Workplaces Under 5 Employees in Korea: Full Guide to Labor Law Coverage and Exceptions

What Is a Workplace with Fewer Than 5 Employees?

The Labor Standards Act (근로기준법) applies in full to "businesses or workplaces that ordinarily employ 5 or more workers" under Article 11(1) of the Labor Standards Act (근로기준법 제11조 제1항). If the ordinary headcount is fewer than 5, only certain provisions of the Act apply. It is therefore very important to know which category your workplace falls into.

How Is the Ordinary Headcount Calculated?

"Ordinarily" (상시) does not refer to the number of people on a single specific day, but rather the total person-days worked during the one month before the date the provision would apply, divided by the number of operating days in that period (Article 7-2(1) of the Enforcement Decree of the Labor Standards Act, 근로기준법 시행령 제7조의2 제1항). Part-time workers, daily workers, and foreign workers are all included if an actual employment relationship exists.

In industries such as construction, where multiple sites are operated, it must be determined whether each site constitutes an independent business or belongs to a single business — based on a comprehensive assessment of site scale, construction period, labor management, and accounting independence (Ministry of Employment and Labor administrative interpretation, 14 November 2001). Once the scope of the business is established, all workers belonging to that business are counted together.

For foreign companies, the Supreme Court, in decisions 2023Du46074 and 2023Du37391, explicitly stated that whether a workplace has 5 or more regular employees must be determined solely by the number of employees working in Korea. Employees at overseas head offices or overseas branches are not counted.

Key Provisions That Do NOT Apply to Workplaces with Fewer Than 5 Employees

The rights most commonly missed by workers at workplaces with fewer than 5 employees are as follows:

• Unfair dismissal (부당해고) relief petition: Article 23(1) of the Labor Standards Act (근로기준법 제23조 제1항, restriction on dismissal, etc. without just cause) and the provisions for filing a relief petition with the Labor Relations Commission do not apply.
• Overtime, night-shift, and holiday premium pay: The 50% premium under Article 56 of the Labor Standards Act (근로기준법 제56조) does not apply.
• Annual paid leave (연차유급휴가): The annual leave provisions under Article 60 of the Labor Standards Act (근로기준법 제60조) do not apply.

Provisions That DO Apply to Workplaces with Fewer Than 5 Employees

Conversely, there are rules that must be observed even at workplaces with fewer than 5 employees.

• Minimum wage: The hourly rate of KRW 10,320 (monthly KRW 2,156,880, based on a 40-hour week / 209 hours) as of 2026 applies regardless of workplace size.
• Weekly holiday allowance (주휴수당): Workers whose scheduled working hours average 15 or more per week over 4 weeks (Article 18(3) of the Labor Standards Act, 근로기준법 제18조 제3항) and who work all their scheduled working days that week (Article 30(1) of its Enforcement Decree, 시행령 제30조 제1항) are guaranteed a paid weekly holiday under Article 55(1) of the Labor Standards Act (근로기준법 제55조 제1항).
• Severance pay (퇴직금): Workers with 1 or more years of continuous service whose scheduled working hours average 15 or more per week over 4 weeks must be paid severance pay under the Act on the Guarantee of Workers' Retirement Benefits (근로자퇴직급여 보장법 · Article 4(1), 제4조 제1항). The payment deadline is 14 days from the date of resignation; if delayed, interest of 20% per annum accrues (Article 17 of the Enforcement Decree of the Labor Standards Act, 근로기준법 시행령 제17조).
• Four major social insurances: National Pension, Health Insurance, Employment Insurance, and Industrial Accident Compensation Insurance are mandatory regardless of workplace size.
• Advance notice of dismissal: Advance notice of dismissal also applies to workplaces with four or fewer employees: the employer must give at least 30 days' notice or pay at least 30 days' ordinary wages in lieu of notice (Article 26 of the Labor Standards Act, 근로기준법 제26조; Appendix 1 of its Enforcement Decree, 시행령 별표 1). Exceptions under the proviso to the same Article apply, such as where the worker has been employed for less than three months.

Note for foreign workers: The statutory minimums above apply to all workers regardless of nationality. However, your employment contract may provide terms more favorable than the statutory minimum — always check your contract.

When the Headcount Fluctuates Above and Below 5

Severance pay disputes frequently arise at workplaces where the headcount rises and falls. According to the Ministry of Employment and Labor's administrative interpretation (26 October 2001), the right to severance pay and the calculation of average wages are based on the actual date of resignation. Severance pay has applied to workplaces with four or fewer employees since 1 December 2010, and in full since 1 January 2013 (for the period up to 31 December 2012, at least 50% of the statutory level — Article 4(1) of the Act on the Guarantee of Workers' Retirement Benefits and Article 8(2) of the Addenda to Act No. 10967 / 근로자퇴직급여 보장법 제4조 제1항, 부칙 제10967호 제8조 제2항), so periods after that date when the headcount was below 5 also count toward severance pay.

How to Seek Relief for Unpaid Wages

Even at workplaces with fewer than 5 employees, you can file a complaint with the Ministry of Employment and Labor if wages go unpaid. Article 36 of the Labor Standards Act (근로기준법 제36조, settlement of money and valuables) applies to workplaces with fewer than 5 employees, so if you have not received your wages within 14 days of resignation, you can report this to the local Labor Office (노동청).

If you are unsure how many regular employees your workplace has, try the ordinary headcount calculator at workbear.kr. Enter the number of workers by employment type and instantly check the ordinary headcount under the legal standard. If you have an unpaid wages or unfair dismissal issue, the AI search and complaint drafting features are also available.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.