PEO Service in South Korea – Professional Employer Organization

  • Post category:South Korea

Professional Employer Organization is referred to as PEO services in South Korea.

When companies wish to outsource HR duties, they use PEO services.

PEO services in south korea

A PEO relieves a corporation of the necessity of having its own HR department by handling sourcing, onboarding, benefits, and even payroll.

PEO services are also used by businesses when hiring abroad.

For instance, a PEO would legitimately hire employees on the business owner’s behalf if they wished to hire workers in South Korea. Additionally, they would be in charge of all local HR, tax, and labor law obligations related to that personnel.

If you wish to incorporate a new company in South Korea, refer to our South Korea company registration page.

Services provided in PEO are –

  • Registering the relevant business and employee data in the payroll system and software in order to calculate payroll
  • Processing Payroll Monthly
  • Annual Declaration and Year-End Adjustment



The progressive tax bracket system is used in South Korea to determine individual income tax rates.

Residents of South Korea who make money both inside and outside the nation are subject to individual income taxes. The tax rates in Korea range from 6% to 45% depending on how much money is made. To lower the taxable income, a number of tax deductions and credits are available, including those for charitable contributions, medical expenses, and educational costs.

South Korean tax payers have until May 31 of the following year to file their tax returns. The tax year is from January 1 to December 31 in South Korea. Failure to comply with tax laws may result in penalties and fines, and tax evasion is a crime punishable by jail time or fines.


Factors that could affect employer costs in South Korea are the size of the business, the industry, and the position of the employee. Employer contributions in South Korea help to partially finance a number of statutory benefits, such as the National Pension Scheme, Employment Insurance, and Industrial Accident Compensation Insurance. The employer’s payment to these schemes is based on a portion of the employee’s salary, and the employee is also required to contribute.

Employers may provide extra benefits on top of the ones that are required, like health insurance, retirement programs, and bonuses. Offering these extra benefits can help attract and retain workers in a market where employment opportunities are fiercely competitive.

Employers must also abide by labor laws, including those governing minimum wage, working hours, and overtime compensation. Many businesses decide to collaborate with a Global PEO service provider to handle their employer costs, and compliance in South Korea since understanding and adhering to these standards can be difficult and time-consuming.


  • 1.05%-1.65%: Employment Insurance
  • 0.73%-18.63%: Worker Accident Compensation Insurance
  • 0.8%: Employment Insurance
  • 4.50%: National Pension
  • 3.68%: National Health Insurance


There are five mandatory social security and insurance systems in Korea. These include long-term senior care, healthcare insurance, unemployment insurance, and compensation for industrial accidents. Benefits and insurance are significant components of employee remuneration in South Korea and may help businesses in attracting and retaining top employees. The government of South Korea offers benefits that cover the bare necessities, and corporations frequently provide incentives like pensions and healthcare to recruit top people.


All citizens of South Korea, including foreign employees, have access to affordable, all-inclusive healthcare under the National Health Insurance (NHI) system. Employers must make a contribution to the NHI program, the amount of which depends on the employee’s pay. Employers may also give supplemental dental or health insurance to offer additional coverage.


The National Pension Service – NPS is a required public pension program created to offer financial security and income security to South Korea’s older population. Both in terms of the amount of participants and the assets under administration, it ranks among the largest pension plans in the world.

According to a pay-as-you-go system, the NPS pays benefits to existing retirees by having current employees deposit a portion of their monthly salaries to the pension fund. In order to guarantee a consistent income for seniors while distributing the financial burden among the working population, the pension system is designed to achieve intergenerational fairness.


The Labor Standards Act, which governs working hours in South Korea, sets the maximum weekly working hours at 52 hours, including up to 12 hours of overtime. Employees must also have at least 15 days of paid annual leave and at least one day off each week, according to the law. However, there might be differing rules for other areas, including manufacturing, and employers might require more overtime when business is busy.


In order to enhance work-life balance and productivity, the South Korean government has been making efforts to shorten the nation’s infamously long workdays. For instance, the “52-hour workweek” was instituted in 2018, limiting weekly working hours to 52 hours, and enforcing fines on firms who do not comply. Additionally, employers are required to pay their workers extra for overtime labor, and those who put in more than eight hours per day are entitled to a 50% pay raise.


South Korean termination rules are intended to safeguard workers from wrongful termination and discrimination. The Labor Standards Act stipulates the prerequisites for termination, such as giving employees advance notice and having valid grounds for doing so. Depending on the length of employment, employers are required to give written notice of termination to employees. For those with more than three months of service, the notice period must be at least 30 days.

Only justified terminations, such as those due to poor performance, policy violations, or downsizing, are permitted by employers. Employers are required to give severance pay to workers who are let go as a result of firm downsizing or restructuring, and discrimination on the basis of age, gender, color, or national origin is illegal. Termination laws must be followed or else penalties and legal action may be imposed. Companies can manage South Korea’s termination legislation and ensure local law compliance by working with a PEO service provider.

Even if an employee leaves on his own will, Korea mandates severance pay. Employees who are fired are eligible for 30 days of severance pay.

If an employee’s contract is terminated, the employer is required to provide a 30-day notice.


The job title, responsibilities, compensation, perks, working hours, and duration of the contract should all be specified in the employment contract, which must be written in Korean. The contract has to be signed by both the employer and the employee.

Employment contracts in South Korea can be either fixed-term or indefinite-term. Indefinite-term contracts are used for permanent personnel, whereas fixed-term contracts are often used for project-based or seasonal labor and are limited to two years. Before ending a worker’s contract, employers must give them notice and give justifications for the decision.

The Labor Standards Act lays out the basic specifications for employment contracts, and companies are required to abide by regional laws. Employing a PEO service provider such as Relin Consultants can guide businesses through the employment contract process and help ensure compliance with local laws.

In South Korea, probationary periods typically last between one and three months.


The Act on National Holidays and the Labor Standards Act govern public holidays in South Korea. Employees are entitled to a day off from work on these holidays, and if they must report for duty, they must be compensated in some other way, such as with overtime pay or an extra day off. 

In addition to federal holidays, each province and city has its own set of regional holidays. Employers must comprehend and follow public holiday legislation in order to maintain compliance and support employee well-being.


Employees in South Korea are entitled to a variety of sorts of leave, including annual leave, sick leave, and maternity/paternity leave. Every employee is entitled to a minimum of 15 paid vacation days annually, with the number of additional days awarded dependent on seniority. 

Employees who are unable to work due to illness or injury are granted sick leave, with the employer providing up to 90 days of paid leave per year.

Female employees who are expecting have access to maternity leave, which is legally guaranteed for up to 90 days with the potential of extended unpaid time off. 

Male employees can also take up to 10 days of paid paternity leave, which is provided by the employer. Other types of leave, like bereavement leave, family care leave, and special leave, may also be available to employees.



A PEO is knowledgeable about legal regulations and employee expectations, enabling the applicant to create a competitive benefits package that will win over the suitable candidates.

They can make the company a globally competitive employer, able to draw top talent from all over the world, by providing the appropriate salary, benefits, and paid leave for each new location.


Local expertise is unmatched. The applicant can really take advantage of chances in the South Korean market by hiring South Korean professionals.

It will be easier to customize your product, service, and strategy after they quickly become familiar with the local clients and cultural quirks.


It’s considerably harder and more complicated to comprehend the standards in a foreign country like South Korea.

Moreover, it can be highly stressful. If the applicant breaks local rules, the company will be subject to severe fines and penalties.

Reach out to us at Relin Consultants for further assistance with our PEO services in South Korea.


Is there a difference between a South Korean PEO and a South Korean EOR?

Organizations that specialize in offering South Korean enterprises with human resources services include South Korea PEOs and South Korea EORs.

The range of services offered by a South Korea PEO and an EOR differs significantly.

PEOs provide a full range of HR services, including payroll, benefits management, and employee recruitment, all in one location and serve as co-employers in South Korea.

Actually, South Korea EORs take the responsibilities of your employees who are based outside. The labour compliance for your employees in South Korea is now the responsibility of South Korea EORs.

Can a PEO in South Korea employ both domestic and foreign workers there?

Both domestic and foreign workers can be successfully hired by a PEO in South Korea.

What exactly is a PEO and how can it benefit your company?

Full-service human resource outsourcing, also referred to as co-employment, is done through professional employer organisations, or PEOs. In this arrangement, the PEO handles a variety of employee administrative duties on behalf of a company, including payroll and benefits management.

When should a company use a PEO?

Small to midsize enterprises (SMBs) who want to outsource their HR duties should use PEOs.

What advantages could using a PEO provide in South Korea?

Using PEO might provide advantages like simplified HR procedures, accessibility to local knowledge, help with compliance, and lessened administrative responsibilities.