Korean Employment Contracts: A Guide for Foreign Employers

Hiring in Korea starts with a contract that does more than confirm a salary. Korean labor law treats the written employment contract as the foundation of the relationship, and getting it wrong exposes employers to back-pay claims, fines, and reinstatement orders. This guide walks foreign employers through the rules that matter most: what the contract must say, how probation works, the limits on working hours, and how termination is actually handled in Korea.

The Written Contract Requirement

Under Korea's Labor Standards Act, a written employment contract is mandatory for any engagement expected to last more than 30 days, and the employer must give the employee a signed copy. Verbal agreements may be technically valid, but they leave you unable to prove key terms and expose you to penalties for missing documentation.

Contracts are commonly drafted in Korean, and a Korean version is what authorities and courts will rely on. For foreign-owned companies, a bilingual Korean-English contract is strongly recommended so both sides understand their obligations while keeping the Korean text authoritative.

Mandatory Clauses

Several terms must be stated in writing and delivered to the employee at the start of employment. At a minimum, the contract must specify:

• Wages — the constituent elements, the calculation method, and the payment date and procedure
• Contractual working hours — daily and weekly hours, including agreed start and finish times
• Holidays — weekly paid rest days and public holidays
• Annual paid leave — the employee's statutory leave entitlement
• Place of work and duties — where the role is performed and what it involves

Wages must meet or exceed the 2026 statutory minimum of 10,320 KRW per hour, which works out to a monthly 2,156,880 KRW based on the standard 209 hours. That figure is a 2.9% increase over the 2025 rate of 10,030 KRW. Beyond wages, employers must also enroll staff in Korea's four major social insurances, so it helps to understand the broader Korean labor law framework before finalizing any offer.

Choosing the Right Contract Type

Korea recognizes several engagement models, and the type you choose affects severance, renewal, and conversion risk.

The two-year limit on fixed-term contracts is one of the most important traps for foreign employers. If a fixed-term worker stays beyond two years without a legally justified reason, they are generally deemed to have an indefinite contract and gain the corresponding protection against dismissal. Matching the contract to the actual role is essential, and our overview of Korean employment types explains how each option behaves in practice.

Probation Periods

A probationary period is not legally required, but it is widely used and legally recognized when documented in the contract. Three months is the standard length; longer periods can be defensible for senior or specialized roles, but they invite scrutiny.

Two probation rules are worth highlighting:

• Reduced pay is allowed, within limits. During the first three months, an employer may pay 90% of the applicable minimum wage. This does not apply to fixed-term contracts shorter than one year.
• Probation is not at-will. Even during probation, dismissal still requires a justifiable reason. Korean courts have ruled in favor of employees dismissed during probation without adequate, documented grounds, so performance expectations and evaluation criteria should be set out clearly from day one.

Working Hours and Overtime

The standard work week in Korea is 40 hours, capped at 52 hours including a maximum of 12 hours of overtime. The cap is enforced seriously, and exceeding it can lead to penalties.

Premium pay rules add real cost to extra hours:

• Overtime work is paid at no less than 150% of the ordinary wage.
• Night work (generally 10 p.m. to 6 a.m.) and holiday work also carry a premium of at least 50%.

On the leave side, employees who complete one year of service with at least 80% attendance earn 15 days of annual paid leave. That entitlement grows by one day every two years of continued service, up to a maximum of 25 days. Building these statutory costs into your budget from the outset is part of sound HR compliance in Korea.

Termination Rules

Korea does not follow at-will employment. Dismissing an employee generally requires "just cause," meaning a legitimate, documented reason such as serious misconduct or genuine, well-evidenced performance failure. Restructuring-based layoffs face additional procedural requirements, including efforts to avoid dismissal and fair selection criteria.

Notice rules are more mechanical:

• Employers must give at least 30 days' advance notice of dismissal, or pay 30 days' ordinary wages in lieu of notice.
• The notice requirement does not apply to employees who have worked less than three months — but a justifiable reason for the dismissal is still required.

Finally, severance pay (퇴직금) is a statutory obligation, not a discretionary bonus. Any employee who has worked at least one year and averages 15 or more hours per week is entitled to roughly one month of average wages for each year of service when they leave. This applies regardless of whether the departure is a resignation or a dismissal, so it should be accrued throughout the employment period rather than treated as a surprise at exit.

Getting It Right From the Start

A compliant Korean contract protects both sides: it clarifies expectations for your new hire and shields your company from disputes that are expensive and slow to unwind. The details above are the essentials, but every role and company structure raises its own questions about classification, benefits, and risk.

Hire From Korea helps global companies hire Korean talent with contracts, payroll, and compliance handled correctly the first time. If you are planning your first hire or scaling a team in Korea, request a consultation and we will help you build an offer that holds up.