Planning to hire employees in South Korea? Here’s a quick guide

South Korea is a key entry point into the Asia-Pacific market. It is driven by its advanced economy and strong industries such as semiconductors, automobiles, and information technology. 

Before a company can hire in South Korea, there are a few non-negotiables to account for. A written employment contract is required by the Labor Standards Act (LSA). Every employee must be registered in four separate social insurance programs. 

This guide details each phase of the hiring process in South Korea. It covers the onboarding process, employment agreements, benefits and rights, tax laws, and termination of employment. 

It also covers how an Employer of Record (EOR) model lets companies engage talent without setting up a local entity. 

How to hire in South Korea

Most global firms, like US companies, that want to engage talent in South Korea end up evaluating three models. The decision often comes down to whether you want to own the compliance burden or delegate it.

1. Set up a legal entity in South Korea

The most common structures chosen by foreign investors are the stock company (Jusik Hoesa) and the limited company (Yuhan Hoesa), both of which offer limited liability. The full process typically covers fund remittance, court registration, business registration at the tax office, and any industry-specific permits.

This route gives the company full control over hiring, payroll, and operations. However, it also means the company assumes direct responsibility for all ongoing tax, labor law, and compliance obligations in South Korea.

2. Hire contractors in South Korea

Engaging contractors makes sense for project-based work with a clear scope and timeline. The risk, though, lies in how South Korea’s Ministry of Employment and Labor views worker classification. 

If someone operates under the company’s direction, following set hours, using company-provided equipment, and reporting to a manager, authorities may reclassify them as an employee. 

When that happens, the company becomes liable for unpaid social insurance contributions, severance, and additional penalties that can add up quickly.

A contractor management system is worth considering here. It keeps contracts, payment records, and classification documentation in one place. 

3. Use an Employer of Record (EOR) in South Korea

An Employer of Record is a third-party organization that acts as the legal employer for the employees in South Korea. You will still select candidates and manage their work, but the EOR supports the administrative side. It includes drafting employment contracts to processing payroll, filing taxes, and administering statutory benefits. You do not require any local entity to hire.

This model tends to work well when a company is entering the Korean market for the first time and plans to recruit employees in South Korea.  

Where to find employees in South Korea

The hiring process in South Korea leans heavily toward digital. For international employers, this means job boards tend to yield strong results without the need for expensive recruitment campaigns.

1. Popular job boards in South Korea

You can search candidates in South Korea using the following job boards: 

• JobKorea 
• Saramin 
• Incruit
• LinkedIn
• Goyong24 

2. Local recruitment agencies

Working with a Korean recruitment agency adds value when the role is specialized or senior. They understand local salary expectations, which can differ significantly from home country benchmarks. They are familiar with employment regulations in South Korea, which is best for hard-to-fill positions.

3. EOR support

Some companies prefer to handle recruitment internally while outsourcing the workforce management in South Korea. With Payoneer Workforce Management, that’s how the arrangement works. While you source and select candidates, the EOR helps manage employment contracts, payroll, benefits, and compliance in the background.

For those looking at neighboring economies, our Japan hiring guide covers a similar breakdown.

Onboarding employees in South Korea

The onboarding process in South Korea involves both documentation and regulatory registration, and it’s important to get both right from day one. 

Here’s a checklist to keep things on track:

• Collect identification documents, including a passport or a national ID card
• Obtain proof of address
• Verify educational credentials
• Record the employee’s Korean bank account details
• Draft and sign a written employment contract covering wages, hours, leave, and termination conditions
• Register the employee with the National Pension
• Register the employee with National Health Insurance
• Register the employee with Employment Insurance
• Register the employee with Industrial Accident Compensation Insurance
• Set up payroll in Korean Won (KRW)
• Arrange devices, including laptops, monitors, and software access
• Schedule team introductions during the first week

An EOR can support much of this process on the company’s behalf. 

Our employee cost calculator is also useful at this stage for estimating total compensation costs before finalizing an offer.

Key employment laws and requirements in South Korea

Employment regulations in South Korea are anchored in the Labor Standards Act (LSA), but several related laws fill in the gaps. Together, they create a detailed compliance environment when hiring in South Korea. 

Employment contracts

Nearly every employer in South Korea uses a formal written contract that goes well beyond the minimum disclosure.

A well-drafted contract should cover the following:

• The title of the job 
• Workplace type and location 
• Wage structure and payment schedule 
• Leave entitlements and rest periods
• The conditions under which either party may end the relationship 

However, fixed-term contracts are limited to two years. If employment continues beyond that point without a new agreement, the worker automatically becomes a permanent employee. 

Employee benefits

Here are key employee benefits you will need to know when you engage talent in South Korea:

• Annual leave: Employees who work more than 80% of total working days in a year earn 15 paid days of annual leave. After three years of continuous service, an extra day is added for every two additional years, with the total capped at 25 days. 
• Sick pay: There is no statutory leave, but you are obligated to pay 60% of the employee’s average wage throughout the treatment period for an injury or illness arising from work-related activities. 
• Maternity pay: Employees get 90 days of leave, paid by the employer.
• Paternity pay: You will have to fund five days of paternity leave, out of the maximum ten days. 
• Social security: Employer contributions to mandatory social insurance programs go up to 28% of your total gross salary. It includes National Pension, National Health Insurance, Employment Insurance, and Industrial Accident Compensation Insurance. 
• Minimum wage: The national hourly minimum wage is set at KRW 9,860 per hour. 

Working hours and holidays

South Korea’s workweek runs 40 hours, typically split as eight hours per day over five days.

Moreover, you can ask an employee to work overtime up to 12 hours a week. In doing so, you must secure written consent and pay a premium of at least 150% of ordinary wages for overtime compensation. 

Furthermore, the employment regulations in South Korea recognize 12 paid public holidays annually, with the government occasionally declaring additional ones.

The list of public holidays in South Korea:

• New Year’s Day
• Seollal (3 days)
• March 1st Movement Day
• Children’s Day
• Buddha’s Birthday
• Memorial Day
• Liberation Day
• National Foundation Day
• Chuseok (3 days)
• Hangeul Day
• Christmas Day 

Tax obligations

South Korea uses a progressive bracket system, starting at 6% for the lowest earners and scaling up to 45% at the top. You are responsible for withholding the correct amount each month and remitting it to the National Tax Service. 

Termination and severance

Unlike the United States, South Korea does not recognize at-will employment. 

Every termination requires justifiable cause, and Korean courts interpret that standard narrowly. An employer who cannot demonstrate adequate grounds risks a wrongful dismissal ruling. 

Most lawful termination scenarios include 

• Voluntary resignation
• Mutual agreement
• Probation-period dismissal
• Termination for documented misconduct or sustained underperformance

Notice period is not required if terminated within the probation period of three months or less. However, you are obligated to provide 30 days’ notice for termination after the probation period ends. 

Furthermore, you have to extend severance pay up to 30 days’ average wage per year of service. This must be paid within 14 days of their departure, regardless of whether they resigned or were terminated.

Explore Payoneer Workforce Management in South Korea

Between the four-pillar social insurance system, payroll in Korean Won, a contract framework shaped by the LSA, and termination rules that demand documented justification, workforce management in South Korea leaves little room for guesswork. 

One of the streamlined ways is to partner with a global EOR provider to manage these responsibilities, particularly for companies without a dedicated HR team on the ground.

With the help of the Payoneer Workforce Management, companies can:

• Engage talent in South Korea without setting up a local entity
• Onboard employees with compliance support
• Process payroll in a few clicks
• Manage benefits, timesheets, and leave from a unified dashboard

The platform supports Employer of Record services, Agent of Record (AOR), and contractor management in 160+ countries. 

Book a demo today!

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