Labor Law & Employment Practices in Korea
2025 Compliance Guide for Foreign Employers
Korea has one of the most structured and worker-protective labor systems in Asia. While this may sound complex for foreign employers, it also provides clarity, stability, and predictability when managed correctly.
If you understand the framework — and partner with a local agency like Hire From Korea — you can hire, contract, or manage Korean talent confidently within a fully legal and compliant structure.
1. Overview: Employment Framework in Korea
Korean labor law is primarily governed by the Labor Standards Act (근로기준법), enforced by the Ministry of Employment and Labor (MOEL). It defines minimum working conditions, contracts, wages, benefits, and termination procedures.
Official Sources:
Labor Standards Act (Korean Law Translation Service) | Ministry of Employment and Labor (MOEL)
2. Types of Employment
In Korea, there are several distinct categories of work relationships, each with specific obligations:
정규직 Regular Employees
Full-time workers protected by all labor laws.
계약직 Fixed-Term / Contract
Temporary, but must receive the same legal benefits as regular staff.
프리랜서 Freelancers
Not legally "employees," but often require careful classification.
파견근로자 Dispatch Workers
Employed by an agency but work at another company's site.
EOR / PEO Employment
Foreign companies may hire through a local legal entity like Hire From Korea to handle compliance, payroll, and insurance.
3. Minimum Wage (2025 Standard)
As of January 1, 2025, Korea's national minimum wage is:
4. Working Hours and Weekly Rest (주휴수당)
The standard legal workweek in Korea is:
- 40 hours per week (8 hours per day × 5 days)
- Maximum 12 hours overtime per week (with consent and extra pay)
- One paid weekly rest day (주휴수당) if workers attend at least 15 hours per week and all scheduled shifts
This weekly allowance equals one day's normal wage and is mandatory under the Labor Standards Act, Article 55.
5. Annual Paid Leave (법정 연차)
Full-time employees earn 15 days of paid annual leave after one full year of service.
- Additional leave granted for long-term service (one extra day for every two years, up to 25 days)
- Employees who haven't completed a full year still get 1 day of paid leave per month of service
- Unused leave must be carried forward or compensated in cash upon contract termination
Reference: Labor Standards Act – Article 60 (Annual Paid Leave)
6. Severance Pay (퇴직금)
Korean law mandates that any employee who works at least one year and averages 15+ hours per week must receive severance pay upon resignation or contract end.
Key Points:
- Equals roughly one month's salary per year of employment
- Must be paid within 14 days after employment termination
- Non-negotiable for employees meeting eligibility criteria
7. Taxation and Social Insurance (4대보험)
Every legally employed worker in Korea must be registered in the four major social insurances (4대보험):
1. 국민연금 National Pension
9% total
4.5% employee / 4.5% employer
2. 건강보험 Health Insurance
7.09% total
Split 50/50 between parties
3. 고용보험 Employment Insurance
~1.6% total
Varies by company size
4. 산재보험 Industrial Accident
Employer-only
Contribution varies by industry
Additional Taxes: Income tax (3–38%) and local income tax (10% of income tax) apply. Foreign employees may be eligible for flat tax options under double-taxation treaties.
8. Termination and Dismissal
Korean law requires "just cause" for termination — poor performance alone may not suffice unless clearly documented.
Acceptable grounds include:
- Repeated misconduct
- Violation of company policy
- Significant incompetence proven through fair evaluation
Employers must:
- Provide advance notice (at least 30 days) or pay one month's wages in lieu
- Document reasons and evidence in writing
- Avoid discriminatory dismissal or retaliation
9. Hiring Freelancers & Independent Contractors
Freelancers are treated as independent business operators, not employees. However, if the nature of work shows regular hours, supervision, or fixed payments, the relationship can be reclassified as employment — leading to legal liabilities for unpaid benefits or insurance.
To stay compliant:
- Use clear written contracts specifying project scope, duration, and payment
- Apply 3.3% withholding tax for freelancer payments (income tax + local tax)
- Ensure freelancers issue tax invoices (세금계산서) or receipts
Hire From Korea can assist foreign companies in preparing freelancer contracts and managing payments according to Korean tax law.
10. How Hire From Korea Helps
At Hire From Korea, we provide full legal and administrative support for global employers:
✅ 1. Local Employment Contracts
We hire Korean employees under a legally registered Korean corporation, handling payroll, tax, and all 4 social insurances on your behalf.
→ You focus on management, we handle compliance.
✅ 2. EOR / PEO Service
We act as your local Employer of Record (EOR) — allowing you to hire Korean staff without establishing a legal entity.
→ Perfect for short-term projects, pilots, or small remote teams.
✅ 3. Company Incorporation Support
We assist in establishing your own Korean entity — from registration to payroll setup — so you can operate independently under Korean law.
✅ 4. Freelancer Contract Support
If you prefer project-based hiring, we help draft legally compliant freelancer agreements, including tax and IP protection clauses.
11. Risk Management for Foreign Employers
To avoid legal or compliance issues:
- Always issue written contracts (in English + Korean where possible)
- Keep documentation of performance, communication, and payments
- Use official pay channels and submit taxes monthly
- Partner with a local agency for administrative compliance
Korea's labor laws are detailed — but they're also predictable. With proper documentation and trusted local support, you can hire Korean talent safely and efficiently.
12. Final Insight
Korea's labor system protects both employees and employers who act transparently.
While compliance may seem complex at first, it ensures long-term stability and trust between companies and professionals.
The key is not avoiding the law — it's using it correctly.
With Hire From Korea, you gain not just access to talent, but full compliance peace of mind.
Ready to Hire Korean Talent Legally?
Let us handle the compliance, payroll, and legal documentation. Focus on building your team — we'll ensure everything is done right.
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