South Korea Payroll Information – Deel Global Payroll

Updated on: 2025/08/07 09:56 (UTC)

Overview

South Korea, also known as the Republic of Korea, is located in northeast Asia and administratively consists of its capital city of Seoul, nine provinces, six metropolitan cities, and one self-governing city. The only country that borders South Korea by land is North Korea. The bodies of water that border South Korea are the Sea of Japan to the east, the East China Sea to the south, and the Yellow Sea to the west. In addition to its mainland on Asia, South Korea includes numerous islands, the largest and most populous of which is Jeju Island (Jejudo, Jeju-do), which is to the southeast of mainland South Korea and is about 90 kilometers afar from mainland South Korea at its nearest point.

Among the nine provinces of South Korea are eight standard provinces: Chungcheongbuk-do (North Chungcheong Province), Chungcheongnam-do (South Chungcheong Province), Gangwon-do (Gangwon Province), Gyeonggi-do (Gyeonggi Province), Gyeongsangbuk-do (North Gyeongsang Province), Gyeongsangnam-do (South Gyeongsang Province), Jeollabuk-do (North Jeolla Province), and Jeollanam-do (South Jeolla Province). Jeju Island is the main part of the ninth province, the Jeju-do special self-governing province, also known as the special autonomous province and as the special administrative region. The capital city of Seoul sometimes is referred to as Seoul Special City. The six metropolitan cities are Busan, Daegu, Daejeon, Gwangju, Incheon, and Ulsan. South Korea’s self-governing city is Sejong, which sometimes is referred to as Sejong Special Autonomous City. Seoul and Sejong sometimes are classified as metropolitan cities, for a total of eight metropolitan cities.

The primary written and spoken language used in South Korea is the Korean language, whose spoken form is known in South Korea as Hanguk-mal. The English language is widely used in South Korea. The writing system for the Korean language consists of two intertwined systems: an alphabetic writing system with Hangul script that includes 19 consonants and 21 vowels that are used in forming syllable blocks that each contain at least one consonant and one vowel, which is the predominant writing system, and a logographic writing system with characters known as Hanja. There are two directionalities that are currently used for written Korean text, and a document written with one of these directionalities typically does not also include text written with the other directionality. The directionality more commonly used in South Korean governmental documents, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom. The other directionality is progression along vertical lines from top to bottom, with successive vertical lines read from right to left.

South Korea’s currency is the South Korean won.

Employers are responsible for withholding income taxes and social insurance contributions for employees. Taxation is conducted at both the national and local levels, although both categories of income taxes are assessed uniformly throughout the country by the national government.

Employers also must provide basic labor protections for employees, including a minimum wage and holiday/vacation time.

For foreign workers, employers generally are required to withhold income taxes and social insurance taxes on their South Korean-based income, with some exceptions.

South Koreans working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

News articles regarding payroll in South Korea are available in

CURRENCY DETAILS

The currency of South Korea is the South Korean won (₩). The internationally recognized three-letter currency code for the South Korean won is KRW. The plural form of South Korean won is the same as its singular form.

When an amount of South Korean won is written using the currency symbol ₩ or the currency symbol W, the symbol precedes the numerical value with no space between the numerical value and symbol. When an amount of South Korean won is written using the currency symbol 원, which is the predominant currency symbol used in South Korea to denote amounts of South Korean won and is the symbol commonly used in Hangul script to refer to the South Korean won, the symbol generally follows the numerical value with no space between the numerical value and symbol.

Although the South Korean won shares the currency symbols ₩ and 원 with the North Korean won, the two currencies are distinct from each other.

One hundredth ( ¹ ⁄ ₁₀₀ ) of one South Korean won is referred to as a jeon, which has the same plural form as its singular form, although transactions involving South Korean currency do not typically include amounts other than whole numbers of South Korean won.

When amounts of South Korean won are written in Korean as used in South Korea, the comma that in English separates the thousands place from the hundreds place generally is rendered, although some government entities prefer to instead use a space between the thousands place and hundreds place, or to have there be no symbol or space between the thousands place and hundreds place with the numbers in those digit places adjacent to each other.

Additionally, when amounts of South Korean won are written in Korean as used in South Korea and the currency symbol 원 is used, amounts of at least 10,000 South Korean won that have at least one nonzero integer among the ten-thousands place or a higher digit place sometimes are abbreviated so that the numbers in the ten-thousands place and higher digit places are rendered, but then collectively followed by the Hangul symbol for 10,000 (만) with no space between the number in the ten-thousands place and the 원 symbol. When there are no nonzero numbers in the thousands place or a lower digit place, no numbers are rendered to the right of the 만 symbol and the currency symbol 원 follows the 만 symbol with either a space or no space between these symbols. When there is a nonzero number in the thousands place or a lower digit place, the numbers among the thousands place and lower digit places would be rendered to the right of the 만 symbol with no space between the 만 symbol and number in the thousands place and with the currency symbol 원 following the number in the ones place (or in rare cases the nonzero number in the lowest digit place below the ones place that has a nonzero number), with no space between the ones place (or otherwise the right-most nonzero number below the ones place) and the currency symbol. When the 원 symbol is used for rendering amounts of South Korean won, it is common for there to be no spaces and no punctuation marks between consecutive numbers, although a comma sometimes is placed between the number in the highest digits place and the number in the second-highest digits place. For example, the amount of 3.52 million South Korean won may be rendered as 352만원 or as 352만 원. Also for example, the amount of 784,520 South Korean won may be rendered as 784만520원.

TAXES

Employers are responsible for withholding both income taxes and social insurance contributions from employee wages at the time of payment. Employer and employee income taxes are coordinated through South Korea’s National Tax Service, which is a division of the Ministry of Strategy and Finance. The Income Tax Act is the primary legislation governing tax issues in South Korea.

South Korea has four social insurance programs, which all set their own contributions rates. Most insurance obligations are evenly divided between employers and employees. While each program sets its own standards, the National Health Insurance Service (NHIS) is a centralized collector and employers must remit all social contributions to the NHIS.

Local income and payroll taxes apply across South Korea’s nine provinces.

The tax year is the calendar year from Jan. 1 to Dec. 31. The filing period for income taxes is from May 1 to May 31.

Coronavirus (Covid-19) Guidance: All employers may apply to postpone National Pension contributions due from April to June 2020. Employers with less than 30 employees may also apply to postpone Employment Insurance and industrial accident insurance contributions for three months.

Effective from December 2020 to March 2021, employers may postpone for three months some social tax payments, including employment insurance, accident insurance, and pensions. Also, there is a 30% reduction of accident insurance contributions for three months for small business owners operating in especially affected sectors.

Income Taxes

Coverage: South Korean residents are subject to taxation on their worldwide income. Residency for tax purposes is determined based on whether a taxpayer owns a domicile in South Korea and/or he or she resides in South Korea for 183 days or longer. Residency due to either business or family reasons is considered equally.

Employees have a domicile in South Korea when their family lives in their South Korean residence and/or they reside in personally owned property located in South Korea.

Rates and Thresholds: Income tax rates are levied on a progressive scale, with rates ranging from 6% to 42%. In the country’s progressive income tax system, portions of an individual’s income are allocated to the country’s personal income tax brackets, and each portion of income allocated to a tax bracket is taxed at the tax rate applicable to that tax bracket.

Effective since Jan. 1, 2021, South Korea’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (South Korean Won)	Income Tax Rate
Up to ₩12 million	6%
More than ₩12 million and up to ₩46 million	15%
More than ₩46 million and up to ₩88 million	24%
More than ₩88 million and up to ₩150 million	35%
More than ₩150 million and up to ₩300 million	38%
More than ₩300 million and up to ₩500 million	40%
More than ₩500 million and up to ₩1 billion	42%
More than ₩1 billion	45%

Effective from Jan. 1, 2018 to Dec. 31, 2020, South Korea’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (South Korean Won)	Income Tax Rate
Up to ₩12 million	6%
More than ₩12 million and up to ₩46 million	15%
More than ₩46 million and up to ₩88 million	24%
More than ₩88 million and up to ₩150 million	35%
More than ₩150 million and up to ₩300 million	38%
More than ₩300 million and up to ₩500 million	40%
More than ₩500 million	42%

For temporary workers paid on a daily basis, employers should withhold 8% in income taxes.

Registration: Employers and employees are required to register with the chief of their jurisdictional tax office, which is an extension of the National Tax Service, prior to payment of withholding taxes. The chief of the tax office gives each registering employer and employee a taxpayer code number, which is used during the payment process.

Employers must register their businesses with their local tax office using a business registration application (available at their tax office); a copy of their “business permit” or “certificate of business declaration;” a copy of their lease agreement; a partnership agreement (if jointly operated); documents certifying South Korean residency or nonresidency and a copy of passport and visa documents. No fee applies during this process.

Employees using the Home Tax Service online payment method must register on the service’s website by submitting an application and a “digital certification of identification.”

Taxable Amounts: Taxable income from employment in South Korea includes all income from wages, salaries, remunerations, allowances, bonuses and any other amount earned in exchange for services rendered. Retirement income also is subject to normal income tax rates. Nontaxable income includes wages earned from serving in the armed forces or amount received as compensation for injury or debilitation while furnishing a service.

In the case of wages, daily workers are entitled to exclude up to ₩100,000 per day. Other wage and salary earners are entitled to exclude 70% of wages up to ₩5 million, 40% of wages between ₩5 million and ₩15 million, 15% of wages between ₩15 million and ₩45 million, 5% of wages between ₩45 million and ₩100 million, and 2% of wages in excess of ₩100 million.

Residents are subject to taxation on all worldwide income, also known as global income. Nonresidents only are subject to taxation on income accrued in South Korea.

Withholding Methods: Employers, or withholding agents, are required to withhold income taxes at the time of payment and then remit them to the National Tax Service. After the taxable year, employees are required to file income taxes—the Year-End Tax Adjustment—to make necessary changes that might qualify them for a refund, such as tax deductions for child care.

Returns and Remittance: Employers, both foreign and domestic, must withhold income taxes for each employee according the Income Tax Act. Monthly returns are due by the 10th of the month following the month for which taxes are withheld. After the taxable year, employees are required to file income taxes—the Year-End Tax Adjustment—to make necessary changes that might qualify them for a refund, such as tax deductions for child care. Prior to filing, employees must alert employers to any potential deductions and employers are required to present employees with a receipt of withholding which specifies the earned income total and applicable withholding amounts and deductions.

Income tax returns must be filed between May 1 and May 31 of the year following the tax year using Form 40-1 and Form 40-4. Along with their income tax return, employees must provide their application and supporting documents for tax credits and exemptions; documents used to calculate the total gross income amount, including income statements; and any other documents specifically requested by the National Tax Service office.

Taxes may be filed either using the postal system or electronically through the Home Tax Service, which is a South Korean-only website. Tax payments, if not withheld already, can be paid at post offices, banks, by phone-banking, or online using the Home Tax Service.

Employees with only wage and salary income may not be required to file a return on income taxes at the end of the taxable year.

Employee Share Plans: Employee share plans are liable to income taxes and social taxes at exercise, according to Ernst & Young and the law firm DLA Piper. Employers must withhold income tax and social taxes from all employee share plans based on the difference between the price employees pay and the market price at the time of exercise. Employers must report and remit these amounts as they would normal salary payments.

Recordkeeping: Employers and employees are required to maintain their withholding documents, records of disbursements and tax filings for at least five years.

Penalties: Employers and employees are subject to penalties for failure to withhold taxes, failure to file tax returns and/or failure to pay taxes owed. For failing to file income tax forms, a 20% penalty is levied on the total income tax amount minus taxes withheld. For under-reporting taxes due, a penalty of 10% is levied on the calculated income tax amount multiplied by the rate of the under-reported amount, minus the withheld tax.

For willfully misleading the tax authorities on tax returns, a penalty of 40% is levied on the income tax amount multiplied by the rate of taxation for under-reported income. For nonpayment or underpayment, the penalty is the total unpaid or underpaid amount multiplied by the number of days between the deadline and the actual date of payment, multiplied by 0.03%.

Social Taxes

Coverage: All employers are required to withhold social insurance taxes on all workers deemed employees by the terms of their contract. Social taxes are withheld at source at the time of payment. Some social insurance taxes are not withheld for certain foreign employees.

Rates and Thresholds: Social insurance taxes are assessed on all earned income, including wages and salaries, excluding all nontaxable income. Social taxes in South Korea are assessed for five mandatory services: National Pension, National Health Insurance, Long-term Care Insurance, Employment Insurance and Industrial Accident Insurance.

National Pension: Employers and employees are required to pay contributions for the National Pension.

National Pension contributions are subject to a maximum monthly amount of wages paid to an employee upon which the contributions may be assessed on the employee and employer. National Pension contributions also are subject to a minimum monthly tax base upon which they may be assessed. If an employee’s compensation for a month was less than the minimum monthly tax base for National Pension contributions, the employee’s compensation for the month would be treated as having been the minimum monthly tax base for calculations of the National Pension contributions liability for the employee and employer. The maximum monthly amount of taxable wages and minimum monthly tax base for National Pension contributions are subject to adjustment each July 1.

Effective from July 1, 2021, to June 30, 2022, the maximum monthly amount of taxable wages for contributions to the National Pension is ₩5.24 million and the minimum monthly tax base for contributions to the National Pension is ₩330,000. Effective from July 1, 2020, to June 30, 2021, the maximum monthly amount of taxable wages for contributions to the National Pension is ₩5.03 million and the minimum monthly tax base for contributions to the National Pension is ₩320,000.

The employee contribution rate for the National Pension is 4.5% and the employer contribution rate for the National Pension is 4.5%, for a total rate of 9%.

Workers employed for less than a month or less than 80 hours in a month are exempt from social insurance contributions for the month.

National Health Insurance and Long-Term Care Insurance: Employers and employees are required to pay contributions for National Health Insurance and Long-Term Care Insurance.

National Health Insurance and Long-Term Care Insurance contributions are subject to a maximum monthly amount of wages paid to an employee upon which the contributions may be assessed on the employee and employer. National Health Insurance and Long-Term Care Insurance contributions also are subject to a minimum monthly tax base upon which they may be assessed. If an employee’s compensation for a month was less than the minimum monthly tax base for National Health Insurance and Long-Term Care Insurance contributions, the employee’s compensation for the month would be treated as having been the minimum monthly tax base for calculations of the employee’s and employer’s liability for National Health Insurance and Long-Term Care Insurance contributions.

Effective for 2021, the maximum monthly amount of taxable wages for National Health Insurance and Long-Term Care Insurance contributions is ₩102,739,068, and the minimum monthly tax base for National Health Insurance and Long-Term Care Insurance contributions is ₩279,300. Effective for 2020, the maximum monthly amount of taxable wages for National Health Insurance and Long-Term Care Insurance contributions was ₩99,615,292, and the minimum monthly tax base for National Health Insurance and Long-Term Care Insurance contributions was ₩278,860.

Health insurance and long-term care insurance contribution rates for employees and employers are subject to adjustment each Jan. 1.

Effective for 2021, the health insurance contribution rate for employees is 3.43%, the health insurance contribution rate for employers is 3.43%, and the total health insurance contribution rate is 6.86%. Effective for 2020, the health insurance contribution rate for employees was 3.335%, the health insurance contribution rate for employers was 3.335%, and the total health insurance contribution rate was 6.67%.

The long-term care insurance contribution rate in effect for a year is equivalent to a percentage of the health insurance contribution rate in effect for that year.

Effective for 2021, the percentage by which the health insurance contribution rate was multiplied to determine the long-term care insurance contribution rate is 11.52%. Effective for 2020, the percentage by which the health insurance contribution rate is multiplied to determine the long-term care insurance contribution rate was 10.25%.

Effective for 2021, the long-term insurance contribution rate for employees and employers is 11.52% of the total health insurance contribution rate of 6.86%, so the total long-term insurance contribution rate for employees and employers is 0.79%, consisting of an employee rate of 0.395% and an employer rate of 0.395%. Effective for 2020, the long-term insurance contribution rate for employees and employers is 10.25% of the total health insurance contribution rate of 6.67%, so the total long-term insurance contribution rate for employees and employers was 0.68%, consisting of an employee rate of 0.34% and an employer rate of 0.34%.

Employment Insurance: There are two separate Employment Insurance assessments based on applicable types of programs: an assessment for financing the unemployment benefits program and a unified assessment for financing the employment security program and the job-skills development program, also known as the vocational training program.

Employers and employees are assessed taxes for the unemployment benefits program.

Effective since Oct. 1, 2019, the unemployment benefits program tax rate for employees is 0.8%, the unemployment benefits program tax rate for employers is 0.8%, and the total unemployment benefits program tax rate is 1.6%. Effective until Sept. 30, 2019, the unemployment benefits program tax rate for employees was 0.65%, the unemployment benefits program tax rate for employers was 0.65%, and the total unemployment benefits program tax rate was 1.3%.

Employers, but not employees, are assessed taxes for the employment security program and job-skills development program. The employment security and job-skills development programs tax rate assessed on an employer is based on the number of employees and whether the employer is eligible for priority support, as follows:

fewer than 150 employees, rate of 0.25%;
at least 150 employees but fewer than 1,000 employees and the employer is an eligible business regarding priority support, rate of 0.45%;
at least 150 employees but fewer than 1,000 employees and the employer is not an eligible business regarding priority support, rate of 0.65%; and
at least 1,000 employees, rate of 0.85%.

Eligible priority support businesses are those that have eligible involvement in the Educational Welfare Primary Support Project, a national initiative of South Korea to improve the education of members of the workforce, especially socioeconomically disadvantaged individuals, often through enhancing their training and experience regarding business operations. Employer participation as an eligible priority support businesses in some cases is limited based on industry category, number of employees, or revenue. Before employers pay contributions using the employment security and job-skills development programs tax rate of 0.45%, they must ensure with the government that they qualify, based on program participation and the characteristics of their business, as an eligible primary support business that may pay taxes based on the rate of 0.45%.

Industrial Accident Insurance: Industrial Accident Insurance is financed by assessments on employers, with assessment rates varying among employers based on their industry category. Employers’ rates are assessed on their total payroll. Rates for the industry categories are subject to change each year, with the rates for a year typically released in December of the previous year.

The Ministry of Employment and Labor’s 2021 Industrial Accident Insurance rates document and2020 Industrial Accident Insurance rates document indicates that effective for 2021, unchanged from 2020, the rates range from 0.6% to 18.5%.

Starting with 2018, the Industrial Accident Insurance rates indicated in the ministry’s rate documents include general rates, plus an additional rate to account for accidents caused by commuting connected with employment. Effective for 2021, the additional rate for accidents caused by commuting connected with employment is 1%. Effective for 2020, the additional rate for accidents caused by commuting connected with employment was 1.3%.

The rates indicated in the rates documents are rendered as amounts that when divided by 1,000 result in the decimal equivalent of the applicable rate percentage. For example, if an industry’s rate indicated in a rates document is 27.5, that amount when divided by 1,000 results in the decimal 0.0275, which is the equivalent of 2.75%.

Registration: Employers and employees share responsibility for registering for social insurance benefits. For Employment Insurance and Industrial Accident Compensation Insurance, employees must present their employer with their insurance application forms and their insured qualification acquisition forms, which the employer then submits to those programs on behalf of those employees. These mandatory programs must be applied for no later than 14 days following eligibility under the new employer.

Employees have sole responsibility to apply for the National Pension program. Workers must submit a “business place declaration form” and a “business place admission applicant qualification acquisition declaration form” no later than the 15th day following the month in which program eligibility occurs (the date of full employment).

Employees solely apply for National Health Insurance by submitting a “business place application notice” and “company applicant qualification acquisition declaration form” no later than 14 days following new employment. NHI cards must be applied for by employees through the NHI central office using Annexed Document Form No. 27.

Withholding Methods: Employers, or withholding agents, are required to withhold social insurance taxes at the time of payment based on rates established by the social insurance programs.

Returns and Remittance: Employers must remit all social insurance taxes and applicable fees to the National Health Insurance Service (NHIS).

Employers must remit to the NHIS during each pay period for employees.

Recordkeeping: Employers and employees are required to maintain their withholding documents, records of disbursements and tax filings for at least five years. Employers must retain documents related to health insurance for three years.

Penalties: Failing to withhold social insurance contributions and remit them to the NHIS could result in fines and penalties.

Other Taxes

South Korea’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Local income taxes also are levied on employers and employees registered in South Korea. The local income tax is uniform throughout South Korea’s nine provinces, although rates vary based on who pays. For all employers and employees subject to the income tax, corporation tax, or farmland tax, a levy of 10% is assessed on the total amount of taxes due during the year prior to assessment. Employers additionally are liable for a tax of 0.5% on total monthly employee payroll.

Local taxes are collected at source, along with income and social taxes, and remitted to the National Tax Service which then distributes funding to each province. Taxes must be remitted by the 10th day of the month following wage payment. Penalties are levied on withholding agents and taxpayers who fail to properly file and/or pay local taxes, including taxpayers are liable for a tax of 20% for failure to report or pay the tax, plus a fee of 0.03% multiplied by the total number of unpaid days.

COMPENSATION AND BENEFITS

Under the Labor Standards Act, employers are required to maintain basic minimum standards of workplace protections for their employees, including a minimum wage adjusted yearly, limited hours for work with overtime pay when necessary and three weeks of annual vacation with the possibility of additional accrual.

Workers are guaranteed maternity and sickness leave, as well as leave without consequence for military service when required.

Employers must compensate employees for unjust termination and/or injury while at, or as a result of, their workplace duties. Workers’ compensation for injury can be as much as 70% of normal salary while on medical leave.

Coronavirus (Covid-19) Guidance: Employers may apply for subsidies through Employment Insurance to partially cover allowances paid to employees to make up lost working hours when the employer is closed for at least 20% of the working days in a month, to partially cover the cost of providing employees with at least one month of paid leave, or to partially replace wages when employees must take unpaid leave.

Minimum Wage

Effective for 2022, the hourly minimum wage is ₩9,160, or ₩1,914,440 per month. Effective for 2021, the hourly minimum wage is ₩8,720, or ₩1,822,480 per month. Effective for 2020, the hourly minimum wage was ₩8,590, or ₩1,795,310 per month.

Overtime

Overtime is generally defined as any hours worked beyond eight in a day or 40 in a week. When hours are averaged over two or more weeks under a flexible work schedule, overtime is defined as hours worked that put employees over an average of 40 a week.

An employee’s full hourly ordinary wage plus an additional 50% of that ordinary hourly wage amount is required to be paid for each hour of overtime worked. Employees who work on their days off or on paid holidays are to be paid time and a half for work of less than eight hours during such time, or 200% if eight hours of work are exceeded. With the exception of pregnant employees and female employees within a year after childbirth, South Korea does not impose a national limit on daily overtime for adult workers. Compensatory time off may be provided instead under agreements with workers’ representatives.

Employees who perform night work, which is defined as work performed between 10 p.m. and 6 a.m., must be paid time and a half, although compensatory time off may be provided instead if workers’ representatives agree. Employers must get the consent of female employees age 18 or older before scheduling them for night work. Women younger than 18 or in their first year after childbirth can only be scheduled for night work with their permission and that of the Ministry of Employment and Labor. Pregnant workers cannot be scheduled for night work unless the workers themselves request it.

Overtime exceeding 12 hours per week is allowed for employees working in some sectors if there is a written agreement between an employer and a representative of employees.

Effective since Sept. 1, 2018, the only sectors for which overtime exceeding 12 hours per week is allowed are land transportation, water transportation, air transportation, other transportation services, and health services. The sectors for which overtime exceeding 12 hours per week no longer is allowed, effective since Sept. 1, 2018, are retention and warehousing, automobile and parts sales, wholesale and commodity brokerage, retail business, financial business, insurance and pension business, finance and insurance related service business, postal business, telecommunications business, educational service business, research and development business, market research and opinion polling business, advertising business, accommodation business, restaurant and restaurant business, video or audio record production and distribution business, beauty or bath and similar service business broadcasting business, building or industrial facility cleaning and control service business, sewage, social welfare service,

Effective until Aug. 31, 2018, the sectors for which overtime exceeding 12 hours per week is allowed are land transportation, water transportation, air transportation, other transportation services, health services, retention and warehousing, automobile and parts sales, wholesale and commodity brokerage, retail business, financial business, insurance and pension business, finance and insurance related service business, postal business, telecommunications business, educational service business, research and development business, market research and opinion polling business, advertising business, accommodation business, restaurant and restaurant business, video or audio record production and distribution business, beauty or bath and similar service business broadcasting business, building or industrial facility cleaning and control service business, sewage, and social welfare service.

Hours of Work

The standard workday is eight hours and the standard workweek is 40 hours, although the law allows for flexible work-hour arrangements. Employers may require employees to exceed the standard number of work hours in a day or week without having to pay overtime, provided that the average number of weekly hours over a two-week period does not exceed 40 and that neither workweek exceeds 48 hours.

In three stages of implementation that started July 1, 2018, the maximum number of hours that may be worked in a week for adult employees in South Korea is 52 hours per seven-day week, consisting of a maximum of 40 regular hours for the seven-day week plus 12 overtime hours. The maximum number of hours that could be worked in a week, until three stages of changes to this maximum number began to be implemented July 1, 2018, was 68 hours per seven-day week, consisting of a maximum of 40 hours for the five standard working days and 16 hours for work over the weekend, plus 12 overtime hours.

Effective since July 1, 2018, employers with at least 300 employees are required to abide by the revised maximum workweek. Employers with at least 50 employees but fewer than 300 employees are required to comply with the revised maximum workweek by Jan. 1, 2020. Employers with at least five employees but fewer than 50 employees are required to comply with the revised maximum workweek by Jan. 1, 2021. Under amendments to the Labor Standards Act that began to take effect July 1, 2018, a week is defined as seven days including holidays with a maximum workweek of 40 regular hours per seven-day week plus 12 overtime hours.

In a three-stage process that started to be implemented July 1, 2018, employees who are at least 15 years of age but younger than 18 years of age are subject to a maximum workweek of 35 hours plus five overtime hours. Effective since July 1, 2018, employers with at least 300 employees are required to abide by the revised lower maximum workweek for employees who are at least 15 years of age but younger than 18 years of age. Employers with at least 50 employees but fewer than 300 employees are required to comply by Jan. 1, 2020. Employers with at least five but fewer than 50 employees are required to comply by Jan. 1, 2021.

Employees are entitled to unpaid breaks of 30 minutes for every four work hours and of one hour for every eight work hours.

Under a Working Hours Savings System, employees can take leave in lieu of compensation for their hours spent on extended, holiday, or night work or they can work extended, holiday, or night work hours to make up for hours they use for leave. Employers and worker representatives can work out specific arrangements based on the situation of a particular company. The law provides for extending the time period for flexible work from two weeks to one month under employment rules and from three months to one year under a workplace agreement.

Employees under the age of 18 may generally work no more than seven hours per day and 40 hours per week, although by agreement with the youth and his or her parents, employers may extend this by one hour per day or six hours per week.

Employers cannot require female employees to work between 10 p.m. and 6 a.m. or on holidays without first getting their consent. Employers must obtain consent from both the Ministry of Employment and Labor and the employee to schedule pregnant women or minors to work during those times.

Within their first year after childbirth, women are prohibited from working more than two hours of overtime per day or six hours per week.

Holidays

Employees receive one day off per week with pay as well as a paid day off for Labor Day, which is a public holiday, on May 1 each year. Additional customary or bank holidays and holidays chosen by employers also may be observed.

The weekly holiday is typically Sunday, but there is no requirement that it be Sunday. Employees who work on their days off are paid time and a half, although the employer may give compensatory time off if allowed under a written agreement with employees’ representatives.

Effective since Jan. 1, 2020, private employers with at least 300 employees, and all government employers, are required to provide employees with paid leave on the following designated public holidays. Effective starting Jan. 1, 2021, private employers with at least 30 employees, and all government employers, are required to provide employees with paid leave on the following designated public holidays. Effective starting Jan. 1, 2022, private employers with at least five employees, and all government employers, are required to provide employees with paid leave on the following designated public holidays. Effective until Dec. 31, 2019, government employers, but not private employers, were required to provide employees with paid leave on the following designated public holidays.

The designated public holidays are as follows:

Jan. 1: New Year’s Day
Seollal, the new year according to the Korean Calendar, is observed for three days, including the days before and after the first day of the new year, and falls in January or February.
March 1: Independence Movement Day
The birthday of the Buddha is celebrated on the eighth day of the fourth month of the Korean Calendar and falls in April or May.
May 5: Children’s Day
June 6: Memorial Day
Aug. 15: Liberation Day
Chuseok, or Korean Thanksgiving, is observed on the 14th to 16th days of the eighth month of the Korean Calendar and falls in September or October.
Oct. 3: Foundation Day
Oct. 9: Hangul Day, also known as Korean Alphabet Day
Dec. 25: Christmas Day
The days of presidential, National Assembly, and local elections also are holidays.

If one of the designated days for Seollal or Chuseok would occur on Sunday or another holiday, the next working day becomes a holiday. If Children’s Day occurs on a weekend, the following Monday becomes a holiday.

Employers may substitute a designated public holiday with another day off upon written agreement of employees’ representatives.

Leave

Employees are entitled to 15 paid days off per year, and those who have stayed with a company for at least three years are entitled to an additional day of leave for every two years of service. Workers who have not been with their employer for a full year get one day of leave for every month worked in which they have no absences. Total days off may not exceed 25 per year. Paid leave is forfeited if not used within one year of being earned, except if the failure to use the leave was caused by the employer, and employers are required to begin reminding employees to use their annual leave on July 1 of each year.

Employees can be compensated for expired leave days, but only if the employer fails to give the employee three months’ written notice of the expiration.

Employees who work less than 80% of the annual workdays—not counting days off due to occupational injuries or diseases or maternity leave—are entitled to one day of annual leave for every month of full attendance at work. Employees may take advantage of leave days at their own discretion, although an employer may change the leave period if it would seriously interfere with business operations.

Sickness Leave: Employers are required to pay employees for sick leave only in cases of occupational injury or illness. Many employers choose to offer paid sick leave, however, upon receipt of proof of illness from a doctor.

Employers are required to grant a female worker one day of menstruation leave per month upon her request.

Maternity Leave: Pregnant women are entitled to 90 days of maternity leave, at least half of which must be taken after giving birth. The employer pays a worker on leave regular wages for the first 60 days, after which the Employment Insurance Fund covers the rest if the woman has participated in the fund for at least 180 days by the end of the leave.

With slight adjustments depending on the conditions of the pregnancy, these benefits also extend to women who have miscarriages or stillbirths.

Employers also must give women with children under 1 year old two 30 minute paid breaks for nursing each day.

Paternity Leave: Effective since Oct. 1, 2019, fathers are entitled to 10 days of paid paternity leave within 90 days after childbirth. Effective until Sept. 30, 2019, fathers were entitled to five days of paternity leave within 30 days after childbirth, of which three were required to be paid.

Parental Leave: Workers with children under eight years of age are entitled to 12 months of child care leave. Workers who have participated in the Employment Insurance Fund for at least 180 days before taking leave are eligible to receive benefits from the Employment Insurance Fund during the leave period. Benefits are calculated as:

for the first three months: 80% of ordinary wages, with a minimum monthly payment of ₩700,000 and a maximum monthly payment of ₩1.5 million; and
for the fourth to 12th months: 50% of ordinary wages, with a minimum monthly payment of ₩700,000 and a maximum monthly payment of ₩1.2 million.

However, 25% of the benefits are paid as a lump sum only after the employee has returned to work for six months.

Maternity leave is considered part of child care leave, so mothers are only eligible for 10.5 months of paid child care leave.

According to the Ministry of Employment and Labor, any worker, regardless of gender, is eligible under South Korean law to request child care leave. If both parents are workers, combined leave cannot exceed two years, one year for each parent. An employer that refuses to grant a worker’s request for child care leave may be subject to a fine of up to 5 million.

Employees may also reduce their working hours to take care of a child instead of taking a period of leave. Effective since Oct. 1, 2019, an employee may reduce his or her hours to a minimum of 15 hours and a maximum of 35 hours per week for this purpose. If an employee does not use the entire 12 months of child care leave, the remaining time may be added to the period for which working hours are reduced, meaning that working hours may be reduced for up to two years if no leave is taken. Effective until Sept. 30, 2019, working hours could be reduced to a minimum of 15 hours and a maximum of 30 hours per week for this purpose, and the combined total of leave and periods of reduced working hours could not exceed one year.

Companies with more than 300 female workers or 500 total employees are required to provide child care facilities at the workplace. The government provides loans and subsidies to help with the costs of establishing and running the facilities.

Family Care Leave: Effective starting Jan. 1, 2020, employees may request leave for up to 90 days per year to take care of injuries, illness, or old age affecting parents, spouses, a spouse’s parents, children, grandparents, or grandchildren. Effective until Dec. 31, 2019, family-care leave did not cover grandparents or grandchildren. Family-care leave must be taken in periods of at least 30 days; however, effective starting Jan. 1, 2020, up to 10 of these days of leave may be used on a day-to-day basis.

Effective Jan. 1, 2020, employees working at employers with at least 300 employees may also apply for reduced working hours for up to one year, which may be extended to up to two years, to take care of their own injury or illness; to take care of a family member’s injury, illness, or old age; to prepare for retirement, for employees at least 55 years of age; or for study. An employee may reduce his or her hours to a minimum of 15 hours and a maximum of 30 hours per week for this purpose. The working-hours reduction takes effect Jan. 1, 2021, for employers with at least 30 and up to 300 employees; and Jan. 1, 2022, for employers with up to 30 employees.

Employers cannot request workers who have reduced their working hours through parental leave or family care leave to work overtime, but may allow employees to work up to 12 hours per week of overtime at the employee’s request.

Military Leave: South Korean men generally must serve 21 to 24 months of active military duty and are later required to complete periodic training. Employers may not penalize employees for work missed due to military obligations.

Wage Payment

Wages must be paid on a regular schedule at least once a month directly to employees.

In the event of a temporary shutdown of a business caused by the employer, employees must be paid 70% of their average wages. If a suspension is caused by unavoidable circumstances, an employer can ask the Labor Relations Commission to be allowed to make lower payments.

Bonuses and Special Benefits

South Korea does not mandate employers to provide bonus payments to employees.

Termination Pay

Employers must give employees either 30 days’ notice of dismissal or 30 days’ compensation instead of notice. Employers are exempted from the notification requirement in the following cases:

when employees are hired on a daily basis for a period of less than three months;
when employees are contracted to work for a fixed period of two months or less;
when workers are employed on a monthly basis for less than six months;
when seasonal employees are contracted for a period of six months or less;
when probationary employees are employed for less than three months;
when workers cause considerable harm to the business or purposefully damage workplace property; and
when it is impossible to continue business because of extraordinary circumstances such as natural disaster, armed conflict, or bankruptcy.

Workers’ Compensation

Most employers are required to participate in the Industrial Accident Compensation Insurance system, which provides benefits for workers who incur work-related injuries or diseases. Proof of employer negligence is not necessary for the granting of compensation, although additional damages may be sought in civil court in cases of negligence. Any awards made in civil court will be deducted from workers’ compensation.

Workers’ compensation is provided to employees who need medical care and/or cannot work as a result of an occupational injury or disease for more than three days. The system covers the costs of medical care, such as examinations and tests, medicine, treatment, surgery, hospitalization and prostheses. During the period of medical treatment, a worker is paid 70% of his or her average wage.

Workers who remain disabled after receiving two years of medical care are paid an annuity or a lump sum, the form of the payment and the amount depending on the type and level of disability.

If a worker dies as a result of a work-related accident or disease, survivors receive a lump-sum payment or an annuity, as well as funeral benefits equal to 120 days of the worker’s average wage.

Recordkeeping

Employers must retain salary documents for at least two years. While keeping signed copies of employment agreements is not required, it is recommended.

FOREIGN WORKERS

Generally, foreign companies seconding foreign workers to South Korea or South Korean businesses hiring foreign workers for their domestic offices or branches are required to apply for and receive a visa prior to arrival. Visa types are varied, but the most applicable to business workers are the C-2 temporary business visa; the D-7 Intra-Company Transfer visa; the D-8 Corporate Investment visa; and the D-9 Trade Management visa.

Employers are required to withhold income taxes and social insurance taxes on their South Korean-based income for all nonresident workers employed in South Korea, although special circumstances may enable them to qualify for a unique tax statuses that reduce their tax burden. Tax treaties also are a common way to alleviate their potential burden.

Visas: Foreign workers entering South Korea should be carrying a valid passport and visa issued by the Ministry of Justice.

Foreign workers who want to stay in South Korea for less than 90 days fall into three statuses: visa exemption (B-1; no visa required), travel/transit (B-2; no visa required), or temporary visit (C-3; visa required). For this short duration, many foreign nationals fall into one of the prior categories which does not require a visa, including those from the United States and most of western Europe. Many tourists who are only temporarily traveling through South Korea also do not require a visa, including European-bound Chinese tourists.

Business visitors staying less than 90 days are categorized as temporary business visa holders (C-2). This category covers those who may be arranging a branch office or those conducting consulting work. A fee applies. Workers seeking employment on a more permanent basis, or more than 90 days, are classified in the following visa categories: Intra-Company Transfer (D-7), Corporate Investment (D-8) and Trade Management (D-9). The Corporate Investment Visa often is used for management and foreign office administration, including executives, senior managers and highly skilled specialists.

Fourteen Pacific-rim countries are members of the APEC Business Travel Card agreement, which enables workers to travel to South Korea for 90 days without a visa for short-term business objectives.

All visa applicants apply through their local embassy or consultate with final review and approval from the immigration management office. Employees sent to South Korea by foreign employers are required to submit the following to their consular office: visa issuance application form; copy of passport; business registration certificate; invitation purpose statement; dispatch order letter; resume; required professional demonstration document; tax payment certificate; and the payment of a commission fee (receipt stamp).

Family members or dependents also remain with a D-8 visa holder using the F-3 visa, which merely requires a visa issuance application accompanied by a demonstration of a familial connection, a certificate of tenure in office and a tax payment certificate. The F-3 also requires a commission fee.

Taxes: Nonresident workers are subject to South Korean taxes on income accrued in South Korea only. A nonresident is any person that does not meet the qualifications of residency. Generally, nonresidents are subject to both income taxes and social insurance taxes at the same rates as residents. Nonresidents also receive a registration number (alien registration number) from the government for reporting purposes.

Nonresidents are subject to the same income tax rates as residents, although they may or may not be eligible for certain exemptions and deductions. Generally, South Korean tax laws cannot be interpreted to give foreign employers or employees a greater tax burden than they would otherwise have if they were domestic. Employers of foreign employees in South Korea must issue withholding tax receipts for year-end tax settlement to their employees before the end of February.

Effective until Dec. 31, 2021, nonresidents can choose to use a flat tax rate of 19% as an alternative to the regular progressive individual income tax rates. Foreign workers who start to work in South Korea on Dec. 31, 2021, or earlier, and who elected to use the flat tax rate can have that rate apply for up to five consecutive tax years. Foreign workers who started to work in South Korea before Jan. 1, 2014, and who elected to use the flat tax rate could have that rate remain in effect up to Dec. 31, 2018. If elected, nonresidents may apply a flat tax rate to their gross earned income, with no deductions, income exclusions, or tax credits allowed.

When filing income tax returns, nonresidents are required to submit a copy of their alien registration card; their application and supporting documents for tax credits and exemptions; documents used to calculate the total gross income amount, including income statements; and any other documents specifically requested by the National Tax Service office.

Nonresidents also are subject to social insurance contributions, in most cases. Foreign workers departing South Korea may apply for a lump-sum of their contributions by bringing certain documents to their local National Pension Service office.

Finally, foreign companies establishing themselves in a South Korean free economic zone (abbreviated as KFEZ) or foreign investment zone (abbreviated as FIZ) are classified as foreign direct investment and largely are exempt from individual and corporate taxes during the first five years of operation, with additional exemptions possible thereafter.

Wages/Payments: South Korea does not have any special wage requirements for foreign workers.

However, companies that hire foreign laborers must obtain “departure-expiration insurance” to pay retirement benefits prior to the departure of the workers.

WORKING IN THE UNITED STATES

Foreign workers from South Korea must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

South Korea is eligible for the visa waiver program for business visitors, which allows South Korean citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for reasonable length of time is at the discretion of the Department of Homeland Security.

South Korean workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, South Koreans are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. South Korea has both a tax treaty and a social tax totalization agreement with the U.S.

State and local taxation of South Korean workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they are granted resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from South Korea and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends. A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer.

All nonresidents in the U.S. who are from South Korea and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c. Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use 4a or 4b. Nonresidents in the U.S. who are from South Korea may be able to use Step 3 to claim the child tax credit or the credit for other dependents. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form. A special provision allowed nonresidents from South Korea to use Form W-4 to claim withholding allowances for themselves and a spouse and any dependent children who live with them in the U.S. for some portion of the year.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: South Korea and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the ith the employer.

Students, trainees, teachers and researchers in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student, trainee, teacher or researcher is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of teaching or engaging in research for a period not expected to exceed two years by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. The student exemption is not to exceed U.S. $2,000 a year; no limit is placed on the teacher or researcher compensation for South Koreans.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the United States.

Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will only pay into one of the social security systems, either the home or the foreign system, but not both. Foreign nationals, utilizing a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.

South Korea and the U.S. have entered into a totalization agreement and a summary of those provisions is included in

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

South Korea has entered into more than 90 income tax treaties, including an income tax treaty with the United States. South Korea also has more than 30 totalization agreements for social tax coverage purposes, including an agreement with the United States.

South Korea’s tax treaties are available in

RESOURCES

All resources in English unless otherwise noted.

General

U.S. State Department:

U.S. Relations With the Republic of Korea
International Travel Information: South Korea

U.S. Central Intelligence Agency:

The World Factbook: South Korea
The World Factbook: Languages

U.S. Department of Commerce:

Export.gov: Korea - Market Overview
Export.gov: Korea - Business Travel

U.S. Library of Congress:

Guide to Law Online: Republic of Korea
Global Legal Monitor: South Korea
Korean Hangul Romanization Table

Invest Korea

Korea Employers Federation (Korean)

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: South Korea

Taxes

Income Tax Act of the Republic of Korea

Home Tax Service online filing (Korean)

South Korea National Tax Service:

Personal Income Tax Brackets
Forms

South Korea Ministry of Health and Welfare (Korean)

South Korea Ministry of Strategy and Finance: A Guide to Korean Taxation: 2016

South Korea Ministry of Employment and Labor: Employment Insurance Unemployment Benefit Premium Rate Increase Summary for Oct. 1, 2019 (Korean)

Compensation and Benefits

South Korea Ministry of Employment and Labor (Korean)

2021 Minimum Wage

South Korea National Pension Service

Korea Workers’ Compensation & Welfare Service

South Korea National Health Insurance Service (Korean)

Labor Standards Act (Korean)

Act on Equal Employment and Support for Work-Family Reconciliation (Korean)

Regulations on Holidays of Government Offices (Korean)

South Korea Military Manpower Administration: Military Leave Time (Korean)

Foreign Workers

Korean Free Economic Zones (FEZ)

Hi Korea e-Government for Foreigners

South Korea Social Insurance Information System: Migrant Workers’ Eligibility for Coverage

Working in the United States

U.S. Department of Labor:

Foreign Labor Certification
Hiring Foreign Workers

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Department of State: Visa Waiver Program

Treaty Arrangements