Gross salary vs. total employer cost
In Korea, "gross salary" is the contract figure before the employee's own tax and contributions are withheld. "Total employer cost" is what actually leaves your account: gross salary plus the employer's share of social insurance, plus accruals for severance and bonuses.
Offers are usually quoted as an annual package (연봉, yeonbong). As of October 2026, the statutory minimum wage is KRW 10,320 per hour, or KRW 2,156,880 per month at the standard 209 paid hours (which include the weekly paid holiday). From 1 January 2027 it rises 3.7% to KRW 10,700 per hour, or KRW 2,236,300 per month. That is your floor for full-time staff, not your total cost.
The four social insurances in 2026
Korea runs four mandatory social insurance schemes (4대보험, sadae boheom). Three are shared between employer and employee; industrial accident insurance is paid entirely by the employer.
| Insurance | Total rate | Employer share | Employee share |
|---|---|---|---|
| National Pension | 9.5% | 4.75% | 4.75% |
| Health Insurance | 7.19% | 3.595% | 3.595% |
| Long-term care | 13.14% of the health premium (about 0.945% of wages) | half | half |
| Employment Insurance | 1.8% plus an employer-only 0.25–0.85% | 1.15–1.75% | 0.9% |
| Industrial Accident | 1.47% national average (varies by industry) | 100% | 0% |
Points worth flagging:
- National Pension rose to 9.5% in 2026, up from 9.0%, under a legislated reform that adds 0.5 points a year until it reaches 13% in 2033. It will be 10% (5% each side) in 2027. Contributions are calculated on monthly earnings between KRW 410,000 and KRW 6,590,000 (limits applying from July 2026), so the employer's pension cost tops out at about KRW 313,000 per month per employee.
- Health insurance stays at 7.19% in 2027. The rate freeze was decided on 8 September 2026, so the main 2027 increase is the pension step.
- The employer-only employment insurance add-on depends on company size, from 0.25% for the smallest employers to 0.85% for the largest.
- Industrial accident insurance is set by industry risk. The national average is 1.47% for 2026, unchanged for a third year, and office-based businesses generally sit below the average.
Altogether, the employer's share usually lands at about 10.5–11.5% of gross salary for office roles. For withholding mechanics and the employee side, see our Korea tax and social insurance guide.
Severance accrual (퇴직금, toejikgeum)
Severance is the cost line that most surprises newcomers. Any employee with at least one year of service who works 15 or more hours per week is owed at least 30 days' average wage for each year of service, paid within 14 days of leaving.
Because one month per twelve months worked is about 8.3% of annual pay, accrue it monthly rather than treating it as a future surprise. Many employers fund it through a defined-benefit or defined-contribution retirement pension plan. One warning: some startup offers quote a package that "includes severance" (퇴직금 포함). Severance cannot legally be prepaid in monthly salary, so a structure like this does not discharge the obligation. Our severance pay explainer covers the calculation in detail.
Bonuses and other common add-ons
Statutory costs are not the whole story. Customary pay elements raise the total:
- Holiday and annual bonuses. Many Korean firms pay bonuses at Seollal and Chuseok, and annual bonuses expressed as a percentage or number of months' pay are common in larger companies.
- Bonuses can increase severance. Regular bonuses can count toward "average wage", so a generous bonus policy quietly raises your severance liability too.
- Paid annual leave. Employees earn 1 day per month of service in year one (up to 11 days), then 15 days after one year with at least 80% attendance, plus 1 day every two years from year three, up to 25 days. Unused statutory leave is generally paid out in cash.
- Overtime, night and holiday work. Work beyond 40 hours a week, night work (22:00–06:00) and holiday work carry a premium of at least 50%, with 100% for holiday work beyond 8 hours. Weekly hours are capped at 52 (40 regular plus 12 overtime).
How you combine base pay, fixed allowances and bonuses affects both the insurance base and severance. Our Korea compensation guide walks through common pay designs.
A worked example
Take a mid-level office employee on a gross salary of KRW 4,000,000 per month (KRW 48,000,000 a year) at a small company that pays the lowest employment insurance add-on of 0.25%. We use the 1.47% national-average industrial accident rate as a conservative assumption.
Monthly employer contributions:
| Item | Rate | KRW per month |
|---|---|---|
| National Pension | 4.75% | 190,000 |
| Health Insurance | 3.595% | 143,800 |
| Long-term care | 13.14% of 143,800 | 18,900 |
| Employment Insurance | 0.9% + 0.25% | 46,000 |
| Industrial Accident | 1.47% | 58,800 |
| Total | about 11.4% | 457,500 |
Severance accrual: one-twelfth of monthly pay, about KRW 333,300 per month.
Total monthly employer cost: KRW 4,000,000 + 457,500 + 333,300 = about KRW 4,790,800, or roughly 120% of gross (about KRW 57.5 million a year). That excludes bonuses, unused-leave payouts and overtime. In 2027 the pension step to 5% adds KRW 10,000 a month at this salary.
What this means for budgeting
A reliable 2026 rule of thumb: plan for total employer cost of about 119–120% of gross salary for a standard full-time office hire, then layer your bonus and benefits policy on top. Pension rates rise every year to 2033, so revisit the figure annually. Cost is only one side of compliance; contracts, working time and dismissal rules matter just as much, and our Korean labor law guide covers the framework.
If you have no Korean entity, the same statutory costs apply through an Employer of Record, which adds its own monthly fee; our EOR vs. entity comparison explains the trade-offs. Hire From Korea is a recruiter-led hiring partner: we deliver a shortlist of 3–5 vetted candidates, coordinate interviews in English and Korean, and can quote payroll, tax or EOR support separately. To get help scoping a specific role, request a consultation.
Frequently asked questions
How much does it cost to employ someone in Korea on top of salary?
For a typical office role in 2026, expect about 19–20% on top of gross salary before bonuses. The employer's social insurance share is roughly 10.5–11.5%, and severance accrues at about 8.3% of annual pay. Bonuses, overtime and unused-leave payouts come on top.
Does the employer pay severance even if the employee resigns?
Yes. Severance is owed to any employee with at least one year of service working 15 or more hours per week, whatever the reason for leaving, including resignation. It must be paid within 14 days of departure and cannot be prepaid as part of monthly salary.
What employer cost changes are already decided for 2027?
National Pension rises to 10% in total (5% employer share), the minimum wage rises to KRW 10,700 per hour (KRW 2,236,300 per month), and health insurance stays at 7.19%. Budget for the pension step and review salaries near the minimum wage before 1 January 2027.
Is there a cap on employer pension contributions?
Yes. National Pension contributions are calculated on monthly earnings of up to KRW 6,590,000 (from July 2026), so the employer's 4.75% share is capped at about KRW 313,000 per month. Health insurance has no comparable cap for typical salaries, so it scales with pay.
Sources
- National Pension Service — English site — 2026 contribution rate and earnings floor and cap
- Lockton — South Korea to increase National Pension contribution rates — 0.5-point annual increases to 13% by 2033
- National Health Insurance Service — English site — health insurance and long-term care rates
- Mercans — 2026 average industrial accident insurance rate maintained at 1.47% — industrial accident average rate
- Korea JoongAng Daily — Hourly minimum wage set at 10,700 won for 2027 — 2027 minimum wage
- Korea Law Information Center — English statutes — Labor Standards Act and Employee Retirement Benefit Security Act (leave, overtime, severance)
This article is general information, not legal or tax advice. Rules change — confirm specifics with a licensed Korean labor attorney (노무사) or tax accountant.