HR Solutions & Employee Relations in South Korea with IRIS
IRIS HR consulting has experience helping businesses grow in South Korea. Without expert guidance, it can otherwise be risky and costly to leave local laws and legislation open to interpretation. For a scalable, compliant operation, IRIS can manage your HR in South Korea to help businesses hire, recruit, and pay staff overseas in new, unfamiliar countries. As a popular destination for businesses, IRIS can navigate local barriers – from culture to compliance – to arrive at a rewarding opportunity for your business to thrive in this exciting marketplace.
Take your business to South Korea with IRIS HR Consultancy.
Global expansion in South Korea
Identified as one of the major G20 economies, the advancing innovation and culturally important South Korea is a key business destination for external investors and business owners alike. Its historically strong economy, growing markets and business-conducive setting is underpinned by a highly educated and mobile workforce. South Korea is often recognised as a hi-tech juggernaut in the East, resting between two key global powerhouses: China and Japan. This close proximity to the booming markets of Asia creates a favourable, and strategic, location to conduct business, not only through trade opportunities, but through imports. The population, estimated at 50 million, is considered affluent, cultured and urban.
The landscape of its businesses is modelled around family-run conglomerates, known locally as chaebols, which helped it survive its economic crisis in the 1990s. Its industries thrive, in part, because of its smart and abundant business infrastructures, including electronic manufacturing.
Its international reach is reinforced by a proactive stance on external relations – an impressive trade network reaches across 58 different countries, owed to its key 16 trade agreements. It’s a country known for enjoying a strong purchasing power – some 50 million potential customers reside in South Korea – and this has ensured it a legacy of being a global testbed for new business opportunity.
South Korea’s Chaebols
The transformation of its economy into a globally competitive, high-tech market was a move spurred, in part, by South Korea’s chaebols. They are infrastructurally important, serving as pillars to support South Korea’s economic developments – including industrially savvy enterprises like LG, Hyundai and Samsung. Like the Japanese “zaibastsu” – similar in meaning – these family-run conglomerates have motivated long-term activity and wealth for the Korean economy.
For new businesses, the South Korean economy is securely supported by legacy firms like the chaebols. This means that exciting and stable infrastructure underpins all business prospects coming into, and those leaving, South Korea.
Establishing your business in South Korea
Embarking on a global expansion is a strategic move to gain extra value from exciting foreign markets, which are constantly evolving and full of opportunity. But the international stage isn’t always easy to navigate.
Before entering the South Korean market, you will need to declare your business type, register interest with the local South Korean embassy, and understand the tax system. Complying with these procedures can be easier when you partner with IRIS HR consultants – we can help you reach South Korean markets.
Employment laws in South Korea
When first expanding your business into South Korea, navigating local laws, legislation and rules of employment is no mean feat, especially if you’re unfamiliar with the country’s driving policies. Throughout Asia, these laws are almost never universal. Rather, employment is dynamic and reflects the countries social, economic, cultural opportunities.
For example, the main legislation that governs employment law in South Korea is the Labour Standards Act (“LSA”). The LSA, generally, applies to businesses with five or more registered employees, although certain exceptions apply to those with fewer.
Did you know?
The LSA does not specify lengths of probation in employment, leaving this practice open to interpretation by businesses acquiring new talent.
Employment rights & contracts in South Korea
For full-time employment, either verbal or written contracts are valid and legal. However, certain details pertaining to the terms and conditions of employment must be captured in writing.
The contents of a written contract should include:
- Wages (including any supporting information, such as calculation)
- Working hours
- Annual leave
- Weekly rest day
Upon request, these details of employment should be defined and supplied by the employer.
Hiring & recruitment in South Korea
When getting your first hire overseas, you will need to negotiate terms of employment. But that requires local knowledge, strict compliance, and an understanding of what to include in an offer and thereafter – including before, during and after the commencement of an employment contract.
Equal Opportunities in South Korea
Equality is strictly guarded in South Korea, enshrined by law. Section 7 of the Korean Equal Employment Opportunity Act supports this goal for equality in, and beyond, the workplace. This extends to protection from within employment, including promotions. In recent policy updates, there has been an active push for respectful labor, refocusing on topics of diversity and equality.
What are the working hours in South Korea?
The maximum time set for a working week, as guided by the LSA, is 40 hours weekly. This accounts for an average working day of 8 hours for employers with at least 5 or more employees.
Rest breaks are typically set at 30 minutes for every four working hours, which allows for one hour for every eight worked.
Overtime in South Korea
The weekly threshold of overtime is set at 12 hours weekly, but certain industries may be exempt. This is typically calculated at 150% against an employee’s hourly wage.
In accordance with the LSA, vacation can be subjected to length of service, whereby those in the first year of employment gather vacation time at a rate of one day for every month worked. After this time, and the following years of service, employees can expect 15 days of vacation leave.
This can accrue to 25 days of vacation, gathering at an extra day per every two years of service.
Public Holidays in South Korea
In South Korea, the 1st of May (Labor Day) is treated as a mandatory holiday. Other national holidays are, generally, acknowledged as days off for employees – although this is not mandatory.
- 31 December – 2nd of January – New Years’ holidays (Lunar Calendar)
- First day of the first lunar month
- 1 March: Independence Day
- 5 May: Children’s Day
- 8 April: Buddha’s Birthday
- 6th June: Memorial Day
- 15th Day of the eight lunar month 14 – 16th of August: Harvest Festival
- 3 October: National Foundation Day
- 9 October: Hangul Day
- 25 December: Christmas Day
Maternity Leave in South Korea
Female employees are entitled to a 90-day leave allowance (or 120 days leave for scenarios of a pregnancy for more than one child); a minimum of 45 days should be taken after the birth.
During the first 60 days of maternity leave, an employee is entitled to receive full pay. This can be in conjunction with benefits from Employment Insurance. Typically, an employer will honour the statutory provision.
Sick Leave in South Korea
There is no existing obligation to acknowledge sick leave to employees who are absent for non-work reasons. Sick leave, if granted, is usually reached under the terms and understanding of a collective agreement, individual agreement or within the company’s work rules. In South Korea, it is not uncommon for employers to provide paid sick leave.
Retirement & pensions in South Korea
Contributions to the NPP are mandatory to employers with at least 5 employees – as part of South Korea’s Social Security System. The NPP provides benefits for old age, disability and death.
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End of Service
HR in South Korea requires compliance not only during an employee’s service, but also at the end of it. End of service might include severance, termination, redundancy, and leaving packages. Or, for globally mobile companies with teams in foreign markets, this could be repatriation services for those returning from an assignment overseas.
For these more complicated matters, you will need expert HR guidance to navigate Korean labor laws and remain compliant.
Termination (including Severance) in South Korea
Termination in South Korea can be actioned with or without notice, but typically requires strong grounds to end employment. Where an employer has 5 or more employees, they must offer severance on the termination of a contract where an employee has worked for at least a year.
Basic Health Coverage
The NHI (National Health Insurance) covers many groups of workers, including those in corporate roles. This works via co-payments and includes:
- Basic healthcare
- Basic dental care
Social Security and Mandatory Provisions
The social security system in South Korea has three main components:
- Social insurance programmes
- Public assistance programmes
- Social welfare services programmes
Work Injury Insurance (IACI)
Employees receive cover under compulsory IACI for work-related injuries, accidents, or illnesses, or otherwise. The IACI pays out proportionate compensation for anything detailed as a work-related incident.
These benefits include:
- Sickness benefit
- Suspended work benefit
- Injury/ disease compensation annuity
- Disability benefit
- Survivor’s benefit
- Carer’s benefit
- Funeral expenses
Supplemental benefits, including Death & Disability Allowance
In South Korea, it’s generally agreed that employees access Death & Disability Allowances, including life insurance. Where there are five or more employees, a group life insurance scheme can be activated and covers injury, hospitalisation and more with a lump sum pay-out.
Why Partner With IRIS?
When entering new, exciting countries in Asia, like South Korea, you will need an employment specialist to navigate the parts of local laws that are mandatory and those that are not. Delivering a compliant solution, IRIS can help your business arrive into new marketplaces whilst protecting your workforce – our partners can discover power and protection through us.
Overseas expansions can seem risky to those who dare it alone. Understanding the complexity of a fully compliant solution, IRIS can help businesses reach Europe, especially when they build bridges in South Korea.
Our cost-effective, knowledgeable approach to HR in South Korea makes us an ideal partner to commence your overseas plans.