What are South Korea’s main employment regulations and do they apply to foreign nationals working under the country’s jurisdiction?
Laws that pertain to employment matters are: Article 32 of the Constitution, which outlines the basic principles of employment law and The Labour Standards Act (LSA), which is the primary law setting the minimum criterion for working conditions. All employment and labor laws apply to foreign nationals working in South Korea, even if both parties have approved of another governing law.
Is there a national (or regional) minimum wage?
Yes, the minimum wage rate is established each year under the Minimum Wages Act. The minimum hourly wage rate for all employees since January 1, 2021 has been 8,720 KRW.
How are redundancies or layoffs legally defined? What regulations exist regarding them, and do special rules apply to collective redundancies?
Redundancies, collective dismissal, layoff, or downsizing all generally correspond to a dismissal of employees for reasons of managerial necessity. In assessing the validity of such a dismissal, courts consider the overall circumstances―the company’s financial condition, market conditions, competitiveness―of the company. As for redundancy or layoff pay, there is no legal requirement for the distribution of benefits in addition to severance pay or retirement pension, which must be granted under the Retirement Benefit Act. It is important to note, however, that employers often provide compensation preemptively to induce employees to resign voluntarily. There is no legal distinction between a collective and individual redundancy.
What is the rate of taxation on employment income?
Rates of taxation charged on employment income as of January 1, 2021:
– Income of up to KRW12 million: 6%.
– Income from KRW12 million up to KRW46 million: 15% (plus KRW0.72 million).
– Income from KRW46 million up to KRW88 million: 24% (plus KRW5.82 million).
– Income from KRW88 million up to KRW150 million: 35% (plus KRW15.90 million).
– Income from KRW150 million up to KRW300 million: 38% (plus KRW37.60 million).
– Income from KRW300 million up to KRW500 million: 40% (plus KRW94.60 million).
– Income from KRW500 million up to KRW1,000 million: 42% (plus KRW174,60 million).
– Income of KRW1,000 million and above: 45% (plus KRW399,60 million).
What are the social security contributions and additional taxes levied on employers and/or employees?
Required social security contributions as of 2021:
– National pension: 9% of monthly salary. The contribution is shared equally by the employer and the employee.
– National Health Insurance: 6.86% of monthly salary plus 11.52% of the health insurance premium for long-term care insurance. The employer and the employee share the contribution equally.
– Industrial Accident Compensation Insurance: the employer contributes between 0.7% to 34.04% of monthly salary, depending on the industry.
– Unemployment Insurance: 1.6% of monthly salary for unemployment insurance. The employer and the employee share the contribution equally. In addition, the employer contributes between 0.25% to 0.85% (depending on the size of the company) of monthly salary for job security and vocational capability insurance.
What is the approval process foreign nationals must undergo to work in South Korea? What specific paperwork/documents need to be submitted to authorities?
Unlike the United States, South Korea’s immigration system solely uses visas. Before entering the country for business purposes, foreign nationals must acquire the appropriate work or employment visa. Out of the 32 total types of visas, nine of them fall under the two categories: business (for those conducting business) and employment (for those employed by South Korean companies). There are four types of typical business visas: temporary business visas (C-3 visas), intra-company transfer visas (D-7 visas), corporate investment (D-8 visas), and trade management visas (D-9 visas). Out of the four, the D-7 visa―for those employed by a foreign company that has invested in a South Korean company or those that have been dispatched to an affiliate company, subsidiary, branch, or office in South Korea―is the most common visa obtained by foreign nationals. There are five types of employment visas: short-term work visas (C-4), research visas (E-3), technology consulting (E-4), licensed profession (E-5), and specifically designated activities (E-7). More specifically, the C-4 visas are for foreign nationals working for a South Korean employer for 90 days or less, and the E-3, E-4, E-5, and E-7 visas are long-term visas issued only to high-skilled foreign worker, loosely defined as a professional with a master’s degree or higher.
How is the employment relationship governed and regulated?
The following are documents required to be drawn up upon hiring an employee:
– Written Contract:
Though the Labor Standards Act (LSA) does not mandate that an employment agreement be in writing, wages, working time, annual paid leave, and weekly holiday must be set forth in writing. The employer must provide these terms in writing when employee commences working and must keep a copy of the writing for at least three years after the employment contract has been terminated.
– Rules of Employment:
In a workplace with ten or more employees, the Rules of Employment (ROE), governing calculation of wages, timing and method of payment, work hours, paid leave, training, maternity and paternity care, workplace health and safety, harassment prevention measures, and disciplinary procedures. Unlike statutes such as the LSA, ROE or collective bargaining agreement (CBA) can supercede the terms of the employment contract.
Employees may enter and form labour unions that draw up a collective bargaining agreement (CBA) with the employer. While employment conditions may vary between union and non-union members, under the section 35 of the Labour Union and Labour Relations Adjustment Act,
any CBA will apply to non-union employees engaged in the same line work at the same business. Moreover, the CBA prevails over the ROE for all employees in the case of any discrepancy.