Payroll in South Korea: a restricted activity

South Korea splits payroll between two regulated professions, and that boundary carries real sanctions. The 공인노무사 (certified public labor attorney) holds the monopoly on social insurance filings and on representing employers in labour law matters for third parties. The 세무사 (certified tax accountant) holds the monopoly on tax filings, including wage withholding and its year-end settlement. The mechanical processing of payroll itself remains unrestricted.

Korean won are paid into a local account. Contracts and documents issued to staff are drawn up in Korean; an English translation is common for foreign executives but does not replace the original.

Korea belongs to no multilateral coordination area. A bilateral social security agreement links it to France and, subject to conditions, avoids dual affiliation for a posted employee. The certificate must be requested before departure, not once the assignment is already under way. Selecting a provider therefore starts with identifying which of the two licences it actually holds.

Four compulsory schemes frame employment: national pension, health insurance, employment insurance and industrial accident insurance. Their collection is unified, however, which simplifies certificates without reducing the number of applicable rules; the employer registers itself and reports each employee on arrival.

The choice of establishment comes before those steps: liaison office, branch or subsidiary. A liaison office cannot trade, and the form selected governs bank account opening and access to government portals, a more practical question than it first appears.

Writing is mandatory for the employment contract, which must state a set of particulars fixed by law; the employer gives a copy to the employee. Any company reaching a given headcount must also adopt work rules and file them with the labour administration.

The annual tax settlement is a key moment in the Korean payroll calendar; during the year, payslips are monthly and income tax is withheld at source. Statutory severance is due to any employee with qualifying service, whatever the reason for leaving, and it must be provisioned or funded from the outset. Check the overtime regime as well: a weekly ceiling is set by statute and enforcement is active, so scheduling practices imported from elsewhere rarely survive local scrutiny.

Statutory severance is the leading peculiarity of Korean payroll: it falls due on departure regardless of the reason, and it is funded either through a provision or through a corporate retirement plan. A foreign employer discovering it when an employee resigns is discovering a liability that should have been accruing from day one.

Then comes the seal. Commitments are sealed and evidenced by a corporate seal certificate: an agreement bearing an unregistered seal rests on weak legal ground.

Tax verification of a provider is a two-part exercise. Korea distinguishes national tax from local tax, each with its own portal and its own no-arrears certificate. A file should be accepted only with both, since a single certificate leaves the check incomplete. All three are matters to settle at the outset rather than at the point of departure.