New requirements for payslips have come into effect for employers in Korea pursuant to a 2021 amendment to the Labor Standards Act. Large employers and professional payroll providers have been well aware of the new payslip rules and prepared to comply with them. But some smaller employers who handle payroll internally may not be fully aware of the requirements that they need to follow.
Effective from November 19, 2021, the Labor Standards Act now requires that when an employer pays wages, it must provide the employees with a payslip (which can be electronic) containing certain specific information. Under the relevant regulations, the information required to be included in the payslip is:
(i) information identifying the paid employee, such as name, date of birth, employee number, etc.;
(ii) the payment date;
(iii) the total amount of payment;
(iv) the amount of each wage payment item, such as basic salary, allowances, bonuses, incentives;
(v) the method of calculation of wage payment items where the amount varies depending on the number of days, hours, etc. (actual working hours should be specified respecting the amount paid for overtime/ day-off/night-time work); and
(vi) if there are any amounts deducted, the details of those deductions, such as each deduction item, and each amount and the total amount of deductions.
Employers who fail to properly issue payslips with the required information can receive an administrative penalty of up to KRW5 million (approx. $4,200). According to guidance issued by the Ministry of Employment and Labor, the administrative penalties imposed will be:
Employers who have not been aware of this new change should review their current payroll practices and make any necessary changes to comply with the new law.