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Undoubtedly, payroll is a critical process for any organization. The pay cycle in South Korea refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

The payroll cycle in South Korea is generally monthly, and payments are usually made on the last working day.

There is no legislation for 13th-month payments in South Korea.

Effective 1 January 2024, the minimum hourly wage in South Korea will be KRW 9,860 and the monthly wage will be KRW 2,060,740.

Anything over 40 hours per week or 8 hours per day, is considered overtime, and payment is 150% of a regular salary. Work done after 10 pm pays 200%. There is no limit for daily overtime for employees, but the weekly overtime cannot exceed 12 hours.

Employers and employees are required to maintain their withholding documents, records of disbursements, and tax filings for at least five years. Employers must retain documents related to health insurance for three years.

With effect from January 1, 2023, tax-free limit on meal expenses included in  the  monthly  salary  of  office  workers from the current 100,000 won to 200,000 won from January. And the health insurance premium rate is increased by 1.49%.

The National Human Rights Commission of Korea Act (the NHRC Act) stipulates that preferential treatment, exclusion, discrimination, or disadvantageous treatment of specific persons based on gender, religion, disability, age, social status, region or country of origin, ethnic origin, physical appearance, marital status, maternity, family background, race, skin color, ideology or political opinion, criminal record, sexual orientation, an academic career or medical history without just cause shall constitute a ‘discriminatory act violating the equal right (Article 2(3) of the NHRC Act).

However, preferential treatment of certain groups of persons, such as men of national merit, disabled persons, women (where the number of female workers is disproportionate to the number of male workers), senior citizens (at least 55 years old), and young adults (aged between 15 and 29) is excluded from the above.

Probation periods in South Korea for permanent employees are generally between 1 and 3 months. It is rare for employers to terminate a contract once the probation/training has been completed since the company must pay unemployment.

Previously Labor Day (1 May) was the only mandatory paid national holiday for private-sector employees. Public holidays generally were not mandatory in the private sector. However, under current legislation, public holidays must be paid for. These holidays are:

• Jan. 2: New Year's Day
•  Jan. 21: Seotdal Geumeum
• Jan. 23: Korean New Year
• Mar. 1: Independence Movement Day
• May 5: Children's Day
• May 27: Buddha's Birthday
• Jun. 6: Memorial Day
• Aug. 15: National Liberation Day of Korea
• Sept. 28: Chuseok
• Oct. 3: National Foundation Day
• Oct. 9: Hangul Day
• Dec. 25: Christmas

Other days are temporarily designated by the government.

There is no paid leave for non-work-related illness or injury. However, if illness or injury is work-related, the employer must provide paid leave until the time of recovery.

90 days maternity leave (120 days maternity leave in case of twins).

Small companies: The government supports allowance for 60 days (capped at 2 million won per 30 days) as maternity leave allowances. The company must pay the difference in salary from the allowance for 60 days (compulsory), and for the last 30 days, the difference payment is up to the company’s decision.

Large companies: the company should pay the total salary for 60 days, and the government only support allowance for the last 30 days (capped at 2 million won per 30 days). The difference is up to the company’s discretion.

A male worker can take up to 10 days of paid paternity leave (5 days by the company & 5 days by the government) and request paternity leave of up to 90 days from the day of the child’s birth.

Parents are entitled to parental leave of up to 1 year until the child reaches the age of 8. The government covers the allowance.

Mothers are entitled to a maximum of 1-year leave

1st-3rd month: Paid at 80% of the regular salary capped at 1.5 million KRW

4th-12th month: Paid at 50% of the regular salary capped at 1.2 million KRW

Fathers are entitled to a maximum of 1 year leave 1st-3rd month: Paid at 100% of the regular salary capped at 2.5 million KRW if the father takes the leave after the mother.

The allowance will be capped at 1.5 million KRW if the mother and the father take the leave simultaneously.

4th-12th month: Paid at 50% of the regular salary capped at 1.2 million KRW.

Work-Related Injury Leave – Employees receive 70% of their wages for up to three months

Family-Care Leave: An employee who needs to provide support and care to family members, including grandparents, parents, spouse, children, grandchildren, and a spouse’s parent in case of their sickness, injury, or old age, shall be entitled to unpaid leave for 90 days per year. An employee can use such leave in more than one period, but one period shall consist of at least 30 days.

Child Care Leave: Employees who have a child aged not more than eight years or in the 2nd or lower grade of an elementary school are eligible for one year of unpaid childcare leave.

An employer must give 30 days’ advance notice of dismissal. Should the employer dismiss an employee without giving the requisite notice, it must pay the employee, in lieu, his or her wages for not less than 30 days (ie, an allowance for dismissal).

Under the Act on the Guarantee of Employees’ Retirement Benefits, an employer may sign up for a retirement pension plan or give an exiting employee severance pay. An employer that signs up for a retirement pension plan and pays its contributions must not give an exiting employee severance pay separately. Where an employer elects to pay an exiting employee severance pay, the severance pay is calculated under the following formula: average daily wage in the last three months multiplied by 30 days multiplied by the number of years of service.

This must be paid within 14 days of the employee’s resignation.

A business that is newly established after 26 July 2012 (excluding new businesses resulting from mergers or divisions) must establish a defined benefit or contribution plan within one year of its establishment after seeking the opinion of the employees’ representative (article 5 of the Act on the Guarantee of Employees’ Retirement Benefits).

Any foreigners coming to work in South Korea must be registered with the local immigration authorities within the first three months of their stay. The type of work permit and employment visa differs by the role which the employee will be undertaking. The appropriate visa needs to be sought to allow an employee to stay in South Korea for more than 90 days.

E-1 Professor Visa is aimed at foreigners to deliver lectures or do research in their field; it is valid for one year and can be renewed annually.

E-2 Foreign Language Instructor is aimed at foreigners who wish to teach a foreign language at a company/school/education infrastructure. It is valid for two years and can be renewed every two years.

E-3 Research is aimed at foreigners that a public or private institution invites to research natural science or advanced technology; it is valid for one year and can be renewed annually.

E-4 Technological Guidance is aimed at foreigners that a public or private institution invites to provide expertise in natural science or high technology; it is valid for one year and can be renewed annually.

E-5 Special Profession is aimed at foreigners who are Architects, lawyers, physicians, accountants, and other internationally licensed professionals and hold Korean government permission to practice their field of expertise is valid for one year and can be renewed annually.

E-6 Culture and Art are aimed at foreigners who participate in musical, artistic, and literary activities; it is valid for one year and can be renewed annually.

E-7 Specially Designed Activities are aimed at foreigners invited to participate in activities designed by the Korean Ministry of Justice through a public or private organization. It is valid for one year and can be renewed annually.

D-5 Long-Term New Coverage is aimed at reporters working for foreign media (broadcast, newspapers, magazines, etc.). The single-entry visa is valid for three months and can be renewed in one-year intervals.

Alien Registration Card (ARC) Most people who are staying in South Korea for more than six months also need to obtain their Alien Registration Card (ARC).

To the extent background checks involve collecting personal information (ie, information relating to a living individual that makes it possible to identify the individual), an employer must obtain the prior consent of the applicant (article 15(1) of the Personal Information Protection Act (PIPA)). Additionally, separate consent must be obtained where sensitive information (ie, information relating to ideologies, beliefs, admission to or withdrawal from a trade union or political party, political opinions, health, sexual life, DNA records (obtained from DNA test results) and criminal records) is being collected (Article 23(1) of PIPA).

Subject to obtaining prior consent, an employer may access criminal and investigation records of an applicant only in certain limited industries, such as child-related industries and the medical industry (Article 6(1) and 6(3) of the Act on the Lapse of Criminal Sentences).

Where an employer intends to hire a third party to conduct background checks, it must first obtain consent from the applicant (Article 32(1) of the Credit Information Use and Protection Act), and all costs related to it must be borne by the employer (article 9 of the Fair Hiring Procedure Act).