Recruiting Top Talent in South Korea

South Korea Top Talent

Finding and recruiting top talent in any overseas territory puts many potential obstacles in the way of companies making the move to build their international profile.

This definitely applies to South Korea, officially the Republic of Korea, as it becomes an increasingly attractive target for global expansion and for jobseekers from other nations.

Geographically, the country is at the southern end of the Korean Peninsula and has only one land border, with North Korea from which it is separated by the demilitarized zone. The Sea of Japan lies to the east, the Yellow Sea to the west, with the Korea Strait in the south separating South Korea from Japan.

South Korea has transformed from an agricultural society to become a major economic force with mega-brands such as Samsung and Hyundai becoming global benchmarks. The nation ranked 10^th globally for nominal Gross Domestic Product at 1,823 billion US dollars in 2021, a 1.92% share of the world economy. Exports and construction helped an 11-year high for growth in 2021, with further growth of 3% predicted for 2022. Per capita GDP of US$35,196 ranks 29^th in the world. South Korea has the fourth largest economy in Asia, behind China, Japan and India.

Unlike the Japanese and Chinese, however, Koreans are a homogenous ethnic group with their own language and culture, based on Confucian and Buddhist philosophies.

This outlook places great emphasis on respect, which permeates every aspect of life including the business world. In business relationships Koreans are reluctant to confront issues and give a straightforward ‘No’, which can become confusing for more direct Western businesspeople

The Recruitment Process in South Korea

South Korea has become an increasingly attractive location for international investment. However, it is essential for foreign companies taking their first steps into South Korea’s economy to have a clear plan when it comes to recruitment.

This particularly applies to Western companies, who are entering a highly competitive marketplace. The work culture demands adjustment and compromise in an environment where hierarchy, respect and dignity play important roles … alongside a business ethic that presupposes long hours at work.

Other barriers also have to be negotiated, such as the language. English is commonly spoken in many sectors, but not all, and taking a course in Korean will indicate commitment to making a mark. Advancement is an important concept for Koreans, so recruiting companies should emphasize career opportunities.

For jobseekers, there are two ‘recruitment seasons’ in the year, often organized by mega-companies such as Hyundai, Samsung, and LG, targeting graduates. But the process is demanding; after sending in a resumé and introductory letter, candidates may have to sit an exam before being invited for interview.

Recruitment is the first stage of making your company operational and competitive. It is vital to know where to locate the finest talent in South Korea to be the perfect fit for your company’s expansion plans. Don’t wait … contact Bradford Jacobs for the solutions.

Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the revenue and social insurance authorities. Foreign companies must establish a subsidiary to undertake these responsibilities, then strict registration procedures for employees must be followed, in addition to other responsibilities for the employer. These include:

• Registering employees with the National Tax Service (NTS) within 15 days of employment by obtaining their tax certificate from the relevant local tax office, to facilitate withholding payroll tax
• Prepare NTS Certificate of Income depending on Class A or Class B income
• Registering employees with the National Health Insurance Service (NHIS) for payroll contributions to National Pension (NP), National Health Insurance (NHI) and Employment Insurance (EI). Employers also contribute to Workers’ Compensation Insurance
• Filing returns and paying any tax due to the NTS between May 1 and May 31 of the year following the calendar tax year
• Withholding payroll taxes and remitting to the NTS
• Finalizing annual tax liability and supply payroll tax settlement certificate to the NTS

Legal Checks on Employees in South Korea

Scope: The Personal Information Protection Act (PIPA) rules that the applicant’s permission must be obtained for any checks that exceed those generally required for an employment agreement. In addition to requiring general permission, some areas require specific consent.

Criminal Records: Companies cannot request police records for criminal record checks. Under PIPA regulations, the individual must have permission to obtain and release the information.

Medical History and Records: This is allowed only with the applicant’s specific consent. Refusal to comply does not justify refusal to employ.

Educational and Reference Checks: With the applicant’s consent, the employer can request the minimum amount of information relevant to the position.

Credit Checks: Under the Use and Protection of Credit Information Act, the employer must ask for permission from the applicant and inform them that the check may impact their credit rating.

Required:  That the applicant fulfils all work permit, visa, and immigration requirements.

Basic Facts on Hiring in South Korea

The obligations of employer and rights of employees in South Korea are governed by the Labor Standards Act (LSA) and the Constitution, Collective Bargaining Agreements (CBAs) and Rules of Employment (ROEs).

• The LSA stipulates employers most have a written agreement with employees detailing such as working conditions and hours, wages and payment schedule, paid days off and paid vacations
• Agreements that do not comply with LSA regulations are void
• Contracts are generally either indefinite or fixed term
• Contracts for part-time workers must be in writing
• There is no statutory language requirement for contracts, although it is advisable, they should be in a language understood by all parties
• There are no statutory limits regarding probation periods, and they are generally between three and six months
• Rules of Employment are mandatory in companies employing more than 10, giving details of working conditions, health and safety, disciplinary procedures, and retirement arrangements
• Most workplaces must comply with requirements of the Occupational Health and Safety Act (OHSA), appoint a health and safety committee, and make regular reports to the government
• ROEs must be filed with the Ministry of Employment and Labor. No other third-party approval is required

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination. 

Employers’ responsibilities include:

• Registering employees with the National Tax Service (NTS) within 15 days of employment by obtaining their tax certificate from the relevant local tax office, to enable withholding payroll tax
• Prepare NTS Certificate of Income depending on Class A or Class B income
• Registering employees with the National Health Insurance Service (NHIS) for payroll contributions to National Pension (NP), National Health Insurance (NHI) and Employment Insurance (EI)
• Filing returns and paying any tax due to the NTS between May 1 and May 31 of the year following the calendar tax year
• Withholding payroll taxes and remitting to the NTS
• Finalizing annual tax liability and supply payroll tax settlement certificate to the NTS