How to hire in South Korea through an EOR

Employment contracts in South Korea must be in writing, and most default to indefinite (permanent) status unless you have a specific business reason for a fixed term. That last part trips up a lot of foreign employers. You can't just decide to hire someone on a two-year contract because it feels safer. The law assumes permanence, and you need to justify anything else.

Here's what you need to know to avoid costly mistakes.

Contract types and when to use them

South Korea recognizes two main contract structures, with some variations:

Most companies use indefinite contracts for their core hires. Fixed-term contracts exist, but they're not a loophole. You need a legitimate reason: a specific project, seasonal demand, or a role with a natural end point. If you keep renewing someone on fixed-term contracts beyond two years total, the law treats them as permanent anyway, and you'll owe severance and full benefits retroactively.

Part-time workers get the same legal protections as full-time staff, just prorated. Don't assume part-time means fewer obligations.

What the contract must include

South Korean law is specific about what needs to be in writing. Your contract must clearly state:

• Employee's full name and ID number
• Job title and duties
• Start date and contract duration (or "indefinite")
• Base salary, bonuses, and any other compensation
• Working hours (standard is 40 per week, up to 12 hours overtime per week with consent)
• Annual leave entitlements
• Probation terms and notice periods for termination
• Severance pay conditions

Electronic documents count as written contracts. There's no legal requirement to use Korean, but providing a Korean version alongside English helps avoid disputes about what was agreed. The Ministry of Employment and Labor publishes standard templates for businesses with fewer than five employees and for larger employers. Using these reduces your legal risk.

Probation periods are allowed but capped at three months. During probation, you can terminate with less cause than you'd need afterward, but you still can't dismiss someone without reason. After probation, dismissal requires "just cause": poor performance, misconduct, or a genuine business need. Casual termination can trigger lawsuits and back-pay claims.

Contractor vs. employee: where companies get burned

This is the biggest trap. South Korea doesn't have a simple "independent contractor" category like the US. The law looks at the substance of the working relationship, not what you call it. If someone works regularly, takes direction from you, uses your tools, and works on your premises or your schedule, they're an employee, regardless of how the contract is labelled.

Misclassification is expensive. You'll owe back social insurance contributions (about 16-35% of wages), unpaid severance, and potentially damages. The Ministry of Employment and Labor can audit you, and employees can sue. There's no statute of limitations on these claims.

True freelancers and contractors do exist in South Korea. Think one-off creative projects, specialised consulting, or short-term work where the person controls how and when they work. But if you're hiring someone for ongoing work that's part of your core business, treat them as an employee from day one.

Non-compete and IP assignment clauses are enforceable in South Korea, but they have to be reasonable. A non-compete that's too broad, whether by geography, duration, or industry scope, won't hold up in court. IP assignment is standard and enforceable as long as it's clearly stated in the contract and relates to work done for your company.

South Korea requires employers to pay into four mandatory social insurances, and you'll split the costs with employees. But legal minimums alone won't keep good people around. Local talent typically expects 20+ days of annual leave and private perks on top of what the law requires.

Time off

Employees get 15 days of paid annual leave after one full year with 80% attendance. If attendance drops below 80% in year one, leave accrues at one day per full month worked. After that, it increases every two years up to a maximum of 25 days.

Leave is granted based on completed service years. Employees can carry over up to one year's worth, but anything beyond that is forfeited. There's no legal right to cash out unused leave unless your own policy allows it.

All leave types

Here's what the law requires. Pay comes from you, the government, or both depending on the leave type. Job protection applies throughout.

Mandatory benefits

The law requires four social insurances, and you split the cost with your employee. Rates below are as of 2024, so it's worth checking for any updates.

• National pension: Employer 4.5%, employee 4.5% of monthly salary (capped).
• Health insurance: Employer ~3.5% (avg), employee ~3.5% (location-based).
• Employment insurance: Employer 1.3%-1.6%, employee 0.9%-1.3%.
• Workers' compensation: Employer 0.7%-1.9% (industry-based), employee 0%.

There are no mandated extras like meal vouchers or transport subsidies. That said, many companies offer them voluntarily, and employees have come to expect it.

What people actually expect

If you're hiring skilled workers, the legal minimums won't be enough. Most local employees treat 20-25 days of annual leave as the norm, even early in their tenure. They'll compare you to large Korean firms, and you'll need to hold up.

Private health insurance is one of the most expected perks. It fills gaps in the national plan, things like dental cover or faster access to specialists. It also makes a real difference when you're trying to attract strong candidates.

Remote work stipends have become common, typically around 100,000-200,000 KRW per month for home office costs. Meal allowances (around 200,000 KRW per year) and transport cards are also widely offered.

If you stick to the bare minimum, don't be surprised by high turnover. Top candidates look for 13th-month pay, stock options, and flexible working arrangements. Budget around 10-15% above your legal costs if you want to stay competitive.

Terminating an employee in South Korea isn't straightforward. Courts require solid proof of "just cause," and they tend to side with employees. Get it wrong, and you're looking at reinstatement orders, back pay, or significant settlements.

Termination rules

You can only terminate for just cause. That means serious misconduct like theft or violence, or poor performance that's been documented over time with warnings and improvement plans. Frequent absences that hurt operations can also qualify.

For layoffs driven by business needs, you'll need to prove urgent necessity, show you tried every alternative first, select people through a fair process, give 50 days' notice, and consult unions or worker representatives.

Unfair dismissal means terminating without just cause. Employees with more than three months' tenure are entitled to 30 days' notice or pay in lieu. Companies with five or more regular staff face the strictest rules. Probationary periods up to three months give you a little more flexibility, but you still need reasonable grounds to let someone go.

Protected groups include pregnant workers, those on parental leave, and union representatives. Courts interpret just cause narrowly, particularly for performance-related dismissals. A recent Supreme Court ruling set a high bar for terminating based on results alone.

Notice periods

Notice requirements are the same for both sides. No notice is required if someone has worked fewer than three months, your business is hit by a disaster, or the employee causes serious harm.

Severance

Anyone who's worked for a year or more is entitled to severance pay, regardless of how or why they leave. That includes resignations. To calculate it, take total pay over the last three months, divide by 90 to get the average daily wage, then multiply by 30 days for each year worked. Include any bonuses paid during those three months. Payment is due within 14 days of the employee's last day, and there's no cap.

Average daily wage example: If total pay for three months is KRW 9,000,000, divide by 90 = KRW 100,000 daily. For two years worked: 2 x 30 x 100,000 = KRW 6,000,000.

Work permits and visas

You can hire foreign nationals through an EOR. The EOR acts as the legal employer and handles visa sponsorship. The main visa categories are: E-7 for skilled professionals (requires a job offer and qualifications match), H-2 for ethnic Koreans living abroad, and F-2 or F-5 for long-term residents. There's no digital nomad visa in South Korea yet.

The process involves Ministry of Justice approval and typically takes 1-3 months. You'll need to show a clean criminal record, a health check, and that the role can't easily be filled by a local candidate. Your EOR handles sponsorship, documentation, and renewals. Without proper sponsorship, foreign nationals can't work legally in the country.

Other things worth knowing

Employee data is governed by the Personal Information Protection Act. You're required to secure personal data, get consent before processing it, and report any breaches quickly. Fines for non-compliance are significant.

Trade unions carry real weight here. More than 20% of the workforce is unionized, and collective bargaining agreements set terms you're legally required to follow. A new law effective March 10, 2026, expands the scope of disputes to include restructuring and M&A activity. If you're planning major changes, you'll need union buy-in, or you risk strikes.

The Supreme Court has also ruled the "wage-peak" system unlawful as a form of age discrimination, so you can no longer cut pay and then increase it later to favour younger workers.

There's a significant change coming in 2026. New laws will presume that freelancers, platform workers, and certain contractor categories are employees under the Labor Standards Act. That brings severance, insurance, and the 52-hour work week to an estimated 8.7 million people. You'll need to actively demonstrate independent contractor status, and hiring costs will rise as a result.

Minimum wage also increases to KRW 10,320 per hour in 2026, up 2.9%. It's worth reviewing your contracts now.

The most practical thing you can do is document everything. Work with an EOR that understands local courts and unions. A single wrongful termination case can cost years of back pay, so it's worth being careful about who you hire and how you manage exits from the start.