South Korea Payroll and Benefits Guide

What global businesses need to know about payroll in South Korea

The “Miracle on the Han River” is the name given to one of the greatest economic success stories of the 20th century. At the end of the Korean War in the 1950s, South Korea was a relatively poor country with a lack of major development. But thanks to a combination of factors, including a hard-working labor force, government support for heavy industry, help from countries like the United States and Japan, and a strong focus on education, its economy was completely transformed in just a few decades.

By the mid-1990s, South Korea had become established as one of Asia’s biggest economies, and it still ranks 14^th globally (at the time of writing). Businesses such as LG, Samsung, Hyundai and KIA are now recognised global leaders in the technology and automotive sectors, and South Korea is habitually high up on international companies’ lists of target Asian markets.

But on a practical level, you should still proceed with caution, not least because of some cultural differences that raise expectations for high-quality payroll performance. Additionally, some recent legislative changes have underlined the need to stay informed, in order to stay compliant. This guide covers all the basics, so that you can start your South Korean expansion on the front foot.

Getting Started

To start up a business in South Korea, the individuals involved require visas (this will generally be one of the D-8 series of visas if you’re a foreign investor).

The next step is to set up a business structure, and by far the most common in South Korea is a ‘chusik hoesa’, which is a joint-stock company with limited liability. It’s also worth noting that foreign companies are not allowed to use the word ‘hoesa’ in their names so that they are not mistaken for domestic organizations.

Strictly speaking, there is no minimum share capital requirement for starting a private business in South Korea. However, foreigners applying for the D-8 visa generally have to commit to investing a minimum of 100 million won (approximately £52,000, $68,000, €59,000).

Through the business registration process, you’ll need to complete key steps including:

Selecting and registering a suitable company name
Obtaining sector-specific licenses from the local authorities (site inspection may be required in some cases)
Opening an in-country bank account to make payments to employees and tax authorities
Signing up with the National Tax Information System and Internet Registry Office

You should allow up to four weeks to complete all the relevant processes. You don’t necessarily need to be in the country to go through the relevant steps: a nominated Power of Attorney can sign relevant documents on your behalf.

Employment Considerations in South Korea

Upon the hiring of a new employee, whether in-country or expat, companies operating in South Korea need to have that employee registered by mid-month of the first payroll period. Information on the employee should include:

the employment contract between company and employee
the employee’s start date, resident registration number and other details
the company’s payroll policy, including severance pay and payroll calculation

On top of this, expat workers will have to provide the South Korean social insurance authorities with:

A legal alien registration check
Health insurance and local medical expense information
National pension certificate
Employment insurance, depending on employee status

Like a number of Asian countries, South Korea has long had a culture of presenteeism and long working hours, but this has gradually been clamped down on by the authorities. The standard working week is 40 hours (five eight-hour shifts), with a limit of 52 hours per week including overtime. However, managers and executives are generally exempt from these requirements, meaning long days remain common for more senior employees.

How overtime is managed is up to the employer, who can choose to apply limits per week, month, quarter, or six-month or 12-month periods. Ultimately, employees cannot work more than 140 hours of overtime per quarter, 250 hours per six months, or 440 hours per year. Overtime should be paid at a 50% premium on top of the normal rate, with double time paid for any time worked at night.

Probation periods are optional in law, but are usually provided by employers at a length of one to three months.

New legislation that took effect in June 2025 means that employers in South Korea now have a legal responsibility to protect their employees from extremely hot or cold working conditions.

Compensation and Severance

South Korea’s national minimum wage has consistently risen in recent years. For 2024, it will rise to 9,860 won per hour (approx. £6.00, $7.60, €7.00). The minimum wage has risen every year since the 1990s, so be prepared for further changes in the future.

In general, salaries in South Korea are based on years of service rather than previous experience or skill sets, and so salaries tend to ramp up year by year. Depending on the industry, choice of profession and length of service, most professionals’ monthly salaries range from 3.5 million won (approx. £1,820, $2,400, €2,060) to 10 million won (approx. £5,200, $6,800, €5,900).

South Korea has some unusual rules when wage payments are delayed, where interest is due to employees at an annual rate of 20% for any wages that are paid late. This was originally only applied to employees who had left a business or who had retired, but was expanded to cover current employees in October 2025. The same legislation also allows employees who are paid late repeatedly or deliberately to take their employers to court, and potentially receive damages up to 300% of the outstanding wages. This underlines the need for employers to run accurately, timely payroll on a consistent basis.

It is common in South Korea to award bonuses for good performance, especially in industries with typically high earnings.

Termination notice is not mandatory, but a one-month notice period defined in employment contracts is customary. The exact terms of terminations are normally decided mutually in the form of a separation agreement. Severance pay is normally 30 days’ salary per year of service, including in cases where employees have resigned or retired.

Tax and Social Security in South Korea

Income tax is levied progressively across eight bands: the lowest of 6% applies to the first 14 million won of annual earnings (approx. £7,300; $9,500; €8,200), and the highest of 45% applies to all earnings in excess of 1 billion won (approx. £520,000; $680,000; €590,000). On top of this, there is also a local income tax: the bands and thresholds are the same as for the main income tax, but at 10% of the rates (so between 0.6% and 4.5%).

Social security contributions in South Korea are as follows:

National Pension: 4.5% employer, 4.5% employee
National Health Insurance: 3.545% employer, 3.545% employee
Employment Insurance: 1.15%-1.75% employer (depending on industry), 0.9% employee
Long-Term Care: 0.459% employer, 0.459% employee
Worker Accident Compensation: 0.606%-18.6% employer (depending on industry and level of risk)
Resident Tax: 0.5% employer

VAT is levied at 10%. Corporation tax, unusually, is levied on a progressive scale similar to income tax. The first 200 million won (approx. £104,000; $136,000; €118,000) is taxed at 9%, after which the next rate of 19% kicks in. Higher rates of 21% and 24% apply on income over 20 billion won (approx. £10.4 million; $13.6 million; €11.8 million) and 300 billion won respectively (approx. £156 million; $205 million; €177 million).

Holiday and Leave Considerations

Paid holiday entitlement in South Korea increases based on length of service. Employees receive one day per month in their first year, then 15 days total in their second year and 16 days in their third. From this point on, employees receive one extra day on their entitlement with every two years worked, up to a maximum of 25 days for those with at least 20 years’ service.

South Korea has 15 days of official public holidays every year, plus others that are occasionally added temporarily or to allow for elections. All businesses with at least five employees must now pay their staff paid leave for public holidays.

There is no statutory sick pay entitlement in South Korea: any provision of paid sick leave in contracts is at employer’s discretion, although many businesses choose to do so.

Maternity leave entitlement is 90 days, 45 either side of the birth (this is increased to a total of 120 days in the case of twins). Sixty of these are fully paid by the employer, and the remaining 30 are paid through state benefits, capped at a maximum of 2 million won (approx. £1,040; $1,360; €1,180). As of February 2025, maternity entitlement for premature births has been increased from 90 days to 100.

Paternity leave entitlement was extended in February 2025 to 20 days, which must be used within the first 120 days post-birth, but can be split into two or three blocks. Employers should pay new fathers for this time off, but can claim a maximum of 1.6 million won (approx. £830; $1,090; €940) back from social security.

On top of this, parents are entitled to one year’s paid parental leave at any time until their child reaches eight years old. This is paid by social security at 2.5 million won per month (approx. £1,300; $1,700; €1,470) for the first three months, 2 million won per month for the next three, and 1.6 million won for each of the last six. This leave can be extended to 18 months for single parents, or when the child has a severe disability. This leave should be requested by the parents in writing at least 30 days in advance.

Payroll in South Korea: a summary

While South Korea is a very modern and developed country, it does have many cultural differences that stand out. In particular, being organized and efficient is absolutely essential, as employees and authorities alike will expect you to maintain accurate, timely and compliant payroll. If you feel you need expert support in staying on top of these requirements, then partnering with a global payroll provider that can provide in-country expertise should be your first port of call.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.