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SALARY PAYMENT IN South Korean Won (KRW, ₩)
CONTRACT LANGUAGES Korean / English
PAYROLL TAX 16.43% – 34.94%
PAYROLL CYCLE Monthly
TIME TO HIRE 24 hours
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South Korean employers with 5 or more employees cannot terminate an employment contract without just cause.
Just cause or reasonable grounds for termination should be significant enough that continuing with the employment would ‘unduly burden’ the employer’s operations. It’s unlikely that an isolated instance of negligence or incompetence will constitute just cause, but repeated or gross misconduct will certainly constitute just cause.
South Korea’s Supreme Court has previously ruled that terminations without just cause are null and void.
Termination on the grounds of discrimination is unlawful in South Korea. Between them, the Labor Standards Act (1997) and the Equal Employment Opportunity and Work-Family Balance Assistance Act (2016) broadly prohibit discrimination against workers on the basis of factors, such as; gender, age, nationality, religion, and social status.
Any failures to comply with the Equal Employment Opportunity and Work-Family Balance Act (2016) can lead to investigation by the Labor Relations Committee as well as criminal and civil penalties.
The Labor Standards Act (1997) requires South Korean businesses with 10 or more employees to create and file a Rules of Employment with the Ministry of Employment and Labor. The Rules of Employment document should detail both the disciplinary process and dismissal process.
At a minimum the termination notice must be submitted in writing, and acknowledge the 30 day notice period. Termination notices must also include the reasons for the termination (cause) and the proposed date of termination. It is the employer who has the burden of proof when establishing just cause
Resigning employees should provide their employer with a resignation letter and give decent notice. Usually, the individual employment contract or the business’s Rules of Employment document will include a notice clause that details the length of the notice period that resigning employees must give.
Keep in mind that severance payments apply to voluntary resignations as well as terminations.
Your business can easily hire employees in South Korea without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.
Provided the employer can provide just cause, including documented evidence or proof of wrongdoing on the part of the employee, it is not overly difficult to terminate an employee in South Korea.
The main risk of terminating an employment agreement in South Korea is for the termination to be found baseless, i.e. without just cause. In such circumstances, the dismissed employee may be reinstated and entitled to back pay or compensation up to 6 months’ worth of normal salary.
You can mitigate the risks of employment termination by terminating employees only in cases where there is just cause to do so.
