South Korea’s economy ranks among the most advanced in Asia, making it a prime destination for foreign businesses looking to expand their footprint. However, operating successfully in the Korean market requires a thorough understanding of its employment regulations. Labour laws in South Korea are comprehensive and employee-focused, covering contracts, working hours, wages, benefits, and lawful termination processes.
For global employers, navigating the complexities of Korean employment compliance can be daunting. From contract structuring to handling severance and managing disputes, each aspect of employment must align with national laws and evolving policies. This guide offers a complete overview of South Korea’s labor framework and explains how using an Employer of Record South Korea can help companies hire and operate without establishing a legal entity.
Table of Contents
- Overview of Labour Laws in South Korea
- Employment Contracts in South Korea
- Work Hours, Overtime, and Leave Policies
- Wages, Severance Pay, and Social Contributions
- Employee Termination Rules and Employer Obligations
- Labour Disputes and Legal Risks
- Hiring Through an Employer of Record (EOR) in South Korea
- Conclusion
- FAQs
Overview of Labour Laws in South Korea
South Korea’s government enforces employment laws that protect worker rights while supporting a flexible and productive labor market. The framework emphasizes transparency in contracts, stability in employment, and structured dispute resolution.
Governing Authorities and Legal Foundation
South Korea’s key labor regulations are rooted in the:
- Labor Standards Act
- Employment Insurance Act
- National Pension Act
- Minimum Wage Act
- Occupational Safety and Health Act
The Ministry of Employment and Labor (MOEL) administers these laws, overseeing enforcement, wage protection, contract compliance, and workplace safety regulations. All employers, whether local or foreign, must comply with this legal framework when hiring employees in South Korea.
Applicability and Scope
Labour laws apply to all employees, including full-time, part-time, and fixed-term workers. Certain exceptions may apply to small businesses or specific industries. However, protections related to minimum wage, social insurance, and termination usually extend to most employment types.
Employment Contracts in South Korea
Korean labor law mandates written employment contracts outlining the essential terms of the relationship between employer and employee.
Types of Contracts and Legal Requirements
Employers may offer:
- Regular (indefinite) contracts
- Fixed-term contracts
- Part-time contracts
South Korea’s labor contract law requires employers to document and sign any contract exceeding 30 days with the employee. Fixed-term contracts cannot exceed 2 years unless the employer has a justified reason for extension.
Mandatory Contract Terms
Each employment contract must clearly state:
- Employee duties and job title
- Work hours and place of work
- Wages and payment schedule
- Start date and contract term
- Paid leave entitlements
Failure to issue a contract may result in penalties or labor disputes in South Korea.
Probation and Renewals
Employers may include probationary periods, but they must clearly state them in the contract. Employees on probation still receive minimum wage, insurance, and all statutory benefits.
Work Hours, Overtime, and Leave Policies
Korean labor reforms increasingly prioritize work-life balance for employees. The law caps work hours and ensures proper compensation for overtime and mandated leave.
Standard Work Hours and Reforms
The legal maximum workweek is 52 hours, comprising:
- 40 standard hours (8 hours/day, 5 days/week)
- Up to 12 hours of overtime
Although small companies initially received grace periods to adopt the 52-hour workweek cap, authorities now enforce it broadly across most industries.
Overtime Pay and Compensatory Leave
Employers must compensate overtime work at 150% of the employee’s regular hourly wage. For work on holidays or night shifts, higher rates may apply. Employers may also offer compensatory time off.
Paid Leave and Holidays
Employees are entitled to:
- 11 paid public holidays (plus local holidays)
- 15 days of annual leave after one year of service
- Maternity leave (90 days), paternity leave (10 days), and family care leave
Work hours and leave in South Korea are well-defined to protect employee health and productivity.
Wages, Severance Pay, and Social Contributions
Ensuring timely wages, statutory severance, and compliance with the national insurance system is essential for any business employing staff in Korea.
Minimum Wage and Salary Payment
As of 2025, South Korea mandates a national minimum wage, updated annually by the Minimum Wage Commission. Employers must pay wages at least once monthly via a designated bank account and issue payslips.
Severance Pay in South Korea
Employers must provide severance pay equal to 30 days’ average wages per year of service for employees who have worked continuously for at least one year. Severance must be paid within 14 days of termination.
South Korea Social Insurance System
Both employers and employees must contribute to:
- National Pension
- National Health Insurance
- Employment Insurance
- Industrial Accident Compensation Insurance
These contributions are mandatory, and failure to comply with South Korea social insurance system obligations can lead to audits, penalties, and reputational damage.
Employee Termination Rules and Employer Obligations
Grounds for Employee Termination in South Korea
Dismissals must be for just cause, such as misconduct, performance failure, or redundancy. Termination without valid reasoning may be deemed unfair and reversed by labor authorities.
Notice Period and Termination Process
Employers must give at least 30 days’ notice or provide wages in lieu of notice. Proper documentation, such as performance records or disciplinary warnings, strengthens legal standing in case of challenges.
Resignation and Final Settlements
Employees are also required to give notice, typically 30 days. Upon termination or resignation, employers must finalize all wage payments, unused leave, and severance pay in South Korea.
Labour Disputes and Legal Risks
Common Labour Disputes in South Korea
Disputes often arise from:
- Unlawful dismissals
- Unpaid overtime
- Contract disputes
- Retaliation for whistleblowing
Maintaining transparency and documentation is key to avoiding costly labor disputes in South Korea.
Dispute Resolution and Legal Process
Disputes may be resolved via:
- Internal grievance procedures
- MOEL mediation
- Labour Relations Commission hearings
- Civil court litigation
Employers must be prepared to demonstrate compliance with contracts, benefits, and notice rules for every case.
Hiring Through an Employer of Record (EOR) in South Korea
Employer of Record South Korea services allow foreign companies to hire Korean employees without opening a local legal entity. The EOR becomes the legal employer, managing compliance, taxes, payroll, and employment contracts on your behalf.
This is ideal for:
- Pilot expansions or contract-based roles
- Hiring remote Korean talent
- Bypassing regulatory complexities
An EOR handles HR tasks while ensuring full alignment with labour laws in South Korea and reducing legal risk for global employers.
Conclusion
Businesses must comply with labour laws in South Korea to build a strong, ethical, and legally sound operation in one of Asia’s most advanced markets. The government strictly enforces every aspect of employment—from contracts and working hours to severance and social insurance. Global companies that want to hire employees in South Korea quickly and compliantly can partner with an Employer of Record. By outsourcing compliance and HR administration to a trusted local provider, they fulfill all legal obligations while focusing on core growth strategies.
FAQs
Yes, Korean labor law mandates a written employment contract for all hires.
Employees may work up to 52 hours per week, including 12 hours of overtime.
Employees are entitled to one month’s average wage per year of service after one year of continuous employment.
No, employers must have just cause and follow formal procedures for legal termination.
Yes, probationary workers are entitled to minimum wage, insurance, and paid leave.
It includes pension, health insurance, employment insurance, and industrial accident compensation.
Employers must pay wages at least once per month via a designated payment method.
Common disputes involve unfair dismissal, unpaid overtime, and contract violations.
Severance must be paid within 14 days of an employee’s termination or resignation.
Yes, by partnering with an Employer of Record South Korea, foreign companies can legally hire and manage employees without establishing a local branch.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
