Invest KOREA

Data on wages are considered sensitive and confidential, so it is hard to access data on the wages the employees of foreigninvested companies. However, some consulting companies or head-hunting companies might have their own comparative data on such wages. Also, the Ministry of Employment provides statistical data on labor and employment through its website (laborstat.moel.go.kr) where users can access information on the wages of Korea classified by industry, size of business, type of employment, business type, etc.

A temporary shutdown means that even though an employee wishes to provide labor as per the labor contract, such a provision of labor is not possible or the employer refuses to receive service. According to Article 46 of the Labor Standards Act, when a business shuts down due to a cause attributable to the employer, he/she shall pay the employees concerned allowances of not less than 70 percent of their average wages during the period of shutdown. If that amount exceeds the amount of ordinary wage, ordinary wage can be paid as shutdown allowance. ◎ A cause attributable to the employer can be considered as a business disruption that is caused within the scope of the authority of the employer. Therefore, although each matter requires careful individual judgment, 1) poor sales and financial difficulty; 2) lack of raw materials; 3) transfer of factory; 4) market recession and production volume reduction, etc. have been recognized as causes attributable to the employer.

There are no provisions under labor laws that stipulate that it is mandatory for foreign-invested companies to hire Korean employees. However, when it comes to visa issuance for hiring foreign professionals, the number of Korean employees could be an important benchmark. When issuing an E-7 (Specific Activity) visa, the number of recipients can be restricted to within 20 percent of the number of Korean employees. In order to hire foreign professionals, it is advised to check the specific visarelated matters in advance with the immigration office.

In accordance with Article 34 of the Labor Standards Act and Article 4 of the Act on Guarantee of Retirement Allowance to Employees, when an employee retires after working for at least a period of one year, retirement allowance pertaining to the average wage of at least 30 days must be paid for one year of continuous service. There are no restrictions to the reason for retirement, and the retirement allowance must be paid in all cases in which the labor contract is terminated, such as when the employee resigns, dies, reaches the retirement age, is dismissed upon disciplinary action, or the company ceases to exist. However, when an employee's continuous service period is less than one year, or when an employee’s weekly average work hours for four weeks is less than 15 hours, retirement allowance need not be paid. ◎ The retirement allowance system was adopted on Dec. 1, 2005. All employers must adopt the retirement allowance or retirement pension system. When an employee has retired, the employer shall pay a retirement allowance within 14 days from the day that the cause of the payment has occurred. Under special circumstances, the payment deadline can be extended upon discussion among the parties concerned.

When a foreigner returns to his/her home country, a refund to the foreign subscriber of national pension fund in the form of a lump sum payment shall be granted only in the following cases (source: www.nps.or.kr, Foreigners and Lump Sum Refund): ① When the foreigner's home country’s law provides for the payment of an allowance to a Republic of Korea citizen that is tantamount to a lump sum refund paid by the Korean system ② When a social security agreement on the payment of a lump sum refund has been established between Korea and the home country of the foreigner ※Parties to Social Security Agreements (as of January 1, 2020; 21 countries): Germany, U.S.A., Canada, Czech Republic, Hungary, Australia, France, Belgium, Bulgaria, Poland, Slovakia, Romania, Austria, India (Nov. 1, 2011), Turkey (June 1, 2015), Switzerland (June 1, 2015), Brazil (Nov. 1, 2015), Peru, Luxembourg, Slovenia, Croatia ※There are other countries (27) that are recognized for their reciprocity, but recognition of reciprocity may depend on the minimum subscription period. Therefore, an inquiry should be made to the National Pension Service on whether a lump sum refund can be made or not. ③ When a foreigner with status of stay of E-8 (Industrial Trainee), E-9 (Non-Professional), or H-2 (Work and Visit) has subscribed to national pension ※When a foreigner claims a lump sum refund on the ground that he/she has to return to his/her home country, the lump sum refund is paid only when it is confirmed that he/she has departed. However, when a document is submitted proving that the person plans to leave the country within one month such as a plane ticket, a claim for a refund can be filed before departure.

In principle, mandatory subscription applies in this case. However, according to Article 109(5) of the National Health Insurance Act and Article 61-4 of the Enforcement Rules of the same Act, a foreigner residing in Korea can receive substantial medical coverage amounting to recuperation pay in accordance with foreign laws, foreign insurance or a contract with the employer. When the employer or subscriber has applied for subscription exemption, the person need not subscribe. When a foreigner is eligible to apply for exemption from subscription to national health insurance, the employer shall submit the Report on Disqualification from Workplace Subscription to the National Health Insurance Service by attaching the following forms: ① When receiving medical coverage pursuant to the laws, decrees and insurance of the foreign country – A copy of a certificate confirming applicability of foreign laws, or a document proving that the foreigner can receive medical coverage domestically such as an insurance policy (including Korean translation) – A copy of a document that indicates the intent of the foreigner to withdraw from health insurance ② When receiving medical coverage pursuant to a contract with the employer, etc. – A copy of a document such as labor contract that can proves that the foreigner can receive medical coverage domestically (including Korean translation) – A copy of a document certifying that medical expenses have been paid to the foreign employee by the pertinent business site (including Korean translation) – A copy of a document that indicates the intent of the foreigner to withdraw from health insurance ※ Working level matters such as specific procedures or required documentation must be confirmed by the National Health Insurance Service.

Foreigners residing in Korea must subscribe to national pension, just as domestic persons. When a foreigner aged 18 or older but younger than 60 is employed by a business that subscribes to national pension, he/she becomes classified as a business subscriber, while other foreigners become local subscribers. ◎ In the following cases, persons are exempted from national pension subscription: ① Trainees from abroad (employment as trainee requires subscription), foreign students, diplomats, and other cases in which legislation excludes persons from mandatory National Pension subscription ② Nationals of countries that do not does not require mandatory subscription to a pension system like the Korean national pension ③ When an employee has been dispatched to Korea from a country that has established a social security agreement with Korea submits a certificate of subscription of his/her home country ※ One must inquire with the National Pension Service to check on national pension subscription requirements per country of origin and sojourn status Diplomat (A-1), Government Official (A-2), International Agreement (A3), Visa Waiver Program (B-1), Tourist/Transit (B-2 , Short-term News Coverage (C-1), Short-term General (C-3), Short-term Employee (C-4), Culture and Art (D-1), Student (D-2), Technical Training (D-3), General Training (D-4), Religious Worker (D-6), Family Visitor (F-1), Dependent Family (F-3), Miscellaneous (G-1)

The employee of a business that has employment insurance becomes the insured person of the employment insurance, but the representative director, etc. is not. The employee provides labor under the instruction and supervision of the business owner, and receives wages in return. Directors, auditors and representatives of a corporation, or a person in the position of an executive body are not employees. However, even if one holds the title of a managing director or executive vice-president, if he/she does not have actual authority to execute operations and is not accountable for the business of the company, but provides services in a subordinate role, he/she is an employee, and therefore his actual status should be judged based on such specific facts.

According to Article 55 of the Labor Standards Act, a day of paid leave must be guaranteed for an average of at least once a week. However, it does not prescribe a certain day as the weekly holiday. This means Sunday does not necessarily have to be the designated weekly holiday. The day which marks the beginning of a week can be designated through a discussion among labor and management in accordance with internal provisions, the rules of employment, labor contract and collective agreements.

According to Article 50 of the Labor Standards Act, the statutory work hours cannot exceed eight hours a day and 40 hours a week excluding recess hours. Also, Article 53 of the Labor Standards Act limits weekly extended work hours to 12 hours. ◎ In the above case, the worker has worked seven hours in excess of eight hours per day, which makes the extended work hours a total of 21 hours (7 hours x 3 days). Therefore, even if the total weekly work hours is within 52 hours, if weekly extended work hours exceed 12 hours, it constitutes a violation of the law.