Workplaces Under 5 Employees & the Labor Standards Act: Complete 2026 Guide for Foreign Workers

Workplaces Under 5 Employees: The Labor Standards Act Applies Differently

A significant share of all wage workers in Korea are employed at workplaces with fewer than 5 employees—convenience stores, cafés, small restaurants, and the like. However, certain provisions of the Labor Standards Act (근로기준법) do not apply to these workplaces, which frequently leads to disputes. Below is a precise breakdown of what does and does not apply, based on 2026 standards.

Note for foreign workers: Even where the statutory minimum does not apply, your individual employment contract or workplace rules may provide greater protections—always check your written contract.

What "Fewer Than 5 Employees" Means: Regularly Employed Workers

Article 11 of the Labor Standards Act (근로기준법 제11조) applies in full to workplaces that regularly employ 5 or more workers. "Regularly" does not mean every single day; rather, it refers to the typical, average number of workers employed. According to the Ministry of Employment and Labor's administrative interpretation, the figure is calculated by dividing the total number of worker-days during the calculation period (usually one month) by the number of operating days to arrive at an average.

Key Provisions That Do NOT Apply to Workplaces Under 5 Employees

① Restrictions on Dismissal and Unfair-Dismissal Remedy
Article 23 (prohibition of dismissal without just cause) and Article 28 (unfair-dismissal remedy petition / 부당해고 구제신청) of the Labor Standards Act do not apply to workplaces with fewer than 5 employees. This means that even if an employer dismisses a worker without a proper reason, the worker cannot file a remedy petition with the Labor Relations Commission.

② Dismissal Notice
Article 26 (해고예고)—requiring either 30 days' advance notice of dismissal or payment of 30 days' ordinary wages—is also excluded. Accordingly, same-day dismissal notice is not unlawful at a workplace with fewer than 5 employees.

③ Overtime, Night-Shift, and Holiday Premium Pay
The 50% premium pay required under Article 56 (연장·야간·휴일 가산수당) does not apply. An employer need only pay the ordinary wage even when overtime is worked.

④ Annual Paid Leave
Article 60 (연차유급휴가) is also excluded. The annual leave entitlements—1 day per month for workers with less than 1 year of service, and 15 days for workers with 1 or more years of service—apply only to workplaces with 5 or more employees.

⑤ Shutdown Allowance
Article 46—which requires payment of at least 70% of average wages when operations are suspended due to reasons attributable to the employer—does not apply either.

Provisions That MUST Apply Even to Workplaces Under 5 Employees

The exclusions above do not mean all worker protections disappear. The following rules apply to all workplaces with one or more employees:

Common Misconceptions in Practice

The idea that "fewer than 5 employees means anything goes" is dangerous. Failure to pay severance pay, violation of the minimum wage, and wage arrears are all subject to criminal penalties regardless of workplace size. Furthermore, even though annual leave (연차유급휴가) is not legally guaranteed at these workplaces, if annual leave is explicitly stated in the workplace rules or employment contract, the employer is obligated to provide it under that agreement.

If you are concerned about severance pay at a workplace with fewer than 5 employees, use the severance pay calculator at Workbear (workbear.kr) to estimate your entitlement in advance. The platform also offers employment contract review and complaint-drafting features, providing practical assistance for workers at small workplaces.

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

Frequently Asked Questions

Can I receive severance pay from a workplace with fewer than 5 employees?

Yes, you can. The Act on the Guarantee of Employees' Retirement Benefits 퇴직급여보장법 applies to all workplaces with one or more employees, regardless of size. If you have worked continuously for at least 1 year and averaged at least 15 hours per week, you are entitled to claim severance pay. Severance pay must be paid within 14 days of the date of retirement; if delayed, a late-payment interest rate of 20% per year applies.

What should I do if I am unfairly dismissed from a workplace with fewer than 5 employees?

Article 23 of the Labor Standards Act 부당해고 구제신청 , which allows workers to file an unfair-dismissal remedy petition with the Labor Relations Commission, does not apply to workplaces with fewer than 5 employees. In addition, the dismissal-notice requirement 30 days' advance notice or payment of 30 days' ordinary wages is also excluded. You should therefore consider other options, such as filing a civil lawsuit for damages or applying for unemployment benefits 실업급여 under employment insurance.

If I work overtime, night shifts, or on holidays at a workplace with fewer than 5 employees, am I not entitled to premium pay?

That is correct. Article 56 of the Labor Standards Act 연장·야간·휴일 가산수당 50% , which requires a 50% premium for overtime, night, and holiday work, does not apply to workplaces with fewer than 5 employees. Therefore, even if you work overtime, the employer is not in violation of the law by paying only the base wage rather than 1.5 times the ordinary wage. However, the minimum wage—KRW 10,320 per hour in 2026—must still be observed.

Am I entitled to a weekly holiday allowance at a workplace with fewer than 5 employees?

Yes. The weekly holiday allowance 주휴수당 applies to workplaces with fewer than 5 employees as well. Article 55 of the Labor Standards Act 유급주휴일 applies regardless of workplace size, and any worker who works 15 hours or more per week must be guaranteed one paid day off per week.