If you had thoughts of hiring people in Korea, consider below two major contract types :
Employment contract vs. Independent service contract
- 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
