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Payroll and Benefits Guide South Korea

Last updated: May 16, 2023

Currency
South Korean Won (KRW)
Employer Taxes
10.794% - 29.35%
Payroll Frequency
Monthly
Employee Costs
9.4%
Capital
Seoul
Date Format
yyyy/mm/dd
Fiscal Year
1 January - 31 December
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Contribution

Employer Employer Payroll Contributions
4.50%
National Pension (taxable monthly income capped at 5,900,000.00 KRW Lower Limit of Monthly base is KRW 370,000 )
3.545% National Health Insurance (applied on income up to 4,240,710 KRW)
1.15% – 1.75%
Employment Insurance (varies by industry, not capped)
0.459%
Long Term Care Insurance (applied on income between 279,266 and 119,625,106 KRW)
0.606%-18.60%
Worker Accident Compensation Insurance (rate is dependent on the type of business, not capped)
0.50%
Resident Tax
10.794% – 29.35%
Total Employment Cost
Employee Employee Payroll Contributions
4.50%
National Pension (taxable monthly income capped at 5,900,000.00 KRW Lower Limit of Monthly base is KRW 370,000 )
3.545% National Health Insurance (monthly contribution capped at 3,911,280 KRW)
0.459%
Long Term Care Insurance (applied on income between 279,266 and 119,625,106 KRW)
0.90%
Employment Insurance (varies by industry, not capped)
9.4%
Total Employee Cost
Employee Income Tax
6.00%
up to 14 million KRW
15.00%
14 million to 50 million KRW
24.00%
50 million to 88 million KRW
35.00%
88 million to 150 million KRW
38.00%
150 million to 300 million KRW
40.00%
300 million to 500 million KRW
42.00%
500 million to 1 billion KRW
45.00%
1 billion KRW and above
Local Income SurTax
0.60% up to 14 million KRW
1.50% 14 million to 50 million KRW
2.40% 50 million to 88 million KRW
3.50% 88 million to 150 million KRW
3.80% 150 million to 300 million KRW
4.00% 300 million to 500 million KRW
4.20% 500 million to 1 billion KRW
4.50% 1 billion KRW and above
The greater of:
45% of income tax liability (35% applied to income tax liabilities of up to KRW 30 million) before exemptions
or
actual tax after exemptions
Alternative minimum tax
(business income of a resident individual and Korean-source business income of a non-resident individual)
Non- Resident Tax
19.00% Flat rate (20.90% inclusive of local income tax) for foreign employees with less than 5 years residency in Korea.

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

The National Minimum Wage in South Korea is 9,860 KRW per hour. The minimum wage is applicable to all companies and employees (regardless of residency status).

MINIMUM WAGE (PER MONTH)

Highest
Lowest

Payroll

Payroll Cycle

The payroll cycle in South Korea is generally monthly and payments are usually made on the last working day.

13th Salary

There is no legislation for 13th-month payments in South Korea.

Authority Payments

Authority Payment  Dates Methods

국민건강보험

Monthly; 10th of the following month

*ICP trust account to localize payments

*Local account owned by client (Payment by Client or Direct debit)

**세무서 – Tax office (account under the company’s name)

Monthly; 10th of the following month

*ICP trust account to localize payments

*Local account owned by client (Payment by Client)

**구청 – Local office (account under the company’s name)

Monthly; 10th of the following month

*ICP trust account to localize payments *Local account owned by client (Payment by Client)

Read here about the challenges with Maritime payroll payments

Working Hours

General

The workweek in South Korea is eight hours per day, 40 hours per week.

Overtime

All hours exceeding the standard 40 hours are paid as overtime and are regulated by employment contracts/collective agreements. In general, overtime is paid at 150.00% of the standard salary rate, increasing to 200.00% for night work (after 10 pm). There is a maximum total number of overtime hours per week of 12 hours. A maximum of 52 hours can be worked in a week including overtime.

The South Korean government has unveiled the latest reforms to its current work week system that will extend working hours.  The latest labor reforms will also allow businesses to manage employees’ overtime hours on either a weekly, monthly, quarterly, half-yearly, or yearly basis.  Under the new regulations, employees may work a maximum of 140 hours of overtime per quarter, 250 hours in half a year, and 440 hours in a full year. The latest measures will expand the maximum weekly work hours to 69, up from the 52-hour limit as stipulated in the South Korean Labour Standards Act, although these are currently (in March 2023) being challenged and this element of the reform may yet be removed.

The new reform has introduced a system that guarantees a rest period of 11 hours between each working day and allows these hours to be used consecutively with annual paid leave entitlements, but would still require an agreement between the employer and the employee.

Leave

Annual Leave (vacation)

Paid leave in South Korea is outlined in the employment contract as a minimum of 11 days paid leave a year, following the completion of one-year of service, in addition to public holidays. This leave increases to 15 days of paid leave when the employee is in the second and third years of service. From the third year and onwards, one additional day of paid leave is added to the entitlement upon completion of every two years of service up to a maximum of 25 days paid leave. Carryover allowance is per employer discretion.

Public Holidays

Certain Public holidays when falling on a weekend are moved to the following working day as a day off in lieu.

Date Day Holiday Notes
1 Jan 2024 Monday New year’s day
9 Feb 2024 Friday Lunar New Year
10 Feb 2024 Saturday Lunar New Year
11 Feb 2024 Sunday Lunar New Year
12 Feb 2024 Monday Lunar New Year Day off in lieu
1 Mar 2024 Monday Independence Movement Day
10 Apr 2024 Wednesday Election Day for the 22nd National Assembly
1 May 2024 Wednesday Labors Day
5 May 2024 Sunday Childrens Day
15 May 2024 Wednesday Buddha´s Birthday
6 Jun 2024 Thursday Memorial Day
15 Aug 2024 Thursday Independence Day of Korea
16 Sep 2024 Monday The Harvest Moon Festival
17 Sep 2024 Tuesdays The Harvest Moon Festival
18 Sep 2024 Wednesday The Harvest Moon Festival
3 Oct 2024 Thursday the National Foundation Day
9 Oct 2024 Wednesday the Hangeul (Korean characters) Day
25 Dec 2024 Wednesday Christmas Day

Private companies with five to 29 employees must now provide paid days off for public holidays as well as substitute holidays (that were previously unpaid).

Sick Days

There is no statutory sick leave entitlement in South Korea. An employer, however, shall compensate an employee who is undergoing medical treatment in an amount equal to 60% of the employee’s average wage during medical treatment.

Maternity Leave

All female employees are eligible for maternity benefits consisting of 90 days of paid leave, increasing to 120 days for multiple/complicated births. The maternity leave is generally taken 45 days before the due date and 45 days after, but a minimum of 45 days leave must be used following the birth (a maximum of 45 days can be used before the birth). The maternity payment is made by a combination of social security/governmental payments and employer payments. For larger companies in South Korea, the employer should pay the maternity pay at 100.00% of the regular salary rate for the first 60 days. After which, the social security/government will provide support allowance for the remaining 30 days (capped two million KRW per 30 days) and with the employer having the option to provide the sum of money for any difference to the employee’s regular salary rate. For small companies, the social security/government supports the employer throughout the 90 days.

Paternity Leave

The father is entitled to mandatory paid paternity leave of a total of 10 days, five paid by the employer and five days paid by the social security/government, and must be used within the period of 90 days following the day or birth.

Parental Leave

Parents of children under the age of eight can request a period of full-time or part-time childcare leave of up to one year. A request for leave should be sent to the employer at least 30 days before the start of the leave period, with an allowance paid by the social security/government.
Should one or both parents take their parental leave during the first year of their child’s birth, both parents will be paid 100% of their monthly income, rather than as previously, only one parent received 100% while the other received a reduced payment of 80%.

Other Leave

Work Injury Leave– for any work-related injury, employees are entitled to receive three months of paid leave with 70.00% of the employee’s regular salary.

Menstrual Leave – for female employees, they are entitled to 1 (menstrual) leave per month.

Family-Care Leave – Unpaid leave for a period of 90 days per year to provide support and care to family members including grandparents, parents, spouse, children, grandchildren and a spouse’s parent in case of their sickness, injury, or old age.

 

Vacation Days
Public Holidays
Highest
Lowest

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

Termination

Termination Process

The termination process is standard in South Korea and is usually based on two main reasons for termination. There is a requirement for the employer to prove a justifiable reason to terminate and that this reason is legally acceptable, as depicted within the Korean Labour Standards Act. Also, when laying off an employee in Korea, the employer must prove that an urgent managerial necessity exists before an employee is laid off.

Notice Period

According to South Korean general labor law, there is no mandatory notice period unless stipulated by your employment contract/company manual. However, it is common practice to provide one month’s notice. See EoR page for specific EoR regulations.

Severance Pay

Employers must adopt a retirement benefit system. The default is the statutory severance pay system, whereby, upon the termination of employment for any reason (including employee resignation), where the employee has been employed for at least one year, the employee is entitled to severance pay of 30 days’ average wages (ie, all wages generally including any bonus paid within the previous 3 months) for each year of continuous service.

Probation Period

Probation periods in South Korea for permanent employees are optional and generally between one and three months. It is rare for employers to terminate a contract once the probation/training has been completed since the company must pay unemployment.

VISA

VISA

Any foreigners coming to work in South Korea will need to be registered with the local immigration authorities within the first three months of their stay. The type of work permit and employment visa differs by the role in which the employee will be undertaking. To allow an employee to stay in South Korea for more than 90 days, the appropriate visa needs to be sought:

  • E-1 Professor Visa is aimed at foreigners to deliver lectures or do research in their field; it is valid for one year and can be renewed annually.
  • E-2 Foreign Language Instructor is aimed at foreigners who wish to teach a foreign language at a company/school/education infrastructure. It is valid for two years and can be renewed every two years.
  • E-3 Research is aimed at foreigners invited by a public or private institution to research natural science or advanced technology; it is valid for one year and can be renewed annually.
  • E-4 Technological Guidance is aimed at foreigners invited by a public or private institution to provide expertise in natural science or high technology; it is valid for one year and can be renewed annually.
  • E-5 Special Profession is aimed at foreigners that are architects, lawyers, physicians, accountants, and other internationally licensed professionals and hold Korean government permission to practice their field of expertise is valid for one year and can be renewed annually.
  • E-6 Culture and Art are aimed at foreigners who participate in musical, artistic, and literary activities; it is valid for one year and can be renewed annually.
  • E-7 Specially Designed Activities are aimed at foreigners invited to participate in activities designed by the Korean Ministry of Justice through a public or private organization. It is valid for one year and can be renewed annually.
  • D-5 Long-Term New Coverage is aimed at reporters working for foreign media (broadcast, newspapers, magazines, etc.). The single-entry visa is valid for three months and can be renewed in one-year intervals.
  • Alien Registration Card (ARC) Most people who are staying in South Korea for more than six months also need to obtain their Alien Registration Card (ARC).

VAT

General

The standard rate of VAT in South Korea is 10.00%

Stay up to date on payroll & employment law changes

Version History

January 24, 2024
Child Support Allowance information added to common benefits.
January 24, 2024
Minimum wage have been increased to 9,860 KRW per hour.
January 24, 2024
Sick leave and other leave sections updated
June 28, 2023
Employer’s and Employee’s contributions have been updated.
May 30, 2023
National Pension (taxable monthly income capped at 5,530,000.00 KRW will increase to 5,900,000.00 as of July 2023)
January 24, 2023
Employer and employee payroll contributions have been updated.
May 31, 2022
The National Minimum Wage in South Korea is now 9,160 KRW per hour. The minimum wage is applicable to all companies and employees regardless of residency status.
Payroll contributions and personal income tax rates have been updated.
The standard rate of VAT in South Korea is 10.00%.
January 1, 2021
Employee income tax: Highest tax bracket raised to 49.5% (including 10% local residence tax) for earnings 1 billion and up.
An additional mandatory monthly employer contribution of 0.5% is applied towards ‘resident tax on employees income.
More

Questions & Answers

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Dylan S.
Dylan S.
3 years ago

Are employees able to request work flexibly? If so, for what?

Erez Greenberg
Erez Greenberg
3 years ago
Reply to  Dylan S.

Employees are eligible for reduced hours for the following:

-Reduced hours instead of parental leave. This can last up to 2 years.
-Reduced hours for family care leave, in preparation for retirement (age 55 or older), or to pursue in academia. Up to one year.

Reduced working hours should be between 15 hours and 30 hours per week.

Jessie A.
Jessie A.
2 years ago

Are any penalties paid for working weekends or public holidays?

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Jessie A.

Hi Jessie, The maximum number of working hours per week is 52. Anything over 40 hours per week, 8 hours per day is considered overtime, and payment is 150% of a regular salary. Work done after 10 pm pays 200%. There is no limit for daily overtime for employees, but the weekly overtime cannot exceed 12 hours. There will only be penalties if an employee is forced to work more than the acceptable number of daily or weekly hours.

Jessie A.
Jessie A.
2 years ago
Reply to  Erez Greenberg

Thank you Erez!

Nano
Nano
2 years ago

Why employer need to contribute 0.5% ‘resident tax on employees income.

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Nano

Hi Nano,
This is a local tax an employer must pay if there the monthly average of the total employee salaries paid for the last 12 months at each business office exceeds 150 million won. The employer must report and pay the employee’s resident tax monthly to the local government where the business office is located.

Leadia
Leadia
10 months ago
Reply to  Erez Greenberg

How to calculate the local tax on employees income?

Enny Shmurin
Admin
Enny Shmurin
9 months ago
Reply to  Leadia

Hello, you can either use the Cost Calculator or look up the tax table that is available in each country.

Niyah K.
Niyah K.
2 years ago

Hi, can the final payment for severance be delayed or paid after 14 days?

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Niyah K.

Hi Niyah, the only way severance can be paid after 14 days is for special circumstances or by mutual agreement between the parties.

Ali H
Ali H
2 years ago

What happens if a public holiday falls on the weekend? Do they get a substitute or day off in lieu?

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  Ali H

Hi Ali, thank you for your question. Employees receive the following Monday off when a national holiday falls on a Saturday or Sunday. This law applies to companies with 5 or more employees (employers with 5 or fewer employees are not required to give any paid leave).

Gilat
Gilat
2 years ago

At what age employees entitled to retire and what are they entitled to?

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  Gilat

Hi Gilat, the age of retirement is 60 in South Korea, however, it is very common for individuals to retire much earlier. That being said, pension only begins to kick in at the age of 60 and the amount will vary based on how many years the individual worked, how much money was earned, and how much was contributed towards pension.

Gilat
Gilat
2 years ago
Reply to  Emily Kuhnert

Thank you Emily for your replay.
If an employee has reached retirement age, does he usually receive also to a severance package?

Cheryl
Cheryl
1 year ago

If an employee works on a Sunday, is the pay still calculated at 150%?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Cheryl

Yes, working on weekends are paid at 150% salary. After 6 pm it is paid at 200% salary.

Vineeth
Vineeth
1 year ago

Is there any remote work allowance/internet reimbursement mandatory as per law for South Korea ?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Vineeth

While it is not mandatory, some allowance might be provided to cover some of these costs, especially if it is necessary for the job to be completed.

Ahimbisibwe
Ahimbisibwe
1 year ago

How much is overtime pay for every hour

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Ahimbisibwe

Hi, Overtime is paid at 150.00% of the standard salary rate, increasing to 200.00% for night work (after 10 pm).

noraisha
noraisha
11 months ago

Hi, Do we need to include OT in eligible earnings for Bonus calculation?

Enny Shmurin
Admin
Enny Shmurin
10 months ago
Reply to  noraisha

Hello, typically overtime is something done by exception, not as a fixed working set up, therefore it would normally not be part of the calculation. Though, depending on the nature of the bonus and overtime agreement in place, it could be considered.

Baginesh
Baginesh
9 months ago

Hi,
I am handling Korean company payroll operation. Like to know if an employee joins on 3rd Working day of the month is she/he is enrolled for 4 social insurance on same month or only from next month onwards?
Thanks,
Baginesh

Enny Shmurin
Admin
Enny Shmurin
9 months ago
Reply to  Baginesh

Hello,
If the start date is 1st of the month then all Social Contributions start within the first month. Workers who start after the beginning of the month will usually see their National pension and National Health contribution pushed to the next month, however the Employment Insurance and Incident insurance will still need to be paid within the starting month.

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Payroll and Benefits Guide
in South Korea

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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Public Holidays Calendar

South Korea
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CSV
PDF
ICS
Date Day Holiday Notes
1 Jan 2024 Monday New year’s day
9 Feb 2024 Friday Lunar New Year
10 Feb 2024 Saturday Lunar New Year
11 Feb 2024 Sunday Lunar New Year
12 Feb 2024 Monday Lunar New Year Day off in lieu
1 Mar 2024 Monday Independence Movement Day
10 Apr 2024 Wednesday Election Day for the 22nd National Assembly
1 May 2024 Wednesday Labors Day
5 May 2024 Sunday Childrens Day
15 May 2024 Wednesday Buddha´s Birthday
6 Jun 2024 Thursday Memorial Day
15 Aug 2024 Thursday Independence Day of Korea
16 Sep 2024 Monday The Harvest Moon Festival
17 Sep 2024 Tuesdays The Harvest Moon Festival
18 Sep 2024 Wednesday The Harvest Moon Festival
3 Oct 2024 Thursday the National Foundation Day
9 Oct 2024 Wednesday the Hangeul (Korean characters) Day
25 Dec 2024 Wednesday Christmas Day