Discover an employer’s guide to employment laws, regulations, and Employer of Record (EOR) in South Korea.
Looking to hire in South Korea? An EOR can help.
If you’re looking to expand into South Korea, an Employer of Record (EOR) service can help you hire, onboard, and manage employees without you needing to establish your own entity.
An EOR serves as the legal employer for your employees in South Korea, overseeing payroll processing, benefits administration, tax management, and more. This means you can outsource time-consuming tasks without worrying about maintaining compliance with South Korean employment laws.
In short: By leveraging an EOR to streamline and automate global employee management, you can avoid the complications of international labor law and concentrate on what truly matters.
How to hire in South Korea
Step 1: Decide between creating an entity and using an EOR
You have two options when it comes to hiring in South Korea: You can either set up a local entity or use an EOR.
Setting up a local entity provides greater control over your operations in the long term. However, it can be time-consuming, costly, and complex in early stages as you have to register your business with the government, appoint directors, and navigate tax regulations.
The process can take several weeks or months to complete which can delay your hiring plans in South Korea. Furthermore, establishing an entity means you are directly responsible for compliance with all local employment laws and regulations.
Using an EOR allows you to bypass the complexities of South Korean employment laws. You can onboard new talent quickly, automate key HR functions, and reduce your risk by outsourcing compliance requirements.
Generally, if your headcount is substantial and you intend to build a significant presence in the region, setting up a local entity might be the right choice. However, if you’re looking for a faster and simpler way to hire in South Korea, an EOR is the better solution.
Step 2: Finding the right EOR
When choosing the right EOR for your business, several factors need careful consideration. Selecting the wrong provider can result in compliance problems, unnecessary expenses, and a poor experience for your new employees. Here’s what to look out for:
- Legal compliance: Ensure the EOR has extensive knowledge of South Korea’s labor laws, employee protections, tax regulations, and localized benefits. Check their record and ask about their experience with industry-specific scenarios.
- Customer service: Assess whether they offer continuous support and assign dedicated account managers for each client. For instance, Multiplier provides 24/7 personalized support (no automated systems) and assigns dedicated managers to each account.
- Transparent pricing: Be wary of EOR services with low initial costs but hidden fees or complex pricing structures. Clarify all associated costs upfront before making your decision.
- Total cost of ownership: Sometimes opting for the lowest price isn’t the best strategy as cheaper solutions can end up costing more if they are ineffective. When selecting an EOR, make sure you are investing in a quality service that fits your budget without compromising on essential features.
Step 3: Employing and onboarding in South Korea
Send over a contract
Once you’ve identified the ideal candidate – and the right EOR – you need to send them a locally compliant employment contract. Multiplier can create contracts that fully comply with South Korean law in under five minutes.
You can customize the terms of employment, including job responsibilities, working hours, remuneration, and termination conditions. Then, once the contract is prepared, your EOR will securely send it and obtain the necessary signatures.
Enhance compensation with benefits
Looking to offer a competitive benefits package? Instead of navigating local vendors yourself, you can look to an EOR to provide locally administered package options. This service can also arrange for employees to receive the IT assets they need to start working.
Get all your documentation in order
You’ll need to gather the new hire’s tax and banking information. If you’re using an EOR like Multiplier, this information will be automatically collected to set up payroll. Multiplier will handle all required documentation directly, ensuring a seamless process throughout.
Though onboarding employees in South Korea might seem challenging, an EOR can make the process straightforward and stress-free.
Step 4: Run payroll for employees based in South Korea
Managing payroll for employees based in South Korea requires careful attention to local tax rates and mandatory contributions. South Korea has a progressive income tax system with rates ranging from 6% to 45%, depending on income levels.
Employers are also responsible for mandatory contributions to the National Pension Service (NPS) and the National Health Insurance (NHI) scheme.
The NPS is South Korea’s public pension system, designed to provide retirement benefits to employees. Employers must contribute a set percentage of an employee’s salary to their NPS account.
Meanwhile, NHI provides health coverage. Employers are required to contribute to this scheme, which helps fund services and ensure that employees have access to necessary medical care.
Navigating these regulations can be complex and time-consuming, especially for multinational companies managing a workforce in South Korea.
Using an EOR like Multiplier simplifies this process by managing accurate and timely salary payments while handling all local taxes, contributions, and withholdings. With Multiplier’s global payroll solution, you can streamline payroll management for all your international employees from a single platform and avoid the need to coordinate with multiple local providers.
Employ top talent in South Korea through an EOR
Onboard, pay, and manage all your international employees
Employment laws and regulations in South Korea
South Korea has a comprehensive set of regulations governing employment. Here’s a brief overview of some key employment laws and regulations you should be aware of:
- Labor Standards Act: This foundational legislation governs employment conditions, including working hours, rest periods, overtime pay, and termination procedures.
- Written employment contracts: Employers are required to provide written contracts that detail the terms of employment, including job duties, salary, working hours, and termination conditions. These contracts must comply with the Labor Standards Act and other relevant regulations.
- Employee rights and protections: South Korean law provides various rights and protections to employees, including a safe and healthy work environment, compliance with minimum wage laws and transparent pay practices, protection against discrimination and harassment, and the right to join labor unions.
- Employment Insurance Act: This act provides employees with unemployment benefits and support during job loss. Employers contribute to the Employment Insurance Fund, which helps provide financial assistance and job-seeking support for unemployed workers.
- Equal Employment Opportunity Act: This legislation mandates equal pay for equal work, ensuring that men and women receive the same compensation for comparable duties and responsibilities.
Employee benefits and compensation
In South Korea, the current minimum wage is KRW 9,620 per hour. South Korean labor laws also stipulate several employee benefits including:
- Annual leave: Employees are entitled to at least 15 days of paid annual leave, which increases with years of service.
- Sick leave: While there is no specific statutory provision for paid sick leave, employers are encouraged to provide paid sick leave as part of their benefits package.
- Parental leave: Employees in South Korea are entitled to 90 days of paid maternity leave and 10 days minimum paternity leave.
Employers often enhance these statutory benefits with additional perks to attract and retain top talent. Explore Multiplier’s Global Benefits Administration to provide locally compliant and competitive benefits to your international employees.
Termination and offboarding procedures
When terminating employment in South Korea, employers must navigate regulations concerning notice periods and severance pay. The standard notice period is usually 30 days, although it can vary based on the terms of the employment contract. Severance pay is mandated and typically equivalent to one month’s salary for each year of service.
Specific procedures apply in cases of redundancy, such as during company restructuring or economic downturns. Employers may opt to provide notice pay instead of working through the notice period, but this must be detailed in the employment contract.
These processes can be complex and time-consuming, particularly for international employers who are not familiar with South Korea’s labor laws.
An EOR, such as Multiplier, can significantly simplify this process. By managing the offboarding procedures, an EOR ensures that all termination activities comply with local regulations and provide a seamless transition for both the employer and the departing employee.
Visa and work permit assistance
Hiring foreign workers in South Korea requires securing the appropriate visas and work permits. The type of visa needed depends on factors such as the nature of the job, the duration of employment, and the nationality of the employee.
Here are the main visa categories for working professionals:
- E-7 Specially Designated Activities Visa: This visa is suitable for skilled workers in specialized fields, including engineering, technology, and research roles.
- D-8 Corporate Investment Visa: This visa is designed for individuals who are investors or high-level managers in companies operating in South Korea.
- D-7 Intra-Company Transfer Visa: For employees transferred from a foreign branch of a multinational corporation to a South Korean branch.
- E-2 Foreign Language Teaching Visa: This visa is specifically for those hired to teach foreign languages, such as English, at educational institutions.
- E-5 Professional Visa: For foreign professionals in fields such as law, medicine, and accounting. This requires international licensing and is valid for one year with renewal options.
- D-10 Job-Seeking Visa: This visa allows individuals who have completed their studies in South Korea to stay while seeking employment related to their field of study.
- E-9 Non-Professional Employment Visa: For low-skilled workers in sectors like manufacturing, construction, and agriculture.
Given the complexities of visa applications and renewals, seeking expert assistance is highly recommended. Multiplier offers comprehensive work permit and visa support as part of its Employer of Record (EOR) services.
For more information on how we handle global immigration, visit our Global Immigration page.
Get started with Multiplier’s EOR services
Multiplier’s Employer of Record (EOR) services provide a robust solution for expanding your workforce in South Korea. You can hire employees without the need to establish a local entity and streamline all HR functions while ensuring an exceptional employee experience.
We handle a huge range of international employment tasks, including drafting locally compliant contracts, managing payroll and taxes, and offering a variety of customizable, local benefits.
Schedule a demo to discover how Multiplier can simplify HR and ensure compliance in South Korea.
