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 number of workers ordinarily employed over a given period. The Ministry of Employment and Labor's administrative interpretation instructs that the scale of the workplace, the nature of the work, and the method of labor management, among other factors, must be considered comprehensively. 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 of the Labor Standards Act (근로기준법 제23조, restrictions on dismissal, etc.) and the provisions for filing a relief petition with the Labor Relations Commission do not apply.
• Advance notice of dismissal: Article 26 of the Labor Standards Act (근로기준법 제26조, advance notice of dismissal) does not apply to workplaces with fewer than 5 employees. However, for workplaces that became subject to the Act on or after 1 January 1999, the period of continuous service is calculated from the date the Act began to apply (Ministry of Employment and Labor administrative interpretation, 19 March 1999).
• 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 who work 15 or more hours per week are guaranteed a paid weekly holiday under Article 55 of the Labor Standards Act (근로기준법 제55조).
• Severance pay (퇴직금): Workers with 1 or more years of continuous service must be paid severance pay under the Act on the Guarantee of Employees' Retirement Benefits (퇴직급여 보장법). 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.

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, and only the periods during which the workplace ordinarily had 5 or more employees are added together to calculate severance pay. Periods when the headcount was below 5 are excluded from the calculation.

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.