Hiring people in Korea

If you had thoughts of hiring people in Korea, consider below two major contract types :

Employment contract vs. Independent service contract

1. Employment contract (고용관계)

• Company needs to enroll for the social securities for each employee

Employer portion of social taxes: approx. 8.75%

Employee portion of social taxes: approx.. 8.5%

• Company needs to provide paid leaves, at least fifteen (15) days per year
• Company needs to withhold salary income tax (payroll tax) and social taxes for each salary payment
• Company needs to make severance payment for any employee whose service period is more than a year : approx. one (1) month’s value for one (1) year of service
• Employees cannot work for more than fifty two (52) hours per week

2. Independent service contract (business income) (비고용관계)

• Called as independent contractor, freelancer, etc. (사업소득자, 프리랜서, 외주용역 등등)

• Withholding tax rate is fixed – 3.3% in total for each payment
• Each individual is required to file global income tax return for the previous year’s business income earning