Employing in South Korea

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Expanding into
South Korea

Expanding to countries such as South Korea – which is characterized by a highly-skilled and innovative workforce, flexible employment and tax laws, a world-renowned infrastructure network, and leading sectors in agriculture, manufacturing, ICT, energy, pharmaceuticals, and tourism – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to South Korea

Learn all about expanding into South Korea and see what we can do to make your expansion easier.

Download our Guide to South Korea

Learn all about expanding into South Korea and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in South Korea

Hiring Staff
in South Korea

The Main Sectors of the South Korean Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Korea is a place where people from all over the world gather. According to the Union of International Associations (UIA), Korea hosted 1,113 international conferences in 2019, making it the world’s second most prolific host of international conferences.

In the Travel and Tourism Competitiveness Report of the World Economic Forum (WEF), Korea ranked 16th out of 140 countries. Shopping experiences in Korea have attracted more foreign tourists, resulting in tourism revenue reaching USD 21.6 billion in 2019, up 16.5% YoY.

The machinery industry refers to five major industries, which according to the Korean Standard of Industry Classification (KSIC), are general machinery, electrical machinery, precision machinery, transport machinery, and metal products (assembly metal).

As of 2020, Korea was the world’s third largest semiconductor equipment market, with a market size of USD 16.08 billion. The production of precision processing equipment reached USD 4 billion (no. 6 in the world) with exports of USD 1.8 billion (no. 7 in the world). The manufacturing system supply capacity is expected to be further strengthened following the expansion of smart factories in Korea’s key industries.

Korea’s robot density index (the number of robots used per 10,000 workers) was the highest in the world in 2020. Korea has the fourth largest number of industrial robots in the world.

Korea is a global leader in the ICT industry. Korea was the first country in the world to commercialize CDMA in 1996, LTE-A in 2013, and 5G in 2019. Korea is evaluated as a global ICT leader based on its high level of ICT related technologies and penetration rate.

As of 2020, the ICT industry accounted for 11.4% (USD 177.5 billion) of the total GDP, driving the growth of the Korean economy. Mobile phones, in particular, are one of Korea’s top 15 export items, accounting for 2.2% of total exports in 2020. The commercialization of 5G service is continuously boosting the sales of the telecommunication service industry.

Korea ranks 1st in ICT Penetration, according to the ICT Adaptation Index (2020), and 8th in in the Digital Competitiveness Index, part of The Global Competitiveness Report (2020).

As of 2020, the total sales of the new and renewable energy industry was approximately KRW 25.5 trillion. The number of employees stood at 119,000, and investment grew to KRW 7.7 trillion.

Korea‘s level of technology in the field of new and renewable energy stands at 86% (with the highest level being 100%), according to the Korea Institute of Science and Technology Planning and Evaluation (KISTEP, 2018). There is a technological gap of around 10% compared to other developed countries, such as the US, Japan, and European nations.

For further information, download our free Country Guide here

The Ministry of Food and Drug Safety analyzed the data on the clinical trials registration system of the US National Institutes of Health (ClinicalTrials.gov). According to the analysis, Korea’s industry-led clinical trials ranked no. 6 in 2020, compared to no. 8 in 2019. Its multinational clinical trial ranking also rose from no. 12 in 2019 to no. 10 in 2020. Seoul, in particular, has continued to rank first in global clinical trial city rankings since 2017.

The number of clinical trials on pharmaceuticals in Korea rose by 12% year-on-year in 2020, showing a steady increase, thanks to excellent infrastructure in Korea. Korea offers a prompt application and approval period (30 days), efficient IRB composition, and over 30 proven clinical trial hospitals and 170 clinical trial centers (CTCs) that have large and diverse patient pools.

Venture capital creation and investment have been breaking records for several years in a row, and venture investment has been continually active even amid the COVID-19 crisis.

In 2021, Korea ranked first in the Bloomberg Innovation Index and fifth (no. 1 in Asia) in the Global Innovation Index of the WIPO. Korea has taken the top spot for several years in various innovation related evaluations. Korea is an incredibly attractive place for investment with its well-established innovation ecosystem.

The formation of venture funds in 2020 reached KRW 6.56 trillion, an increase of 54.8% compared to 2019, and an all-time high of 206 newly formed associations were recorded.

The formation of venture funds in 2020 broke the previous record of KRW 4.84 trillion in 2018 and exceeded KRW 6 trillion for the first time.

The Dutch finance industries are leading the way in finance and Fintech, bringing traditional finance services into the future with tech innovation, research, development, as well as digital infrastructure. Amsterdam is also the world capital of green finances and ranks as the 2nd biggest fintech nation in the EU.

The Korean food market was worth USD 128.7 billion as of 2019, which was 1.9% of the global food market. In response to the recent growth of emerging markets, such as China and ASEAN countries, and the growing global demand for Korean processed foods, exports have been rapidly and continuously growing.

As of 2019, the production scale of the Korean food industry was KRW 96.5 trillion. The industry has grown at an average annual rate of 5.9% since 2007, which is higher compared to the manufacturing industry (4.2%). The share of the food industry in the manufacturing industry has been steadily increasing. The number of businesses, production amount, and added value all increased compared to 2007.As of 2020, exports of Korean processed food amounted to USD 6.14 billion, accounting for 62.2% of the total agricultural and fishery food exports.

The Main Sectors of the South Korean Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Korea is a place where people from all over the world gather. According to the Union of International Associations (UIA), Korea hosted 1,113 international conferences in 2019, making it the world’s second most prolific host of international conferences.

In the Travel and Tourism Competitiveness Report of the World Economic Forum (WEF), Korea ranked 16th out of 140 countries. Shopping experiences in Korea have attracted more foreign tourists, resulting in tourism revenue reaching USD 21.6 billion in 2019, up 16.5% YoY.

The machinery industry refers to five major industries, which according to the Korean Standard of Industry Classification (KSIC), are general machinery, electrical machinery, precision machinery, transport machinery, and metal products (assembly metal).

As of 2020, Korea was the world’s third largest semiconductor equipment market, with a market size of USD 16.08 billion. The production of precision processing equipment reached USD 4 billion (no. 6 in the world) with exports of USD 1.8 billion (no. 7 in the world). The manufacturing system supply capacity is expected to be further strengthened following the expansion of smart factories in Korea’s key industries.

Korea’s robot density index (the number of robots used per 10,000 workers) was the highest in the world in 2020. Korea has the fourth largest number of industrial robots in the world.

Korea is a global leader in the ICT industry. Korea was the first country in the world to commercialize CDMA in 1996, LTE-A in 2013, and 5G in 2019. Korea is evaluated as a global ICT leader based on its high level of ICT related technologies and penetration rate.

As of 2020, the ICT industry accounted for 11.4% (USD 177.5 billion) of the total GDP, driving the growth of the Korean economy. Mobile phones, in particular, are one of Korea’s top 15 export items, accounting for 2.2% of total exports in 2020. The commercialization of 5G service is continuously boosting the sales of the telecommunication service industry.

Korea ranks 1st in ICT Penetration, according to the ICT Adaptation Index (2020), and 8th in in the Digital Competitiveness Index, part of The Global Competitiveness Report (2020).

As of 2020, the total sales of the new and renewable energy industry was approximately KRW 25.5 trillion. The number of employees stood at 119,000, and investment grew to KRW 7.7 trillion.

Korea‘s level of technology in the field of new and renewable energy stands at 86% (with the highest level being 100%), according to the Korea Institute of Science and Technology Planning and Evaluation (KISTEP, 2018). There is a technological gap of around 10% compared to other developed countries, such as the US, Japan, and European nations.

The Ministry of Food and Drug Safety analyzed the data on the clinical trials registration system of the US National Institutes of Health (ClinicalTrials.gov). According to the analysis, Korea’s industry-led clinical trials ranked no. 6 in 2020, compared to no. 8 in 2019. Its multinational clinical trial ranking also rose from no. 12 in 2019 to no. 10 in 2020. Seoul, in particular, has continued to rank first in global clinical trial city rankings since 2017.

The number of clinical trials on pharmaceuticals in Korea rose by 12% year-on-year in 2020, showing a steady increase, thanks to excellent infrastructure in Korea. Korea offers a prompt application and approval period (30 days), efficient IRB composition, and over 30 proven clinical trial hospitals and 170 clinical trial centers (CTCs) that have large and diverse patient pools.

Venture capital creation and investment have been breaking records for several years in a row, and venture investment has been continually active even amid the COVID-19 crisis.

In 2021, Korea ranked first in the Bloomberg Innovation Index and fifth (no. 1 in Asia) in the Global Innovation Index of the WIPO. Korea has taken the top spot for several years in various innovation related evaluations. Korea is an incredibly attractive place for investment with its well-established innovation ecosystem.

The formation of venture funds in 2020 reached KRW 6.56 trillion, an increase of 54.8% compared to 2019, and an all-time high of 206 newly formed associations were recorded.

The formation of venture funds in 2020 broke the previous record of KRW 4.84 trillion in 2018 and exceeded KRW 6 trillion for the first time.

The Dutch finance industries are leading the way in finance and Fintech, bringing traditional finance services into the future with tech innovation, research, development, as well as digital infrastructure. Amsterdam is also the world capital of green finances and ranks as the 2nd biggest fintech nation in the EU.

The Korean food market was worth USD 128.7 billion as of 2019, which was 1.9% of the global food market. In response to the recent growth of emerging markets, such as China and ASEAN countries, and the growing global demand for Korean processed foods, exports have been rapidly and continuously growing.

As of 2019, the production scale of the Korean food industry was KRW 96.5 trillion. The industry has grown at an average annual rate of 5.9% since 2007, which is higher compared to the manufacturing industry (4.2%). The share of the food industry in the manufacturing industry has been steadily increasing. The number of businesses, production amount, and added value all increased compared to 2007.As of 2020, exports of Korean processed food amounted to USD 6.14 billion, accounting for 62.2% of the total agricultural and fishery food exports.

Commercial Laws in
South Korea

Residents must also contribute a local income tax. The same tax bands apply as for PIT, but the tax bands are 10% of the above, from 0.6% to 4.5%. Tax is paid to the province or city where the taxpayer resides.

Tax residents are liable for their worldwide income, as are foreign residents who have lived in the country for five years in the most recent 10-year period. Non-residents are taxed on South Korea-sourced income.

Tax residents are those residing in South Korea for more than 183 days in a tax year or spending 183 days or more in-country due to their occupation. Individuals residing with families or having assets in South Korea for more than 183 days or those whose family are in the country for more than 183 days a year even if their job is overseas, are also tax residents.

The tax year is the calendar year. Returns must be filed between May 1 and May 31 of the following year along with taxes due.

  • The National Tax Service – one of the tax organizations in South Korea and is run under the Ministry of Economy and Finance. The headquarters are in Sejong City.
  • The Fair Work Ombudsman – South Korea’s Ministry of Employment and Labor (MOEL) is a cabinet-level ministry overseeing labor affairs. Its predecessor agency, the Division of Labor, was established under the direction of the Minister of Social Affairs on 11 November 1948. It was upgraded to a cabinet ministry on 8 April 1981.
    Major tasks include the establishment of policies related to employment, establishment and management of policies related to industrial insurance, the establishment and management of policies related to industrial insurance, the establishment of policies related to occupational capacity development, employment equality with work and family compatibility, and the establishment of policies related to labor conditions.

Internationally minded companies hiring employees in South Korea must operate within a strict framework of legislation.

Most aspects of employment law are covered by the South Korea Constitution and the Labor Standards Act (LSA), supplemented by Collective Bargaining Agreements (CBAs) and Rules of Employment (ROEs).

General requirements applying to all contracts include:

  • The LSA stipulates employers should have a written agreement with employees detailing such as working conditions and hours, wages and payment schedule, paid days off and paid vacations, benefits including sick leave entitlement, location of job and working conditions.
  • Any agreements that do not comply with LSA minimums are invalid
  • The usual contract is indefinite or open-ended, known as ‘regular’ contracts
  • Fixed-term contracts cannot exceed two years, or they become indefinite
  • Part-time and fixed-term employees are entitled to the same rights as full-time employees
  • The contract does not have to be in Korean, although this is recommended for local employees
  • There are no statutory requirements regarding probation periods, which generally are for three to six months

Commercial Laws in
South Korea

Residents must also contribute a local income tax. The same tax bands apply as for PIT, but the tax bands are 10% of the above, from 0.6% to 4.5%. Tax is paid to the province or city where the taxpayer resides.

Tax residents are liable for their worldwide income, as are foreign residents who have lived in the country for five years in the most recent 10-year period. Non-residents are taxed on South Korea-sourced income.

Tax residents are those residing in South Korea for more than 183 days in a tax year or spending 183 days or more in-country due to their occupation. Individuals residing with families or having assets in South Korea for more than 183 days or those whose family are in the country for more than 183 days a year even if their job is overseas, are also tax residents.

The tax year is the calendar year. Returns must be filed between May 1 and May 31 of the following year along with taxes due.

  • The National Tax Service – one of the tax organizations in South Korea and is run under the Ministry of Economy and Finance. The headquarters are in Sejong City.
  • The Fair Work Ombudsman – South Korea’s Ministry of Employment and Labor (MOEL) is a cabinet-level ministry overseeing labor affairs. Its predecessor agency, the Division of Labor, was established under the direction of the Minister of Social Affairs on 11 November 1948. It was upgraded to a cabinet ministry on 8 April 1981.
    Major tasks include the establishment of policies related to employment, establishment and management of policies related to industrial insurance, the establishment and management of policies related to industrial insurance, the establishment of policies related to occupational capacity development, employment equality with work and family compatibility, and the establishment of policies related to labor conditions.

Internationally minded companies hiring employees in South Korea must operate within a strict framework of legislation.

Most aspects of employment law are covered by the South Korea Constitution and the Labor Standards Act (LSA), supplemented by Collective Bargaining Agreements (CBAs) and Rules of Employment (ROEs).

General requirements applying to all contracts include:

  • The LSA stipulates employers should have a written agreement with employees detailing such as working conditions and hours, wages and payment schedule, paid days off and paid vacations, benefits including sick leave entitlement, location of job and working conditions.
  • Any agreements that do not comply with LSA minimums are invalid
  • The usual contract is indefinite or open-ended, known as ‘regular’ contracts
  • Fixed-term contracts cannot exceed two years, or they become indefinite
  • Part-time and fixed-term employees are entitled to the same rights as full-time employees
  • The contract does not have to be in Korean, although this is recommended for local employees
  • There are no statutory requirements regarding probation periods, which generally are for three to six months

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