Do I Need a Local Entity to Hire in South Korea?

In South Korea, a "local entity" typically refers to a recognized employing presence, such as a subsidiary or branch office, that allows you to comply with local employment laws. This setup enables you (or a provider acting on your behalf) to be recognized as an employer and fulfill payroll and employment obligations in the country.

Without a local entity, you generally cannot register as an employer, manage mandatory social security processes, or run compliant payroll. An alternative is to use an Employer of Record (EOR), which can help you navigate these requirements without the need for a local entity.

What is Required to Employ Someone in South Korea?

• Local employing entity required to directly employ? Yes (unless using an EOR)
• Payroll registration required? Yes (employer registration with the National Tax Service)
• Withholding/tax remittance required? Yes (mandatory payroll tax withholdings apply)
• Social contributions required? Yes (employer must pay contributions to the National Health Insurance Corporation)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (includes statutory leave and social security coverage)
• Works council/collective agreements considerations? Usually (certain sectors may have collective agreements)

Best Options If You're Hiring in South Korea

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors allows you to bypass the need for a local entity, South Korea has strict labor laws. Misclassifying a contractor as an independent worker can lead to significant legal issues if the relationship resembles employment.

• Ensure the contractor operates independently and is not integrated into your business.
• Be wary if the contractor works exclusively for you or if you control their work conditions.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in South Korea, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,000,000–2,500,000 KRW per month ($850–$2,100)
• Payroll provider: Estimated 100,000–300,000 KRW per employee per month ($85–$255)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 1,500,000–4,000,000 KRW per year ($1,275–$3,400)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in South Korea

Hiring in South Korea can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in South Korea quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.