Hybrid Payroll is an employment model between a foreign employer and a local Korean employee and serves as a legal alternative to the PEO and/or Employer of Record employment models in South Korea.
The Hybrid Payroll model was developed by KOISRA UP with the aim of overcoming the risks and legal conflicts that the classic employment model of PEO or EOR creates in the Korean legal environment. The Hybrid Payroll employment model is an employment model backed by the Korean law. In some countries such model considered as contract base work or freelancer work, but in South Korea it comes with almost all the benefits of regular employee.
Employing Korean workers in Korea in the model of a Hybrid Payroll, allows a foreign company to employ local workers without the need to register a local Korean company and allows the foreign employer better control over wages and working conditions.
For example, according to Korean labor laws, a local employee employed by a local company (including a branch or subsidiary of a foreign company) or by a PEO/EOR service provider, becomes a permanent employee after 24 months of work. A permanent employee cannot be fired unless special conditions applied. However, under direct employment through the Hybrid Payroll model, an employee does not become a permanent employee after 24 months and can be terminated at any time in accordance with the terms set out in the employment agreement.
Another advantage of the Hybrid Payroll model is the cost of service. Hybrid Payroll is the most cost-effective employment solutions available today in South Korea. PEO or Employer of Record employment services are very expensive, especially in the employment of high-wage workers. In addition, it is necessary to deposit high deposits before starting the employment. In the Hybrid Payroll model, there is no such obligation for deposits.
The benefits of using a Hybrid Payroll employment model for the foreign employer are clear and direct, but there are also benefits for the local Korean employee Under the Hybrid Payroll employment model, the Korean employee, like a regular employee, is entitled to and can receive coverage for National Health and Medical Insurance as well as payment and coverage to his National Pension account. Moreover, a Korean employee employed under a Hybrid Payroll model (as opposed to a regular or EOR / PEO model employment) is entitled to a reduced monthly income tax, which increases the employee's disposable income by hundreds and even thousands of dollars each year.
Hybrid Payroll is an employment model that balances the interests of the foreign employer and the local Korean employee in an efficient and effective manner.
Want to learn more? Check out our Employment Solutions in South Korea