employment Laws in South Korea

Updated on:
16 Jan, 2024
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South Korea boasts a robust and dynamic economy with advanced infrastructure, a highly skilled workforce, and thriving industries. In 2022, the GDP in Korea was worth $1673.92 billion.

South Korea offers numerous opportunities for global business expansion, primarily contributed to by the nation’s technological prowess in the electronics, automotive, and telecommunications sectors. Companies such as Samsung, LG, and Hyundai have established themselves as global leaders in their respective fields, driving innovation and competitiveness on a global scale. 

While Korea is undoubtedly an attractive destination for innovation and growth, navigating the labor landscape of this region can be confusing at first glance. To help you with the same, we have provided a detailed look into the employment laws in Korea with this guide.

Contractual Agreements 

The Labor Standards Act governs contractual agreements in Korea and establishes employment standards, terms, and conditions in alignment with the Constitution. 

According to the contract employment law in Korea, the duration of a labor contract is generally limited to one year. Exceptions occur where there is no fixed term, or a fixed term is necessary to complete a specific project.

Additionally, employers are required to clearly state the following matters in writing when entering into a labor contract:

  • Wages
  • Contractual work hours
  • Holidays
  • Annual paid leave entitlements
  • Any other terms and conditions of employment.

Types of employment contracts 

In Korea, various employment contracts regulate the relationship between employers and employees. 

Fixed-term employment contracts

  • This type of contract specifies a fixed duration for employment, typically for a specific project or seasonal work.

Part-time employment contracts

  • Part-time employment contracts are for employees whose contractual work hours per week are shorter than those of a full-time employee in the same kind of work at the workplace concerned.

Dispatched worker contract

  • The dispatched worker contract involves a triangular relationship between the worker, the dispatching agency, and the host company, where the employee is sent to work.

Obligations and rights for both parties

Employers in Korea must provide a safe working environment, fair compensation, and adhere to local labor regulations. Likewise, employees have the right to timely payment of wages and protection from discrimination.

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Working Hours and Overtime

Working hours and overtime compensation in Korea are regulated by Chapter 4 of the Labor Standards Act.

Regular working hours

  • According to Article 50 of the Labor Standards Act, the standard working hours in Korea are 40 hours per week.
  • Employees should not be required to work for more than eight hours in a single day, excluding breaks.

Overtime regulations and compensation

  • The standard working hours may be extended up to 12 hours per week based on an agreement between the employer and the employee.
  • For extended work hours, employers must pay employees 50% of their ordinary wages in addition to their regular wages.
  • Employees are entitled to 50% of their ordinary wages for up to eight hours of holiday work.
  • For holiday work exceeding eight hours, employers must provide their employees 100% of ordinary wages.
  • For night work (10:00 pm to 6:00 am), employees are entitled to 50% of their ordinary wages.

Minimum Wage and Compensation

In South Korea, the minimum wage and compensation are regulated by the Minimum Wage Act. Under Article 8 of the Act, the Ministry of Employment and Labor has to determine the minimum wage by August 5 of every year. 

The minimum wage rate in 2024

  • As of 2024, the national minimum wage is 9,860 won per hour and 2,060,740 won per month.  

Factors affecting wage determination 

Wage determination in Korea is a complex process that takes into account multiple factors, such as:

  • The cost of living of employees
  • The wages of similar employees
  • Labor productivity and
  • Distribution of income, among others.

Employee Benefits and Social Security 

Employee benefits and social security in Korea encompass various aspects aimed at safeguarding the well-being of workers and providing them with essential support. 

Statutory benefits

Under the Korea labor law, there are five primary social security schemes. 

National health insurance

  • National health insurance plays a key role in enhancing public health and providing social security by covering a wide range of healthcare services. 
  • They include preventative treatment, medical treatment, diagnosis, childbirth, rehabilitation, and expenses related to injury and death.
  • Two main types of health insurance benefits in Korea are benefits in kind and cash.

National Pension

  • The National Pension System in Korea safeguards the retirement benefits of Korean citizens.
  • It ensures income security and promotes national welfare in various life circumstances, such as retirement, disability, or death.
  • Some key components of the National Pension Scheme in Korea are old-age pension, disability pension, and survivor’s pension.

Industrial Accident Compensation Insurance

  • This is a form of financial support aimed at enhancing the quality of life for workers by ensuring they receive optimal compensation, rehabilitation support, and welfare services in the event of work-related injuries and accidents.
  • It includes benefits such as care benefits, disability benefits, temporary incapacity benefits, survivor benefits, and nursing benefits, among others. 

Employment Insurance 

  • Employment insurance offers temporary income support to employees during unemployment, job search, or skill upgrading.
  • It includes benefits such as maternity and parental benefits and unemployment benefits.

Long-term care insurance

  • This is specifically designed to provide essential support to senior citizens facing challenges in their daily lives due to geriatric diseases and cerebrovascular issues. 
  • Two main benefits are provided under this scheme: home-based and institution-based benefits. 

Additional perks and benefits

  • The welfare of the aged
  • The welfare of the disabled
  • Child welfare
  • Female welfare
  • Basic livelihood protection
  • Medical aid

Social security contributions and requirements 

  • Both employees (4.5%) and employers (4.5%) must contribute to the National Pension Fund in Korea.
  • The monthly pension contribution is capped at 5,900,000 won, and the maximum monthly contribution for employees is 265,500 won (subject to change annually).
  • The applicable premium rate for the National Health Insurance is currently 8.008% of monthly wages.
  • The cost is divided equally between employers and employees, approximately 4.004% each.
  • The employee contribution rate for Employment Insurance (EI) is 0.90%.
  • However, the EI rate for employers ranges from 1.15% to 1.75%, depending on the number of employees and industry type.
  • Alongside the 0.90% contribution to EI, employers are mandated to allocate 0.25%~0.85% for employment stabilization insurance and occupational competency development insurance. 
  • Employers must contribute to the Worker’s Accident Compensation Insurance (WCI).
  • The contribution rate, ranging from 0.7% to 18.6% of total wages and payroll, is determined by the Social Security office based on the working environment and type of industry.

Vacations and Paid-Time Off

The Labor Standards Act and the Equal Employment Opportunity and Work-Family Balance Assistance Act govern annual paid and unpaid leave policies in Korea.

Annual leave entitlement 

  • The duration of annual paid leave for employees differs based on their tenure and attendance at their current company. 
Tenure of employment Duration of leave
Less than one year, or less than 80% of one year One paid leave for each month of continuous work
80% of one year 15 days
Three years 25 days

Public holidays and special leaves

The public holidays in South Korea are as follows:

  • New Year
  • Independence Movement Day
  • Children’s Day
  • Memorial Day
  • Constitution Day
  • Liberation Day
  • National Foundation Day
  • Hanguel Day
  • Christmas Day
  • Korean New Year
  • Buddha Day
  • Harvest Festival

Monthly Menstrual Leave

  • Under the labor laws of Korea, female employees are entitled to one day of menstrual leave per month.

Maternity leave

  • The labor law in Korea mandates 90 days of maternity leave for female employees.
  • If an employee is pregnant with two children, the maternity leave extends to 120 days.
  • In such cases, at least 45 days (or 60 days for pregnancies with two or more children) of the leave period must be taken before childbirth.

Paternity leave

  • Under the Korea labor law, employees are entitled to ten days of paid paternity leave.

Leave of absence for subfertility treatment

  • The labor laws of Korea mandate three days of leave per year for employees who undergo subfertility treatment.
  • The first day is paid leave, and the remaining two days are unpaid leave.

Childcare leave 

  • Employees are entitled to one year of childcare leave.

Family care leave

  • Under the employment laws in Korea, employees are entitled to 90 days of family care leave per year, which they can utilize on multiple occasions.
  • The minimum leave duration for each instance should be at least 30 days.

Termination and Severance

In South Korea, termination and severance are primarily governed by the Labor Standards Act. Article 23 of this Act prohibits employers from unjustly dismissing, laying off, suspending, or transferring a worker, reducing their wage, or implementing other punitive measures.  

Grounds for termination

An employer may terminate the contract of employment based on the following grounds:

  • Illegal activities
  • Misconduct
  • Apparent lack of ability to carry out duties
  • Physical disability
  • False statement of career experience
  • Urgent managerial needs

Notice period and severance pay

  • Under the labor law in Korea, if an employer plans to terminate an employee, they must provide the employee with a written notice of dismissal at least 30 days before the intended termination date.
  • Failure to provide this advance notice requires the employer to compensate the employee with a minimum of 30 days’ wage.
  • South Korea labor law does not mandate severance pay for employees.
  • However, employers must provide a certain amount of compensation to employees who have completed at least one year of service upon termination.
  • This compensation amounts to at least 30 days’ pay per year of service.

Discrimination and Equal Opportunity 

In South Korea, discrimination based on factors such as age, gender, and disability is prohibited by various laws, including:

  • Enforcement Decree of the Act of Prohibition of Age Discrimination in Employment and Elderly Employment Promotion
  • Enforcement Decree of the Equal Opportunity and Work-Family Balance Assistance Act and
  • The Anti-Discrimination Against and Remedies for Persons with Disabilities Act.

Employers must ensure compliance with all these relevant provisions to avoid any legal consequences.

Prohibitions against workplace discrimination

  • Under Article 6 of the Labor Standards Act, employers are prohibited from engaging in discriminatory practices based on gender, nationality, religion, or social status.

Health and Safety Regulations

  • The Occupational Health and Safety Act governs the health and safety regulations of employees at the workplace.

Stay Compliant with Skuad

Whether expanding your business overseas or managing remote teams across the globe, Skuad is the one-stop HR platform for all your needs. From effortless international hiring to streamlined payroll management and automated candidate screening, Skuad simplifies global HR compliance in 160+ countries, including South Korea. 

Don’t let the complexities of managing an international workforce hold you back any longer. 

Take the leap with Skuad and unlock the full potential of your global business expansion!

FAQs

Q1: What are the labor laws in Korea?

A1: The Labor Standards Act is the primary legislation governing labor relations in Korea. It covers various aspects, such as leave policies, working conditions, and overtime compensation.

Q2: What are the working rules in Korea?

A2: Under the labor laws of Korea, the standard working time is 40 hours per week.

Q3: What is employment like in South Korea?

A3: Employment in South Korea is characterized by long working hours, hierarchical workplace culture, and an emphasis on teamwork, among others.

Q4: What are the rules for termination of employment in Korea?

A4: Employers in Korea are required to provide justifiable cause for terminating an employee’s contract. These can be poor performance, misconduct, or economic reasons. Dismissal without valid cause is considered unfair and subject to legal challenge.

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EOR in 
South Korea
Monthly
best value
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
449
/month
(billed annually)
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limited-offer-banner
EOR in 
South Korea
Monthly
$
499
/month
(billed annually)
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
449
/month
(billed monthly)
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Employ contractors and employees in 160+ countries

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Table of Content

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