Payroll in South Korea

Pay frequency and payday rules

Wages must generally be paid directly to the employee, in full and in currency, at least once a month on a fixed date. Statutory exceptions exist, so check any proposed deduction or non-cash payment before you set it up. Put the payday and the lawful deductions in the payroll setup and in the written terms.

The employee's payday is one date. Your remittance deadline is another. The tenth of the following month is a common remittance deadline for the employer. It is not a universal salary payday. Keep the two apart in your payroll calendar.

Payslips and records

Give each employee a written or electronic payslip showing the required wage components, how they were calculated and the deductions. Keep the wage ledger and the relevant employment records for at least three years under the Labor Standards Act, and check whether tax or other rules require a longer period. Wage claims ordinarily have a three-year limitation period.

Extra payments and benefits

The thirteenth salary is customary in South Korea rather than set out as a fixed statutory entitlement in the dossier. Do not assume every Korean employee has the same thirteenth-month salary or bonus percentage. Check the contract, the employment rules and any collective agreement for bonuses, allowances and other benefits. For each item, state the payment conditions and whether it counts in the applicable wage or insurance base.

Deductions, tax and contributions

Employee deductions are income tax and social insurance. For 2026, the National Pension rate is 9.5%, split 4.75% employer and 4.75% employee. From July 2026 to June 2027, standard monthly income is bounded by KRW410,000 and KRW6,590,000. Health insurance is 7.19% of the applicable remuneration base, shared equally at 3.595% each. Long-term care is calculated from the health premium. Employment insurance is normally 0.9% employee and 0.9% employer, and the employer pays an additional employment-stability and skills charge that depends on company size. Industrial accident insurance is an employer cost and is not an employee deduction.

Remitting tax

You withhold income tax through payroll and normally pay it by the tenth of the following month. Year-end settlement of employment income is generally made with the following February payroll, with the applicable reporting by 10 March. Collect the employee's declarations and supporting information before you calculate the final liability. Confirm the remittance and filing details for social insurance with the relevant insurance bodies, as the dossier does not set them out.

Working-time rules that affect pay

For workplaces under the ordinary working-time rules, hours are generally limited to eight a day and 40 a week, excluding breaks. Agreed overtime is normally limited to another 12 hours a week, giving an ordinary total of 52. Flexible schedules and statutory exceptions need a separate assessment, and remote work does not create an exemption.

• Overtime: at least a 50% addition to ordinary wages where the premium rules apply.
• Night work: a separate 50% addition for work from 22:00 to 06:00.
• Holiday work: a 50% addition for the first eight hours and 100% beyond eight.
• Overlap: applicable premiums can overlap, so a late overtime hour may carry more than one addition.
• Breaks: 30 minutes for four hours of work and one hour for eight hours, provided during working hours.

The 2026 minimum wage is KRW10,320 an hour, or KRW2,156,880 a month on the official 209-hour basis, which includes the paid weekly rest allowance. The monthly figure does not fit every working pattern, so check the employee's hours and which payments count towards the floor. Keep the 2026 rate in payroll until the new rate applies.

Coverage matters too. The Labor Standards Act generally applies to workplaces regularly employing at least five workers, and employees averaging less than 15 hours a week over four weeks are excluded from the weekly-holiday and annual-leave provisions. Run a specific coverage check for each hire.

Income tax bands

South Korea taxes employment income progressively. National individual income tax rates run from 6% up to a top rate of 45%. Local income tax is generally 10% of the national income-tax amount, so it is a charge on top of the national figure, not a share of it.

The bands apply to taxable income, which is calculated after deductions. They are not flat percentages of gross salary, so a band rate cannot be used as a take-home pay estimate.

How withholding works

The employer withholds income tax through payroll and normally pays it by the tenth of the following month. That date is a remittance deadline for the employer, not an employee payday. Wages themselves must generally be paid directly and in full in currency, at least once a month on a fixed date.

Employment income is settled at year end. The year-end settlement is generally made with the following February payroll, with the applicable reporting by 10 March. Collect each employee's declarations and supporting information before calculating the final liability.

Allowances and credits

Deductions and credits change the final calculation for each employee. The dossier does not list the individual allowances or credit amounts, so check the current tax authority rules and each employee's declarations rather than applying a standard figure.

Eligible foreign employees may be able to elect a special national flat tax of 19% instead of the ordinary progressive calculation. With local tax, the combined rate is normally 20.9%. The regime has first-work-date and other conditions and can apply over a qualifying 20-year period. It does not allow the usual deductions and credits on top, so have payroll compare the actual alternatives for each person.

Employee social insurance deductions

Employees also pay social insurance contributions from gross pay. These rates apply to covered workplace members and depend on eligibility, limits and the assessed income base.

• National Pension: 9.5% in 2026, split 4.75% employee and 4.75% employer. From July 2026 to June 2027, standard monthly income is bounded by KRW410,000 and KRW6,590,000. Do not apply the rate to every foreign worker's full salary.
• Health insurance: 7.19% of the applicable remuneration base in 2026, shared equally at 3.595% each.
• Long-term-care insurance: equivalent to 0.4724% of the same base for each party before payroll rounding.
• Unemployment insurance: normally 0.9% employee and 0.9% employer for covered employees.

The employer also pays an employment-stability and skills charge, which is not an employee deduction. Industrial accident insurance is likewise an employer cost and should not be treated as an employee deduction.

Business taxes are separate

For business years beginning from 1 January 2026, the standard national corporate income-tax schedule uses marginal rates of 10%, 20%, 22% and 25%, with local corporate tax and special categories assessed separately. Standard VAT is 10%, subject to exemptions and zero-rating. These are business and transaction taxes, not salary deductions.

In South Korea, the employer pays several statutory insurance contributions on top of gross pay, and the employee pays a matching share that you withhold through payroll. The OECD summary figures for 2025 are 11.06% for employers and 9.4% of gross for employees. Those are aggregates. For budgeting, use the individual 2026 rates below.

Employer and employee contribution rates

Long-term care is calculated from the health premium and shown here before payroll rounding. The skills charge is ordinarily 0.25% below 150 workers. For larger employers it is 0.45% for qualifying priority-support businesses, 0.65% for other employers with 150 to 999 workers, or 0.85% for the largest and public employers. Check the employing company's category and the worker's coverage.

Ceilings and thresholds

From July 2026 to June 2027, standard monthly income for the National Pension is bounded by KRW410,000 and KRW6,590,000. Do not apply the pension rate to a foreign worker's full salary without checking eligibility, any social-security agreement and the assessed income base. The dossier gives no ceiling for the other insurances, so confirm the current limits and assessments before you budget.

What is and is not included

• Included in the table: pension, health, long-term care and employment insurance.
• Employer-only and variable: industrial accident insurance depends on the business classification and assessment. Confirm the actual premium and do not use a universal estimate. It is never an employee deduction.
• Retirement funding: under a defined-contribution scheme, the employer contributes at least one-twelfth of annual wages. This is an alternative way of providing the retirement benefit, not automatically an extra charge on top of a separate full retirement allowance.
• Not included: bonuses, allowances, private medical cover and other benefits. Check the contract, employment rules and any collective agreement, and whether each item counts in the insurance base.

Worked cost example

Take a KRW4,000,000 gross monthly salary, assuming the same insured base and the 0.25% employer category.

That total is still before injury insurance, other benefits, equipment, EOR fees and invoice taxes. Treat it as a floor for the budget, not the final figure.

Annual leave

At covered workplaces, an employee who attends at least 80% of the year earns 15 paid annual-leave days. In the first year, one day accrues for each month of full attendance, normally up to 11 days before the first anniversary. From three years' service, one extra day is added for each two years beyond the first, up to 25 days overall.

Employees averaging less than 15 hours a week over four weeks are excluded from the annual-leave provisions. Leave generally expires if unused for one year, but employer fault and the rules on encouraging leave use can change the outcome. Do not forfeit unused leave pay automatically. Maternity leave, parental leave and specified pregnancy or parental reduced hours count towards attendance. Reconcile unused leave when employment ends.

Public holidays

For covered workplaces, prescribed public holidays are paid. A substituted working day needs a written employee-representative agreement. The 2026 changes restored Constitution Day on 17 July and extended public-holiday status to Labour Day on 1 May, with substitute-day rules. Check the annual dates for lunar holidays and any separately designated holidays before setting the work calendar. Holiday work carries a 50% addition for the first eight hours and 100% beyond eight.

Sick pay

The dossier does not set a statutory paid-sick-leave allowance. Sick pay should be set out in the employment rules or contract, with the way the employee reports illness and supplies evidence. Do not assume a provider's package includes a fixed sick-leave entitlement. Work-related illness and injury are separate matters, covered by industrial accident compensation, which is an employer cost and not an employee deduction. Check the dismissal restrictions that apply during treatment and for 30 days afterwards.

Maternity leave

Maternity leave is generally 90 days, 100 days for a qualifying premature birth, or 120 days for multiple births. At least 45 days must fall after childbirth, or 60 for multiple births.

The employer pays the paid period, reduced to the extent the employment-insurance benefit covers it. Insurance eligibility, limits and employer category affect the arrangement. Do not promise full salary throughout every maternity leave.

Paternity and parental leave

Spouse childbirth leave is 20 paid days, to be used within 120 days of the birth, and it can be split three times, making up to four periods. Employment-insurance reimbursement has separate eligibility rules and does not remove the employee's paid-leave entitlement. From 18 September 2026, announced changes allow it to begin within 50 days before the expected birth. These were future rules at the guide's 14 September 2026 review, so confirm their status.

Qualifying employees can generally take up to one year of parental leave for a child aged eight or younger or in second grade or below, with a six-month service requirement. The limit can rise to 18 months where both parents each use at least three months. Leave counts as service. Statutory leave and employment-insurance payments are separate entitlements, so confirm who funds each part.

Other leave

Infertility-treatment leave is six days a year, with the first two paid. Menstrual leave is one day a month on request, and it need not be paid. Family-care leave can reach 90 days a year, with no automatic duty to pay full salary. Keep these separate from annual leave and contractual sickness benefits.

Compliance in Korean payroll comes down to five areas: workplace coverage, written terms, monthly payroll and remittance, records, and dismissal procedure. Start by confirming which rules apply to the workplace, because several protections depend on headcount.

Coverage and employment rules

The Labor Standards Act generally applies to workplaces regularly employing at least five workers. Some protections also apply to smaller workplaces. Annual leave, working-time limits, premium pay and unfair-dismissal protections each need a specific coverage check. Do not assume one hire through a larger provider makes the workplace a one-worker business.

Employers regularly using at least ten workers must prepare and report rules of employment. Changes need consultation with the relevant employees or union, and changes unfavourable to workers generally need consent. Before changing pay, benefits or working arrangements, check the rules, any collective agreement and the individual contract. OECD data puts collective agreement coverage at 16.3% for 2023, so many hires will have none, but check for one.

Written terms

Give the employee written or electronic terms covering wage components, calculation and payment, agreed hours, holidays and annual leave. Identify the actual employer, role, work location, duration and benefits. A bilingual contract can help the employee and an overseas client understand the same agreement, but have local requirements checked before signing.

Covered fixed-term employment is generally limited to two years, including successive contracts. Continuing beyond that normally creates indefinite employment unless an exception applies. Also confirm the right to work for the proposed employer and role before agreeing a start date.

Payroll, filing and payment

Wages must generally be paid directly and in full in currency, at least once a month on a fixed date. Record the payday and lawful deductions in the payroll setup. The employer withholds income tax through payroll and normally pays it by the tenth of the following month. Year-end settlement is generally made with the following February payroll, with reporting by 10 March. The tenth is a common remittance deadline, not a universal payday.

Provide a written or electronic payslip showing the required wage components, calculation and deductions.

Records

Keep the wage ledger and relevant employment records for at least three years under the Labor Standards Act, and check any longer tax or other retention requirement. Wage claims ordinarily have a three-year limitation period. Record actual working and rest time, not scheduled time.

Notice and termination

Where the dismissal protections apply, the employer needs a justifiable reason and must give the reason and effective date in writing. An employer generally gives at least 30 days' notice or pays at least 30 days of ordinary wages instead. Exceptions include service under three months and specified serious circumstances. Notice pay does not cure an otherwise unlawful dismissal, and completing probation does not create a right to dismiss without a reason.

Dismissal is restricted during treatment for occupational injury or illness and during maternity leave, and for 30 days afterwards, with specific exceptions. Check these before starting an exit.

Dismissals for managerial reasons need urgent business necessity, efforts to avoid dismissal and fair selection. The employer must notify and consult the union or employee representative at least 50 days beforehand, separate from individual notice.

A covered employee can apply to the Labor Relations Commission for unfair-dismissal relief within three months. Final wages and retirement benefits are generally due within 14 days of departure, with an agreed extension allowed for special circumstances.