SOUTH KOREA LAW AND PRACTICE Contributed by: Tehyok Daniel Yi, Gun Kim, Kyu Hyun Kim, Sun Hee Kim, Yong Whan Choi, Yong Min Lee, Jung Woo Lee and Hyeon Jeong, Yulchon LLC
10.2 Employee Compensation According to the Minimum Wage Act, employers are required to pay employees at least the minimum wage determined each year by the Minimum Wage Council. The minimum wage in 2025 is KRW10,030 per hour and will increase to KRW10,320 per hour in 2026. As long as the wage of an employee is above the mini - mum wage, the amount of the wage will typically be determined by contract. Employers are required to pay employees severance pay upon retirement if the employee has been con - tinuously employed for one year or longer. Employ - ees who are eligible for severance pay are entitled to receive 30 days’ average wages for each year of continuous employment, upon separation from the employer (regardless of whether the separation is voluntary or involuntary). Severance pay must gener - ally be paid within 14 days after the date of separa - tion. As an alternative to the severance pay system, an employer may establish a retirement pension system. Fixed payment type (ie, defined-benefit pension plan) and fixed contribution type (ie, defined-contribution pension plan) are available. For work performed beyond the regular work hours, the employer must pay an additional 50% of ordinary wages as an overtime allowance on top of ordinary wages. A 50% uplift of ordinary wages also applies to any work done between 10pm and 6am, which is clas - sified as night work under the LSA. For work during a holiday, the employer must pay an additional 50% of ordinary wages for up to eight hours of work per day and 100% of ordinary wages for work exceeding eight hours per day. Night work, overtime work and holiday work allowances are cumulative, not mutually exclusive, and the employer must pay each additional allowance to its employees as applicable. Equity-linked compensation such as stock options and phantom stock may be granted by certain employers in the market. 10.3 Employment Protection Under Korean law, the consent of individual employ - ees is required in principle when an employer intends to have them transferred to a separate legal entity, and it would not be possible to pursue a transfer of
a countermeasure to the anti-hybrid rules in other countries.
10. Employment and Labour 10.1 Employment and Labour Framework Employment relationships in Korea are broadly gov - erned by the Labour Standards Act (LSA), which prescribes various minimum terms and conditions of work, including allowances and benefits, which super - sede any provisions of employment contracts, rules of employment (employee handbook) or collective bar - gaining agreements (CBAs) that may be less favour - able to employees. There are other labour-related laws that govern the terms and conditions of work, such as the Retirement Benefits Act, the Minimum Wage Act and the Gender Equality Employment Act. In principle, most of the provisions of the LSA and other labour-related laws (including the requirement to have “just cause” for termination, work hours, wages, overtime/nighttime/holiday work allowances and pub - lic holidays) are applicable to any employer, including foreign companies, that continuously employ five or more employees in any workplace located in Korea. However, breaks, weekly holidays, maternity/pater - nity/parental leave, severance pay and social insur - ance also apply to employers employing fewer than five employees. Depending on the types/periods employees are employed under, other statutes may be relevant, such as the Act on the Protection of Temporary and Part- time Workers and the Protection of Dispatched Work - ers and Foreign Workers Act. Labour unions, collective bargaining, CBAs and other aspects of collective labour-management relations are subject to the Labour Union and Labour Rela - tions Adjustment Act, which regulates labour union activities and dispute resolution, and the Act on the Promotion of Employee Participation and Co-Opera - tion which regulates labour-management councils and grievance procedures.
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