Global PEO in South Korea
There are plenty of reasons to do business and hire employees in South Korea.
The country boasts the world’s tenth largest economy, making it a leading business destination in East Asia.
South Korea is also one of the most connected countries in the world. 96% of people use the internet. And inhabitants get to enjoy the world’s highest average internet connection speed.
Its population of 50 million — who generally enjoy a high standard of living — are renowned for being well-educated and having a strong work ethic.
There’s really never been a better time to tap into the potential of this thriving country.
Want to expand into South Korea? With a PEO like Skuad, you can hire South Korean employees and reach a new market. Check out our services here.
What is a PEO?
PEO stands for professional employer organization.
Companies use PEO services when they want to outsource HR functions.
A PEO takes on responsibility for a company’s sourcing, onboarding, benefits and even payroll, meaning a business doesn’t need its own HR team.
Companies also use PEO services to hire internationally.
If you wanted to hire employees in South Korea, for example, a PEO would legally hire staff on your behalf. They’d also manage all local HR, tax and labor law responsibilities associated with those employees.
Ultimately, a PEO makes it easier for a company to build a talented, global team.
Want to start hiring and doing business in South Korea? Find out if a PEO in South Korea is right for your business by chatting to one of the Skuad team today.
What are the benefits of using a PEO provider in South Korea?
Hire the best South Korean (and international) talent
Remote working is here to stay. So why not make the most of it?
Rather than hiring from a local talent pool, cast your net across the whole of the world, to find the very best people for your business.
A PEO can help you to hire talent in South Korea (and beyond), safe in the knowledge that you’re ticking all of the boxes with regards to payroll, tax and employment laws in South Korea.
Become a globally competitive employer
When you’re hiring in South Korea, a little local knowledge goes a long way.
A PEO understands statutory requirements and employee expectations – so you can craft a competitive benefits package sure to persuade the right people on board.
By offering the right salaries, perks and paid leave for each new location, you can turn your business into a globally competitive employer, able to attract top talent the world over.
Avoid setting up your own legal entity in South Korea
The alternative to using PEO services in South Korea? Setting up your own legal entity.
To do this you’ll need to:
- Register as an international business and set up a South Korean subsidiary
- Recruit a legal team
- Ensure your HR team have the knowledge they need to run payroll and manage compliance in South Korea
- Invest a lot of time and money in the process
For many businesses, this is time and money they can’t afford. Luckily, with the help of a professional employer organization in South Korea, you can skip this whole process.
A PEO like Skuad already has their own legal entity in South Korea. This means they can act as an employer of record in South Korea, legally hiring and paying employees without the hassle.
Want to know more about how an EOR in South Korea works? Check out our handy EOR guide.
Gain insight into new markets
Nothing beats local insight. When you recruit South Korean talent, you really get to maximize opportunities in the South Korean market.
You’ll get to know local customers and cultural quirks quickly, and find it easy to tailor your product, service and strategy.
Getting your head around tax requirements and employment laws in your own country can be tricky enough. Understanding requirements in a new country – like South Korea – is an even bigger and more complex task.
It can also be very stressful. Fail to stick to the local laws and your business faces strict fines and penalties.
With a PEO you get peace of mind. Your PEO partner takes responsibility for compliance, and can advise you of your obligations at every step of the HR and payroll process.
They’ll be able to tell you all of the following about payroll and labor law in South Korea:
Payroll in South Korea
- The local currency in South Korea is the South Korean Won (KRW).
- The minimum wage in South Korea is 8,720 KRW (around $6.90) per hour.
- Employees in South Korea are paid on a monthly basis, usually on the last day of the month.
- The standard working week in South Korea is eight hours per day, up to 40 hours per week.
- Employees can work a maximum of 12 overtime hours per week, taking their weekly total up to 52 hours. Overtime is generally paid at 150% the usual salary, rising to 200% for night time work.
South Korea tax rates and contributions
Employee tax contributions
In South Korea, income tax is charged according to eight tax bands. The following rates include a 10% local residence tax charged at all salary levels.
- Up to 12 million KRW: 6.6%
- 12 million to 46 million KRW: 16%
- 46 million to 88 million KRW: 26.4%
- 88 million to 150 million KRW: 38.5%
- 150 million to 300 million KRW: 41.8%
- 300 million to 500 million KRW: 44%
- 500 million to 1 billion KRW: 46.2%
- 1 billion + KRW: 49.5%
Employee payroll contributions
Employees in South Korea make the following payroll contributions:
- 4.5% - National pension (monthly contribution capped at 5,030,000 KRW)
- 3.825% - National health insurance (monthly contribution capped at 7,047,900 KRW)
- 6.86 – Long term care insurance (monthly contribution capped at 345,600 KRW)
- 0.8% - Employment insurance
This totals 15.99% in employee payroll contributions.
Employer payroll contributions
Employers of South Korean employees make the following payroll contributions:
- 4.5% - National pension (monthly contribution capped at 5,030,000 KRW)
- 3.83% - National health insurance (monthly contribution capped at 7,047,900 KRW)
- 5.76% - Long term care insurance (monthly contribution capped at 345,600 KRW)
- 1.05% to 1.65% - Employment insurance
- 0.7% to 18.6% - Worker accident compensation insurance (calculated depending upon the type of business)
- 0.5% - Resident tax
Total employer contributions fall between 16.34% and 34.84% of an employee’s salary.
South Korea corporate tax rate
In South Korea, the corporate tax rate is charged at a progressive rate, ranging from 10% to 25%.
Paid leave in South Korea
There are 12 paid public holidays in South Korea.
Annual leave: Employees in South Korea are entitled to a minimum of 11 days paid leave per year, plus public holidays. After two years of service, this entitlement rises to 15 days per year. From the third year of service onwards, one day of leave is added to the entitlement every two years, up to a maximum of 25 days paid leave per year.
Sick leave: There is no statutory sick leave entitlement in South Korea.
Maternity leave: Women are entitled to 90 days paid maternity leave and generally take 45 days before and 45 days after the birth of their child. Rates and responsibility for payment vary depending upon the size of a company.
Paternity leave: Men are entitled to 10 days paid maternity leave, five of which are paid by the employer and five of which are paid by social security.
Parental leave: Parents with children under the age of eight can take full or part time parental leave for up to one year. Social security pays a parental leave allowance.
Skuad can take care of all employment law and tax compliance – so you don’t have to. Book a platform demo to find out more.
What does it cost to build a team in South Korea?
The cost of operating as an international business in South Korea – and hiring a team there – depends upon which of the following two options you choose.
Company incorporation in South Korea
A popular choice with large enterprises looking to build a long term presence in South Korea, company incorporation can be costly and time consuming.
In South Korea, company registration costs can quickly spiral. Budgets have to factor in:
- Legal fees
- Travel costs
- Office space costs
- Banking costs
- HR training costs
Partnering with a PEO in South Korea
With a PEO in South Korea, you can build a South Korean team at a fraction of the cost involved in setting up a legal entity.
This makes it a more viable choice for smaller businesses and any organization that values its agility.
So what does a PEO service cost? Prices vary depending on the PEO provider and package, but here at Skuad prices start from $199 per employee, per month. This includes:
- Employer of record services
- Payroll, benefits and onboarding management
- Your first hire for free
- South Korean labor law compliance
- Free global payments
- Same day platform onboarding
Sign up to the Skuad platform and you can hire your first South Korean employee within a matter of days.
Ready to start onboarding and paying employees in South Korea? Schedule a Skuad demo to see our platform in action.