Employer of Record Guide in 

South Korea

Annual Leave

• Initial Entitlement: 15 days after one year of employment
• Additional Days: +1 day for every 2 years of service (maximum 25 days)
• Unused Leave: Must be compensated if not taken within 2 years
• Minimum Usage: Employees must use at least 10 days annually

Sick Leave

• Paid Sick Leave: Not mandated by law, but many employers provide 3-7 days
• Medical Leave: Unpaid leave available for serious illness with medical certification
• Industrial Accident Leave: Fully compensated through workers' compensation insurance

Maternity Leave

• Duration: 90 days (45 days before birth, 45 days after)
• Payment:
  • First 60 days: Employer pays (up to ₩2,000,000/month)
  • Remaining 30 days: Government pays through employment insurance
• Job Protection: Position guaranteed upon return

Paternity Leave

• Duration: 10 days within 90 days of child's birth
• Payment: First 5 days paid by employer, remaining 5 days by government
• Additional Leave: Up to 1 year of unpaid parental leave available

Parental Leave

• Duration: Up to 1 year per parent (can be split between parents)
• Payment: Government provides monthly allowance through employment insurance
• Eligibility: Must have worked 180 days in the year before leave
• Job Protection: Same or equivalent position guaranteed

Family Care Leave

• Duration: Up to 90 days per year for caring for family members
• Payment: Unpaid, but may receive government support in certain cases
• Eligibility: For care of spouse, parents, children, or grandparents

Summary

Termination Types

Dismissal for Cause:

• Requires "justifiable reasons" under the Labour Standards Act
• Must follow progressive discipline procedures
• Common grounds include misconduct, poor performance, or economic necessity

Dismissal Without Cause:

• Requires 30 days' advance notice or payment in lieu
• Must demonstrate legitimate business reasons
• Subject to strict procedural requirements

Notice Period Requirements

Severance Pay

Retirement Allowance System:

• Required for employees with 1+ years of continuous service
• Minimum: 30 days' average wage per year of service
• Calculated based on average wage over the last 3 months
• Must be paid within 14 days of termination

Example Calculation:

• Employee with 3 years of service earning ₩3,000,000/month
• Severance = ₩3,000,000 × 3 years = ₩9,000,000

Mass Layoffs

For layoffs affecting 30+ employees within 30 days:

• 50 days' advance notice to employees and labour office
• Consultation with employee representatives required
• Must demonstrate urgent business necessity

Wrongful Dismissal Protection

• Employees can challenge dismissals through labour dispute procedures
• Remedies include reinstatement and back pay
• Discrimination-based dismissals are strictly prohibited

Final Pay Requirements

• All outstanding wages and benefits must be paid within 14 days
• Includes unused annual leave compensation
• Retirement allowance (severance) must be paid simultaneously

National Holidays

South Korea observes 15 statutory holidays annually:

Holiday Pay Rules

• Paid Holiday: Employees receive regular daily wage
• Holiday Work: 150% premium pay required
• Substitute Holidays: If holiday falls on weekend, following Monday becomes holiday
• Eligibility: Must work 80% of scheduled days in the month

Alternative Holidays

When statutory holidays fall on weekends, the following Monday becomes a substitute holiday, ensuring employees don't lose the benefit of the time off.

Required Documentation

Employment Contract Requirements:

• Job title and duties
• Workplace location
• Working hours and rest periods
• Wages and payment methods
• Contract duration (if fixed-term)

Government Registration:

• Alien Registration Card: Required for foreign employees within 90 days
• Tax Registration: National Tax Service registration
• Social Insurance Registration: All four insurance programmes

Work Authorization

Foreign Workers:

• Must obtain appropriate work visa (E-1 through E-7 categories)
• Employer must sponsor visa application
• Health check and criminal background check required

Documentation:

• Passport and visa
• Diploma and qualification certificates (apostilled)
• Health certificate
• Criminal background check (apostilled)

Language Requirements

• Korean Proficiency: Not legally required but practically necessary for most roles
• Contract Language: Must be provided in Korean; English translation acceptable as supplement
• Safety Training: Must be conducted in language employee understands

Social Insurance Registration

Employers must register employees for all applicable social insurance within 14 days of hire:

• National Pension Service
• National Health Insurance Service
• Employment Insurance
• Workers' Compensation Insurance

Banking Setup

• Bank Account: Required for salary payments
• Documentation: Alien registration card, employment contract, and passport needed
• Major Banks: KB Kookmin, Shinhan, Hana, Woori accept foreign employees

Onboarding Timeline

Worker Classification

Regular vs. Non-Regular Workers:

• Regular (Permanent): Full-time, indefinite contracts with full benefits
• Fixed-term: Maximum 2 years, after which conversion to regular status required
• Part-time: Less than standard working hours, pro-rated benefits
• Dispatched Workers: Employed by staffing agency, strict regulations apply

Collective Bargaining

• Union Membership: Approximately 10% of workforce
• Enterprise Unions: Company-level unions are most common
• Collective Agreements: Override individual contracts where more favourable to employees
• Industrial Action: Strikes are legal but subject to procedural requirements

Cultural Considerations

Hierarchy and Respect:

• Age and seniority are highly valued
• Formal language and titles important
• Decision-making often involves consensus-building

Work-Life Balance:

• Long working hours historically common but changing
• After-work socialising (hoesik) traditionally expected
• Younger generation increasingly values work-life balance

Communication Style:

• Indirect communication preferred
• Saving face is important
• Group harmony valued over individual expression

Remote Work Framework

Legal Status:

• No specific remote work legislation
• Must comply with standard labour laws
• Working time limits still apply

Practical Considerations:

• Home office setup may require employer support
• Overtime tracking more complex
• Health and safety obligations extend to home workspace

Industry-Specific Regulations

Technology Sector:

• Flexible working arrangements more common
• Stock option regulations under Capital Markets Act
• Intellectual property protections crucial

Manufacturing:

• Stricter safety regulations
• Higher workers' compensation rates
• Shift work premiums may apply

What the EOR Handles

Borderless AI manages:

• Employment contract drafting and compliance
• Social insurance registration and contributions
• Payroll processing and tax withholding
• Visa sponsorship support
• Local labour law compliance
• Korean language document preparation