KRW
Currency, Korean won, ₩
51.3 million
Population
$1.6 trillion
Economy
How can EOR help you
What it’s like to hire in Korea?
Benefits of hiring in Korea
- Korea is one of the Four Asian Tigers and has the world’s 14th-largest economy. It is classified as a “high-income” country by the OECD (Organisation for Economic Co-operation and Development). Benefiting from rapid economic growth since the 1980s, Korea is now one of the world’s most technologically advanced economies.
- The World Bank ranks Korea as the world’s fifth-easiest country in which to do business. The Korean government has cultivated a business environment friendly to foreign companies, and the country enjoys strong economic relationships with nearly every other Asian country.
- Thanks in large part to its prominence in technology manufacturing and exports, Korea’s private sector is thriving. Home to global brands like Samsung, LG, and Hyundai, Korea is one of the world’s most prominent manufacturers of electronics and semiconductors.
- Korea has a highly educated workforce, which benefits from significant inward investment from the Korean government.
- The World Economic Forum ranks Korea as the sixth-most innovative country in the world. Similarly, the country ranks second globally in both patent applications per capita and research and development expenditures as a percentage of GDP.
- Korea’s populace is exceptionally technologically literate. The country has more fiber optical internet connections than any country in the world, and 96% of its population regularly uses the internet. Korea also ranks second in the world in electricity access.
Challenges when expanding into Korea
- The Korean business world is highly gendered and patriarchal, which can create cultural incompatibilities for Western companies. All Korean men between the ages of 18-28 must complete two years of military service, creating a highly regimented business culture. The workforce tilts heavily male, with less than four women per every five men employed–a ratio that falls well below the OECD average.
- Korea’s workforce is aging, which affects the country’s long-term economic outlook. The country’s culture resists change and risk, creating an inflexible labor market that may face challenges adjusting to changing workforce demographics.
- Korea’s wealth is heavily concentrated amongst family-owned firms called chaebols. These powerful entities have enormous influence over both the business world and the government. Some Koreans blame chaebols for government corruption, a scarce startup culture, and widening income disparity.
Cultural nuances and must-knows for doing business
- Pay close attention to the position and official titles of your Korean business partners. Korean culture is strongly hierarchical, and Koreans are highly deferential to age, experience, and status.
- Prepare to exchange business cards with your Korean counterparts, as Koreans use business cards to convey and understand status. Take time to review the business card and address your partners accordingly. Leave business cards on the table for the duration of your meeting.
- Bow when meeting your Korean counterparts. Shorter bows are acceptable when meeting a colleague of equal status, while more pronounced bows are customary when meeting someone of higher status or age.
- Be punctual. Koreans see lateness as a sign of disrespect. If meeting in Seoul, give yourself plenty of time to arrive at a meeting. Traffic is often heavy, and taxis can be hard to find.
- Act with modesty and approach delicate subjects with sensitivity. Koreans value their dignity, which they call kibub, or “face”. As such, they prefer to avoid directly addressing confrontational situations, choosing instead to infer or imply. Avoid sensitive topics such as North Korea or political matters overall.
- Dress formally for meetings. Men commonly wear dark suits and ties with white shirts. Women tend to wear darker or subdued colors and dress conservatively.
Employment Contracts
Employment Contracts in Korea
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Minimum wages and salaries:
- Hourly minimum wage is KRW 8,590.
- Monthly minimum wage is KRW 1,795,310.
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Probationary periods:
- There are no established time limits for probationary periods under Korea’s LSA (Labor Standards Act). However, the Ministry of Labor most often accepts probationary periods between three and six months.
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Bonuses:
- There are no restrictions or guidelines on bonuses in Korea.
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Termination and Severance Considerations:
- Employers must provide employees with 30 days of notice before terminating employment. Employers are exempt from the notice requirement period under the following circumstances:
- The employer pays the employee 30 days’ pay in place of providing notice.
- The employer cannot maintain their business due to an unavoidable outcome, such as a natural disaster.
- The employee intentionally commits a wrongful act or takes action that significantly interferes with a company’s ability to do business.
- The employee has worked for less than three months.
- The Employee Retirement Benefit Security Act bounds employers to either:
- Pay employees a severance payment upon termination of employment
- Set up a retirement pension plan (the employee must agree to this option)
- Employees are entitled to 30 days of pay for every year they have continuously worked for the employer. The payment amount is based on an average of the employee’s wages for the three months before termination.
- Employees are entitled to severance payment whether they are terminated or voluntarily leave their position.
- Employers must issue termination notices in writing. These notices must include the reasons for termination.
- Employers must provide employees with 30 days of notice before terminating employment. Employers are exempt from the notice requirement period under the following circumstances:
PTO & Benefits
Paid Time Off & Benefits
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Maternity leave
- Employers must provide female employees 90 days for maternity leave (120 days in the case of twins). Female employees are required to take at least 45 days off following birth (60 in the case of twins).
- An employer must pay an employee salary for 60 days of the employee’s leave (75 in the case of twins).
- The government is responsible for paying the remaining days.
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Paternity leave
- Employers must provide male employees with at least 10 days of paternity leave, but the employee must first request this time off. Employees must make their requests within 90 days of the child being born.
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Parental leave
- Employees must provide up to one year of parental leave to employees with a child under eight years of age or no further than second grade in elementary school. This rule also applies to employees who adopt children.
- The employee is entitled to receive 80% of regular wages during this time. The Korean government’s Employment Insurance Funds is responsible for paying this portion of the salary.
- The employer is not required to pay employees during this time.
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Vacation leave
- Employees are guaranteed 15 days of yearly paid leave, providing they work for a full year.
- Starting in their third year of employment, employees earn an additional day of paid leave for every two years of work they complete. Employees can earn a maximum of 25 days of paid leave.
- Employees are not entitled to the 15 days of paid leave if they:
- Have not completed one year of work
- Have an attendance rate below 80%
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Sick leave
- Korea’s LSA does not guarantee employees time off work for non-work-related illness or injuries. However, many industries or companies have ROE (Rules of Employment) that set aside sick leave days for employees.
- Employers are required to provide employees with sick leave for any injury or illness suffered while working. Employers must pay into industrial accident insurance that covers employee wages during sick leave.
Payroll
Average workweek hours
- Employees in Korea are limited to 40-hour work weeks and eight-hour workdays under the LSA.
- Employees have the right to work an additional 12 hours of overtime per week, at their discretion. Employers must pay employees 150% of their normal wages for overtime hours worked.
- Employees are entitled to 150% of their ordinary wages during night work, which ranges between 10 PM and 6 AM.
Employer Contributions
| Employer Contribution | Burden |
| National Pension | 4.5% |
| National Health Insurance | 3.68% |
| Employment Insurance | 1.05%-1.65%* |
| Accident Insurance | .73%-18.63%** |
| Total | 9.95%-28.45% |
* Percentage dependent upon a company’s industry and number of employees
** Percentage dependent upon a company’s industry
Choose Velocity Global
Expanding into an international market like Korea marks an exciting new chapter for your business. But global expansion also requires care and intention, as maintaining compliance with business and labor laws can be complex and time-consuming. That’s where Velocity Global comes in.
Our International PEO solution covers every detail required for compliance in Korea, ensuring you’re properly hiring, onboarding, and managing supported employees. By handling all the nuances required to smoothly operate in Korea, we allow you to focus on what really matters–ensuring your business thrives in a new market.
International PEO is up to 60% less costly and 90% faster than entity establishment. As a result, it saves you valuable time and money that you can reinvest back into core business initiatives. No matter what your long-term goals are or how many team members you’re trying to support, we have the expertise and experience to back you every step of the way.
Ready to see how Velocity Global’s International PEO can streamline your expansion? Reach out today.
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