Employer of Record and Payroll Services in South Korea 
Mercans-owned legal entity 
We have our own legal entity to protect your business from risk and provide you and your employees with a distinctive experience.
We have our own legal entity to protect your business from risk and provide you and your employees with a distinctive experience.
Services available
- Employer of record
- Contractor management
- Global payroll
- In-country payroll
Mercans offers complete payroll, PEO and HR services in South Korea
A mature, industrialized economy, South Korea is the world’s 12th largest economy. It has the second highest spending on R&D to GDP ratio and key industries to watch out for include bio health, smart cities and smart homes and AI. While the economy has performed well, a key risk is the impact of US-China trade tensions.
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Doing Business in South Korea
Seoul presents an optimal business environment, ranking first in the 2021 Bloomberg Innovation Index. It is the world’s best digital city and is at the center of the R&D industry. There are many attractive industrial clusters and business areas available which make Seoul attractive to business. Additionally, the government provides incentives such as cash grants, subsidies and tax exemptions to boost economic growth.
Entity Registration and Incorporation Requirements
Setting up a new business or expanding an existing one in South Korea is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.
Banking
Banking Hours: 9:30 am to 4:30 pm from Monday to Friday
Working Week
The standard working week is from Monday to Friday from 9:00 am - 5:00 pm
Labor Law
Relevant laws pertaining to wages, working hours, leave and more are prescribed by the Labor Standards Act which applies to all businesses or workplaces that employ five workers or more.
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Main Industries
Textile, steel, car manufacturing, shipbuilding, and electronics.
GDP Growth
0.60%
Dates & Numbers
yyyy/mm/dd
Official State Name
The Republic of Korea
Population
51.78 million
Capital
Seoul
Major Languages
Korean
Currency
South Korean Won
Internet Domain
.kr
International Dialing Code
+82
23°C
Payroll
The government conducts regular inspections and provides guidance on labor management to assist companies in rolling out the new minimum wage.
It is mandatory to provide employees with payslips
Payslip
Payroll reports must be kept for five years
Reports
Employees receive paid annual leave of 11 days for the first year of employment
Annual Leave
Employees are not entitled to any statutory sick leave
Sick Leave
Employees are entitled to 90 days paid maternity leave.
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However, 45 consecutive days of maternity leave must be taken after the birth of a child. Male employees are entitled to 10 - 90 days of paid paternity leave
Maternity & Paternity Leave
Between 1 - 3 months notice is required to terminate employment
Employee Termination
There are no provisions mandated by law regarding the 13th month salary
13th month salary
9,160 KRW per hour
Minimum Wage
Employees are entitled to overtime pay calculated at 150% of their regular rate which increases to 200% for work performed at night (after 10 pm)
Overtime
Employees who are paid monthly are entitled to one month’s pay for each year of employment
Severance Pay
Tax and Social Security
Taxes include personal income tax, local income tax and alternative minimum tax. The Retirement Pension System requires employers to set aside an amount equivalent to retirement benefits at a financial institution outside the company and pay their employee pensions in the form of an annuity or lump sum at retirement.
Tax
A taxpayer pays income tax on their income. A resident is subject to income tax on all worldwide income. Foreign workers who have stayed in Korea for five years or less are taxed on Korea-sourced income only and their foreign-source income is reportable only where it is paid by a Korean entity or transferred to Korea.
Corporate Income Tax
Personal Income Tax
Sales Tax
VAT
Social Security
The Employee Welfare Fund System requires employers to contribute a portion of the company’s operating profits to create a fund for employee welfare.
Social Security Rate
Social Security Rate for Employers
Social Security Rate for Employees
Employment Law
In order to protect working conditions and improve employment practices, the government offers the EAP (Employee Assistance Program), livelihood security loans and credit guarantee support.
Employment Agreement
Key terms of employment must be provided to employees in writing such as wages and work hours. While terms can be implied, employers are advised to provide written employment agreements.
Working condition
The government, through labor management specialists, provides support for the voluntary improvement of working conditions to micro and small sized businesses with poor working conditions.
Leaves
Employees are only entitled to the minimum statutory annual leave if they maintain 80% attendance in the previous year of employment. Generally, employees are not legally entitled to time off for non-work related illness or injury but it is common for employers to allow this.
Employment termination
Employers are prohibited from dismissing an employee without just cause and a high threshold must be met in order to justify redundancies.
30 days
Minimum notice period for terminating an employee
12
Total number of public holidays
40
Working hours per week
15 days
Total number of days for Compassionate & Bereavement Leave
Immigration
There are multiple visas available whether for short term visits, medical treatment, study, investment, professionals, trade and more. Working professionals are able to enter the country using visas for short-term employees, job seekers, business startups, research and more. Applications can be processed through e-Visas or at the diplomatic missions abroad.
Residency permits
A foreign worker who plans to enter Korea must possess a valid passport and valid visa which matches their entry purpose. Entry without a visa is permitted in the event that they are exempted from their re-entry permit, there is a visa exemption agreement between the person’s country and Korea, they are specially approved to enter by Presidential Decree or have been issued a refugee travel document. Single-entry, double-entry and multiple-entry visas are available. Foreigners who plan to stay for over 90 days from their date of entry must register with their jurisdictional immigration offices within 90 days from date of entry.
Work Permit Validity
3 years
Required Documents
A copy of their employment contract
Educational and professional certificates
Criminal record (if applicable)
Recommendation letter
Original passport and copies
Colored passport-size photo.
Build the best team and hire top talent compliantly in South Korea. Get in touch with South Korea payroll outsourcing & PEO specialists for a free consultation!
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