Payroll:
The Republic
of Korea
Photography:
Gary Wallis.
www.wallispictures.com
With the world’s 15th largest ecomony
we take a look at South Korea’s
key employment rules
T
he Republic of Korea has been progressively walking
the path to mature democracy and economic
prosperity. With its modern technology and rich
cultural heritage, South Korea’s economy is the
15th largest in the world. Also among Korea’s greatest
strengths are its excellent pool of human resources and
its optimal business environment. Despite the legacies
of the Cold War that still exist on the peninsula and
having global economic crises disrupting, South Korea
has been demonstrating remarkable capabilities in
dealing with these challenges. Some measure includes its
central government, in conjunction with its provincial and
municipal governments, working consistently to overhaul
regulations and systems related to foreign investment in
terms of law, taxation, labour, financing and accounting,
and aim to upgrade them to international standards. With
measures in place, employers are largely concerned with
recruiting new employees and whether they are complying
with the employment law and payroll obligations.
10
Accolade
OCTOBER 2013
The following are some key
employment rules in Korea:
• The Minister of Employment and Labour (MOEL)
determines by August 5 of each year the minimum
wage to be applied for the following year. Before
making this determination the MOEL seeks the
recommendation of the Minimum Wage Council,
an executive agency established pursuant to the
Minimum Wage Act. The minimum wage may be
fixed on an hourly, daily, weekly or monthly basis.
From Jan. 1 to Dec. 31 2013, the minimum wage
for workers covered is KRW 4,860 per hour. This is
also equivalent to a daily rate of KRW 38,880 (8
hours a day) and a monthly rate of KRW 1,015,740.
• Companies, with 10 or more employees, in Korea
need to have its employment conditions documented
in a “Rule of Employment”. This has to be filed with
the Labour Authority as per the “Labour Standard
A ct”. Either one “Rule of Employment” or different
“Rules of Employment” by employment type or
occupation type are allowed. Employers are also
allowed to prepare its own “Rule of Employment”
but is obliged to hear opinion from at least 50% of
their employees or get consent where an amendment
will lead to worse off working conditions.
• An employer shall establish a retirement allowance
system whereby an average wage of more than 30
days shall be paid for each year of consecutive years
employed as a retirement allowance to a retired
worker; however, if the worker was employed for less
than one year, this shall not apply. This mandatory
retirement allowance should be paid in cash when
employment is terminated no matter what the reason
for termination. If employer and employee agree to
pay more than this basic amount, the multiplier
must be stipulated from the internal by law.