Overview

Capital
Seoul
Currency
South Koran Won

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Taxes

Employer
4.50% - National Pension
3.35% - National Health Insurance
0.7% - 34% - Long-term care insurance
0.85% - Employment Insurance
Employee
4.50% - National Pension
3.35% - National Health Insurance
0.65% - Employment Insurance
6% - up to 12 million KRW
15% - 12 million - 46 million KRW
24% - 46 million - 88 million KRW
35% - 88 million - 150 million KRW
38% - 150 million KRW & above

Termination

Termination Process
The Korean Labor Standards Act declares that regular employees or those working under contract may only be dismissed from job for justifiable or managerial reasons. The justifiable reason must be directly attributable to the employee. Among these reasons are stealing, purposeful mishandling of equipment, absenteeism from work for many days, and the breach of work-related laws. Managerial reasons should be given by employers. They need to prove that they have an urgent managerial necessity to fire an employee. That is, they need to convince the Supreme Court that without dismissing this employee, they would not properly conduct their business.
Advance Notice
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.
Severance Pay
Under Korean law, full-time employees, both Korean citizens and foreigners, receive severance pay, which is an amount paid to them upon dismissal or discharge from work. Full time employees receive one month’s salary for each year served within the company. Worker must have been employed at least a year and worked 60 hours per month.

Payroll

Payroll Cycle
Payroll cycle in South Korea is monthly.
Pay Date
Salaries in South Korea are paid by the 15th day of each month.
Working Hours
40 hours per week and 8 hours per day. The maximum amount of the working hours per week is 52. Depending on the length of the month, employees can work between 208-260 hours.
Overtime Payment
Anything over 40 hours per week, 8 hours per day is considered overtime. There is no limit for daily overtime for employees, but the weekly overtime cannot exceed 12 hours

Mandatory Benefits

Social Security
South Korea implements social insurance though 4 types of schemes: • National Pension – 4.5% • National Health Insurance – 3.35% • Employment Insurance – 0.65% • Industrial Accident Compensation Insurance – 0.7% Employers are required to enroll in the national social insurances for employees and contribute their prescribed portions to the insurance authorities in accordance with the relevant laws.
Health Insurance
The National Health Insurance gives access to affordable care for all citizens. The employer and employee each provide 3.35%
Unemployment Insurance
Unemployed people with six to 12 months of coverage receive 50% of the insured's prior three months daily earnings average after a seven-day waiting period, for up to 90 days. Unemployment is also paid for up to 240 days with more than 10 years of coverage to people aged 50 or older, or to those who are disabled. The minimum daily benefit is 90% of the minimum daily wage. Additional allowances are paid to those unemployed to encourage retraining or a job search. Allowances include the early reemployment allowance, vocational ability development allowance, and transportation and home moving allowance
National Pension
All employees are required to enroll in the National Pension Scheme and contribute to this fund alongside employers. Foreign employees residing in South Korea must enroll for the National Pension Scheme as well. Pension contributions to the government are not subject to tax. The only people exempt from the mandatory enrollment are employees sixty years of age or older, casual workers, and temporary employees. Obligatory deductions are: • Employer – 4.5% • Worker – 4.5%
Long Term Insurance
The Long-Term Insurance (LTC) is a 6.55% contribution from the total health care contributions. It is composed of (60%–65%), tax subsidies (20%), and a use copayment, which is 20% for institutional services and 15% for home-based services.
Employment Insurance
Employment Insurance provides unemployment benefits to employees who were fired from their workplaces. This insurance also subsidizes training of employees in accordance with South Korea’s Employment Insurance Act. All employees are required to pay employment insurance, with exceptions to a director of a company, employees older than 65 years old, and casual workers. As a rule, foreign employees are also exempt from the enrollment of the Employment Insurance scheme, although, those of them who hold F-2, F-5, D-7, D-8, and D-9 visas do need to participate in the Employment Insurance. The burden of the payment for Employment Insurance is shared by employers and employees alike. Employees contribute 0.65 percent of their monthly employment income, whereas employers pay from 0.9 to 1.5 percent of it depending on the size of the company.
Industrial Accident Compensation Insurance
ndustrial Accident Compensation Insurance provides financial assistance to employees with work-related diseases, injuries, and disabilities. This insurance is paid from the fund created by the employer’s insurance contribution in accordance with the Industrial Accident Compensation Insurance Act. All employees, whether local or foreigners and regardless of their age, should be covered by this insurance. How much employers pay depends on the industry in which they work. Employers working in the manufacturing sector pay from 0.7 to 4.2 percent and those in retail industry pay 0.9 percent. The premium rate for enterprises in financial services and insurance is 0.7 percent.