Employer Payroll Tax
Employee Payroll Taxes
Employee Income Tax
The hourly minimum wage is 8,590 South Korean won.
The payroll cycle is monthly. There is no statutory payment date. It can be any date set by the company. In practice, it is often on the 25th or last day of the month.
There is no 13th salary.
40 hours per week and 8 hours per day. 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.
In the first year, employees are entitled to 11 days per year.
In the second and third years, employees are entitled to 15 days per year.
In the third year and onward, one day’s paid leave is added for every two years of employment, up to a total of 25 days.
There are 12 public holidays.
There is no paid leave for non-work-related illness or injury. However, if illness or injury is work-related the employer must provide paid leave until the time of recovery.
90 days maternity leave (120 days maternity leave in case of twins).
Small companies : The government supports allowance for 60 days (capped at 2 million won per 30 days) as maternity leave allowances, the company must pay the difference of salary from the allowance for 60 days (compulsory) and for the last 30 days, the difference payment is up to company’s decision.
Large companies: the company should pay the total salary for 60 days and the government only support allowance for the last 30 days (capped 2 million won per 30 days), the difference is up to the company’s discretion.
A male worker can take up to 10 days of paid paternity leave (5 days by company & 5 days by the government) and request paternity leave of up to 90 days from the day of the child’s birth.
Parents are entitled to parental leave of up to 1 year until the child reaches the age of 8. The allowance is covered by the government.
Mothers are entitled to a maximum of 1 year leave
1st-3rd month: Paid at 80% of the regular salary capped at 1.5 million KRW
4th-12th month: Paid at 50% of the regular salary capped at 1.2 million KRW
Fathers are entitled to a maximum of 1 year leave
1st-3rd month: Paid at 100% of the regular salary capped at 2.5 million KRW if the father takes the leave after the mother.
The allowance will be capped at 1.5 million KRW if the mother and the father take the leave at the same time.
4th-12th month: Paid at 50% of the regular salary capped at 1.2 million KRW.
Work-Related Injury Leave – Employees receive 70% of their wages for up to three months.
Employees under “contract” or “regular employees” may only be terminated for “justifiable reason attributable” to the employee or “urgent managerial necessity” after the completion of the employee’s probationary period.
Justifiable Reason for Dismissal of an Employee in Korea
The Korean Labor Standards Act places the burden on the employer to prove a “justifiable reason to terminate.” According to the Korean Supreme Court, the reason must be “directly attributable to the employee.” Stealing, missing an excessive number of days of work, and violating laws related to the job, have all been deemed enough to terminate. Prior to termination, an attorney should be contacted to allow the company not to terminate an employee in violation of law.
Managerial Reasons for Laying off an Employee in Korea
The Korean Labor Standards Act places the burden on the employer to prove that an “urgent managerial necessity exists” before an employee is laid off. The Supreme Court has interpreted this to mean that a company should prove that without the layoff, the company would have extreme difficulty in maintaining operations. The standard is interpreted strictly.
Employers in South Korea must provide a 30-day notice before dismissing an employee. In some circumstances, employees are informed about their dismissal a year in advance. However, notice may not be required in the following cases:
- The employee commits any intentionally wrongful act that produces a damaging effect on the company’s business or operations.
- The employee is serving a probationary period of three months or less.
- The employee is paid monthly and has worked for less than six consecutive months.
A full-time employee is entitled to receive severance pay equal to one month’s salary for each year of employment if they have worked for at least one year and they have worked for more than 15 hours per week or more than 60 hours per month.
Severance pay is to be paid within two weeks of termination regardless the reason of the termination.
Probation period can last a maximum of 3 months.
The VAT rate in South Korea is 10%.