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13 December 2022
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2 minutes

Payroll compliance in South Korea

South Korea – officially the Republic of Korea – is the world’s tenth-largest economy, based on 2021 nominal GDP. The country has long been an attractive destination for overseas investors and workers, but has detailed and complex employment and payroll-related regulations, which contribute to South Korea ranking as the 16th most complex business environment in TMF Group’s 2022 Global Business Complexity Index.

  • South Korea’s main source of payroll-related law is the Labour Standard Act (LSA), which governs labour standards, minimum wages, annual leave, working hours, occupational safety and health, and equal employment opportunity.
  • Foreign nationals need to obtain one of nine different types of visa to work or invest in South Korea, according to the nature and duration of their employment or investment.
  • Labour costs in South Korea include a number of direct contributions towards social security made by both the employer and the employee. These cover national pension, national health insurance, long-term care insurance, unemployment insurance and workers’ accident compensation.
  • All employees in South Korea are entitled to one year of unpaid leave for childcare, if the employee has a child who is younger than eight years or who has not entered the third grade.
  • In South Korea, an employer cannot terminate employment without establishing a 'just cause'. The LSA does not include a definition of a just cause but it typically entails misconduct or poor performance on the part of an employee, or substantial business or economic reasons for the employer.

If you’re doing business in South Korea and are looking to learn more about South Korea’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in South Korea.

Payroll compliance guide

The global payroll compliance landscape can be a difficult one to navigate and interpret. Overseas businesses can be subject to greater scrutiny on the part of local governments, regulators and tax authorities.

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