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Discover everything you need to know about North-Korea

Hire in North-Korea at a glance

Here ares some key facts regarding hiring in North-Korea

North Korean Won
GDP growth
GDP world share
Payroll frequency
Working hours
40 hours/week

Overview in North-Korea

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North Korea, located in Eastern Asia, occupies the northern half of the Korean Peninsula, bordered by China, Russia, South Korea, the Sea of Japan, and the Yellow Sea. It features a mountainous terrain with coastal plains and a humid continental climate. Historically, the region has seen various kingdoms since the 7th century BCE, with North Korea forming after World War II and the Korean War, under the rule of the Kim dynasty.

The nation operates as a one-party totalitarian state with a centrally planned economy, heavily influenced by the Juche ideology of self-reliance and nationalism. Despite facing economic challenges, particularly after the Soviet Union's collapse, North Korea has seen limited economic reforms but remains under strict international sanctions due to its nuclear ambitions. The society experiences severe human rights abuses and a high level of government control, including a Songbun system that affects social mobility.

Economically, North Korea is reliant on agriculture and mining, with significant mineral resources. The workforce is estimated at 14 million, with a high literacy rate, though education focuses more on ideological indoctrination than practical skills. The informal sector plays a crucial role due to the inefficiencies of the formal economy.

Workplaces in North Korea are characterized by strict hierarchies, formal communication, and a lack of personal freedoms, where work is seen as a patriotic duty. The Songbun system also influences employment opportunities and workplace dynamics. Emerging sectors include construction, particularly in Pyongyang, and informal markets that provide small-scale trade and services. However, the overall economic activity is heavily controlled by the state, with significant impacts from international sanctions and a reliance on outdated industrial and agricultural methods.

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Employer of Record in North-Korea

Rivermate is a global Employer of Record company that helps you hire employees in North-Korea without the need to set up a legal entity. We act as the Employer of Record for your employees in North-Korea, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in North-Korea through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationshiop with the employee, you allocate them the work and manage their performance.
Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in North-Korea, Rivermate is responsible for:

  • Creating and managing the employment contracts
  • Running the monthly payroll
  • Providing local and global benefits
  • Ensuring 100% local compliance
  • Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

  • Day-to-day management of the employee
  • Work assignments
  • Performance management
  • Training and development

Taxes in North-Korea

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  • Overview: Understanding employer tax obligations in North Korea is essential for organizations planning to operate there, but information is limited and complex. Consulting with experts in North Korean law and international business is highly recommended.

  • Employer Taxes:

    • Social Insurance Contributions: Employers must contribute to mandatory social insurance for pensions, disability benefits, and healthcare, with rates likely set by the government.
    • Wage-Related Taxes: Specific details on wage-related taxes are scarce, but they may exist related to payroll amounts.
  • Sources for Verification: Information can potentially be verified through the Ministry of Finance in North Korea, international organizations like the World Bank or IMF, and specialized consultancy firms.

  • Challenges:

    • Information Accessibility: Limited government transparency and potential language barriers make accessing reliable tax information difficult.
    • Dynamic Policies: Economic policies in North Korea are subject to change, which can make available information quickly outdated.
  • Employee Tax Deductions:

    • Social Insurance: Direct deductions from wages fund social welfare programs.
    • Income Taxes: There is a lack of clear information on tax rates and brackets, with an example from 2013 indicating a 45% tax rate in the Kaesong Industrial Region.
  • Value-Added Tax (VAT):

    • Historical Absence: North Korea historically lacks a VAT system.
    • Limited Implementation: There might be limited VAT forms in special economic zones like Kaesong and Rason, especially in transactions involving foreign entities.
  • Tax Incentives:

    • Special Economic Zones (SEZs): SEZs like Kaesong and Rason may offer tax benefits for foreign investors, but specifics are unclear.
    • Focus on State Enterprises: Any tax incentives are likely aimed at supporting state-owned enterprises and domestic investment in selected sectors.
  • Conclusion: Due to North Korea's opaque and evolving economic policies, obtaining precise and current information on tax obligations and incentives is challenging, necessitating reliance on specialized legal and business consultancy services.

Leave in North-Korea

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  • North Korea's Labor Laws and Practices: Information on labor laws in North Korea is difficult to verify due to the country's closed nature. Workers are reportedly entitled to paid annual leave, although specifics such as the number of days vary and are often unclear.

  • Vacation Leave: The allocation and utilization of vacation leave in North Korea are heavily influenced by government control and production targets, making detailed information scarce.

  • Public Holidays: North Korea observes several public holidays, many of which celebrate political events and leaders. Key holidays include the Day of the Shining Star (February 16), Day of the Sun (April 15), and Foundation Day of the DPRK (September 9).

  • Other Leave Types: The existence and specifics of sick leave, maternity leave, and special leave (e.g., for family events or religious observances) are uncertain, with limited available data.

  • Challenges and Sources: Accessing and verifying information on North Korean labor practices is challenging. Some insights might be gleaned from older reports by organizations like the International Labour Organization (ILO) or limited academic research.

Benefits in North-Korea

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Overview of Employee Benefits in North Korea

North Korea's closed political system makes it difficult to obtain detailed information about mandatory employee benefits. Insights can be drawn from the Kaesong Industrial Complex (KIC), which, although now closed, provided some understanding of potential employee benefits:

  • Paid Leave: Workers at KIC were entitled to one paid day off per week and 14 days of annual leave, totaling approximately 71 paid days off per year including national holidays.
  • Wages: The minimum monthly wage was set at $50 USD, but payments were made into government-controlled accounts, with deductions for social programs.
  • Healthcare: The responsibility for healthcare was placed on the North Korean government, indicating a state-run system, though specifics are unclear.

Limitations and Current Landscape

The KIC was a unique economic zone and may not reflect the standard employee benefits across North Korea. Generally, the state likely provides some form of social security and healthcare, but details are scarce. Optional employee benefits to attract or retain talent are likely minimal due to state-assigned jobs and a focus on collectivism.

Possible Benefits with a Collective Focus:

  • Housing: State-provided or subsidized housing could be available for workers in key industries or locations.
  • Subsidized Goods: Essential goods like food and clothing might be state-subsidized for critical professions.
  • Educational Opportunities: Government might offer educational or vocational training in certain sectors.

Healthcare and Retirement Challenges

Despite claims of universal health insurance and free medical care, accessing quality healthcare is reportedly difficult due to informal payments, resource shortages, and quality concerns. The retirement system officially provides pensions and food rations, but economic struggles and reliance on informal markets cast doubt on its effectiveness, often leaving the care of the elderly to their families.

Workers Rights in North-Korea

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Agreements in North-Korea

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  • State-Controlled Employment: In North Korea, the government assigns jobs to citizens without the use of individual employment contracts, controlling the labor market through state labor administrative agencies managed by the Workers' Party. This system is designed to meet state needs rather than individual preferences.

  • Limited Employment Options: The employment system in North Korea offers limited options, primarily full-time roles assigned by the state, with few exceptions in sectors attracting foreign investment.

  • Labor Law Focus: North Korean labor laws emphasize duty and loyalty to the state over individual rights. Common employment benefits like minimum wage, overtime pay, and collective bargaining are not central to this system.

  • Employment Agreements: While traditional employment contracts as known globally do not exist in North Korea, work arrangements are strictly regulated by state laws and practices, focusing on loyalty and service to the nation.

  • Confidentiality and Non-Compete Clauses: Although not well-documented, it is likely that employment agreements in North Korea include confidentiality clauses to protect state secrets and proprietary information. The relevance of non-compete clauses is uncertain due to the state-controlled economy, but they may be used in sensitive or specialized industries to protect state interests.

  • Enforcement of Employment Terms: Enforcement of employment terms in North Korea likely involves state or party mechanisms rather than a formal judicial system, reflecting the country's secretive and authoritarian nature.

Remote Work in North-Korea

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North Korea's approach to remote work is heavily constrained by its centralized control, restrictive labor laws, and limited technological infrastructure. The Socialist Labor Law of 1997, which governs employment, does not acknowledge remote work, creating a legal grey area. The country's internet access is among the most restricted globally, with most citizens only able to use a state-controlled intranet, making typical remote work nearly impossible.

Despite these limitations, there are reports of North Korean IT workers freelancing for international companies, suggesting some form of remote work does occur under highly secretive and controlled conditions. These workers likely use asynchronous communication and creative payment mechanisms to circumvent local restrictions.

Formal employment in North Korea is characterized by full-time roles, with no legal provisions for part-time work, flexitime, or job sharing, and telecommuting is unfeasible due to poor internet infrastructure. Additionally, there are no established policies for equipment provision or expense reimbursements in these scenarios.

In terms of data protection and privacy, North Korea lacks specific legislation, leaving employee data rights in remote work settings unclear. Best practices like data minimization, employee training, and secure data storage would be challenging to implement given the current technological and legal framework.

Working Hours in North-Korea

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  • North Korean Labor Practices: Information on standard working hours in North Korea is scarce due to its closed political system. The ideology promotes an "eight-hour work, eight-hour study, and eight-hour sleep" routine, suggesting an eight-hour workday, though enforcement and adherence are unclear.

  • Kaesong Industrial Complex (KIC) Labor Law: This law, specific to an industrial zone involving South Korea, mandates national holidays and off days, hinting at a standard work week but without specifying hours. It also required a minimum wage of $50 per month and consultations on overtime, though its applicability outside KIC is uncertain.

  • Overtime and Working Conditions: Reports indicate prevalent overtime, especially in sectors like the KIC where workers averaged 6.9 hours of overtime weekly. North Korea lacks clear regulations on overtime pay and limitations, complicating understanding of compensation for extra work hours.

  • Broader Labor Context: The North Korean government heavily controls the economy and workforce, potentially influencing overtime practices. The focus on productivity and lack of independent labor unions may pressure workers into extended hours without adequate compensation or negotiation power.

  • Regulatory Gaps and Future Prospects: North Korea's national labor law is opaque, with no detailed public information on night shifts, weekend work, or rest breaks. However, there is interest in aligning with international labor standards, suggesting possible future reforms in labor regulations.

Salary in North-Korea

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  • Challenges in Analyzing Salaries: Analyzing competitive salaries in North Korea is difficult due to its closed economic system and lack of reliable data, making traditional evaluation methods inapplicable.

  • Centrally Planned Economy: North Korea operates under a centrally planned economy where the government controls wages and resource allocation, eliminating the typical market dynamics of supply and demand influencing salaries.

  • Low Official Salaries: Official salaries are extremely low, ranging from 5,000 to 10,000 won per month ($1-$3), which are insufficient for basic needs, pushing citizens to depend on the informal market.

  • Informal Market Dependence: The informal or "jangmadang" market is crucial for North Koreans to obtain food, clothing, and other necessities, where prices are market-driven due to supply and demand.

  • Lack of Minimum Wage Legislation: There is no national minimum wage law in North Korea; wages are set by the government for different sectors and professions.

  • Kaesong Industrial Complex Exception: The now-closed Kaesong Industrial Complex had a unique wage system under the KIC Labor Law, mandating a minimum wage of $50, although the government reportedly withheld a portion of these wages.

  • Merit-based Systems in Special Economic Zones: Attempts to introduce merit-based wage systems in Special Economic Zones like Kaesong have been limited, with resistance to performance-based wages leading to alternative incentives like goods instead of monetary bonuses.

  • Centrally Planned Wage System: The government sets wage rates based on factors like industry and experience, aiming to ensure a baseline standard of living.

  • Payment Frequency and In-Kind Payments: The payroll cycle in North Korea is not well-documented, but monthly payouts are speculated, with a significant portion of compensation possibly in-kind, such as food or housing, aligning with the government's focus on basic needs.

  • Overall Limitations: The secretive nature of North Korea's regime makes it difficult to obtain detailed and reliable information about its wage structures and payroll practices.

Termination in North-Korea

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  • Limited Information: Information on notice periods in North Korea is scarce and mostly derived from external sources or anecdotal evidence, making it difficult to ascertain specific legal requirements.
  • State-Controlled Economy: North Korea's economy is centrally planned, with employment typically allocated by the government, emphasizing job security and worker loyalty to the state.
  • Consultation Options: For reliable information, consulting with experts in North Korean labor law or directly contacting North Korean businesses is recommended, although challenging.
  • Job Security Emphasis: The concept of severance pay is less relevant in North Korea, where the state is likely to reassign workers rather than provide financial compensation upon job loss.
  • Termination Scenarios: Workers may be reassigned, undergo disciplinary actions, or face severe penalties such as imprisonment for misconduct. Formal termination processes common in other countries may not apply.
  • Sources of Information: Limited insights can be gained from organizations like the International Labour Organization (ILO) or from personal accounts of North Korean defectors, though these should be critically assessed.

Freelancing in North-Korea

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In North Korea, distinguishing between employees and independent contractors is challenging due to a less defined legal framework. Key factors for differentiation include:

  • Control vs. Independence: Employees are under significant control by employers regarding work schedules, methods, and tools, whereas independent contractors enjoy more autonomy, setting their own schedules and methods, and using their own tools.
  • Integration vs. Specialization: Employees' work is integrated into the core operations of the entity, while independent contractors provide specialized services distinct from the core business.
  • Economic Dependence: Employees depend on one employer for income, contrasting with independent contractors who typically work with multiple clients.
  • Benefits and Withholdings: Employees often receive benefits and have taxes withheld by their employers, unlike independent contractors who handle their own tax and social security contributions and generally do not receive benefits.

In the highly controlled North Korean economy, independent contracting is limited and usually involves specific state-sanctioned projects with little room for negotiation. The state's interests often overshadow individual rights, particularly in intellectual property, where creations made during government projects are owned by the state. The legal landscape for independent contractors regarding tax obligations and insurance is complex and opaque, with limited information available. Freelancers face challenges in securing their rights and navigating the economic system, and consulting with local experts is advisable if possible.

Health & Safety in North-Korea

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Dispute Resolution in North-Korea

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  • North Korea's Secrecy and Legal System: North Korea is highly secretive, with limited information on its legal system, especially regarding labor courts. Most information comes from defector testimonies, which may be biased or incomplete.

  • Human Rights Violations: The country is known for severe human rights abuses, including forced labor and suppression of workers' rights, indicating that any labor dispute resolution is likely unfair and biased towards the government.

  • Speculations on Labor Dispute Mechanisms: It is speculated that North Korea has a basic system to handle labor disputes, heavily controlled by the state, and primarily aimed at maintaining control over workers rather than ensuring fair resolutions.

  • Government Dominance in Compliance Audits: Government agencies and the ruling party conduct compliance audits and inspections, focusing on political compliance, economic regulations, and enforcing international sanctions.

  • Consequences of Non-Compliance: Non-compliance can lead to severe consequences, including fines, asset confiscation, imprisonment, or even execution.

  • Challenges in Information Gathering: Due to North Korea's closed nature, it is difficult to verify specific procedures and regulations, with a lack of independent media and civil society organizations.

  • Whistleblowing Risks: The theoretical right to whistleblow exists in North Korea's constitution, but practical limitations and severe risks, including punishment and imprisonment, make it nearly impossible.

  • Contradictions with International Labor Standards: North Korea is not a member of the International Labour Organization (ILO) and does not adhere to many international labor standards, with reports of forced labor and exploitative practices.

  • Domestic Labor Laws and Enforcement: North Korea's labor laws, as stated in its constitution and the Socialist Labor Law, provide some workers' rights on paper, but enforcement is lacking, and practices often contradict these laws.

  • Impact of Non-Compliance on Domestic Laws: The lack of external accountability and independent unions leads to exploitation and inadequate protection of workers' rights, reinforcing the state's control over labor conditions.

Cultural Considerations in North-Korea

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  • Indirect Communication: In North Korea, communication is typically indirect to maintain social harmony and respect for hierarchy. Criticism of superiors is avoided, and euphemisms are commonly used.

  • Formality in the Workplace: There is a high level of formality in North Korean workplaces. Titles and honorifics are important, and there is a strict adherence to formal language and protocols in both verbal and written communications.

  • Non-Verbal Communication: Non-verbal cues are crucial, with body language used to show respect and deference. Eye contact should be brief, and bowing is a common practice, reflecting social status differences.

  • State Influence on Business: The state heavily influences business practices, with the social class system affecting communication styles and the national ideology promoting self-reliance and efficiency.

  • Negotiation Tactics: North Korean negotiation strategies include securing incremental concessions, using media manipulation, and maintaining a strong stance to gain leverage. Respect for authority and hierarchical decision-making are key cultural norms in negotiations.

  • Business Structure and Leadership: Businesses in North Korea have a centralized decision-making process with limited autonomy for lower-level managers. A paternalistic leadership style is prevalent, emphasizing loyalty and strict control.

  • Statutory Holidays: Major holidays like the Day of the Sun and Day of the Shining Star significantly impact business operations, with closures common during these times. Understanding these holidays is crucial for scheduling business activities.

Overall, successful communication and business operations in North Korea require a deep understanding of the country's cultural emphasis on hierarchy, respect, and indirect communication, as well as the significant influence of the state on all aspects of business practices.

Frequently Asked Questions for Employer of Record services in North-Korea

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in North-Korea?

In North Korea, when using an Employer of Record (EOR) like Rivermate, the EOR takes on the responsibility of handling the filing and payment of employees' taxes and social insurance contributions. This includes ensuring compliance with local tax regulations and social insurance laws, which can be complex and subject to frequent changes. The EOR will manage all necessary paperwork, calculate the appropriate amounts for taxes and contributions, and ensure timely payments to the relevant North Korean government authorities. This service alleviates the administrative burden on the foreign company and ensures that all legal obligations are met, reducing the risk of non-compliance and potential penalties.

Is it possible to hire independent contractors in North-Korea?

Hiring independent contractors in North Korea presents significant challenges due to the country's unique political and economic environment. North Korea operates under a centrally planned economy with strict government control over all employment and business activities. The concept of independent contractors, as understood in many other countries, does not align well with North Korea's system.

Here are some key points to consider:

  1. Government Control: The North Korean government maintains tight control over all employment. Most workers are assigned jobs by the state, and private employment is extremely limited. This makes the traditional model of hiring independent contractors virtually non-existent.

  2. Legal Framework: North Korea lacks a legal framework that supports the concept of independent contracting. Employment laws are designed around state-assigned jobs, and there are no clear regulations or protections for independent contractors.

  3. Economic Structure: The economy is heavily state-controlled, with limited private enterprise. Most businesses are state-owned, and private businesses operate under strict regulations. This environment is not conducive to the flexibility and autonomy typically associated with independent contracting.

  4. International Sanctions: North Korea is subject to extensive international sanctions, which complicate any form of business engagement, including hiring practices. These sanctions limit the ability of foreign companies to operate in North Korea and restrict financial transactions.

Given these factors, hiring independent contractors in North Korea is not feasible in the conventional sense. Businesses looking to engage with North Korean workers would need to navigate the complex and restrictive state-controlled employment system, which is fundamentally different from the independent contractor model used elsewhere.

What options are available for hiring a worker in North-Korea?

Hiring workers in North Korea presents unique challenges due to the country's strict government controls and limited interaction with the global economy. Here are the primary options available for hiring a worker in North Korea:

  1. Government Mediation: In North Korea, the government plays a central role in employment. Most workers are assigned jobs by the state, and foreign companies looking to hire local workers typically need to go through government channels. This often involves negotiating with state agencies or ministries that oversee labor and employment.

  2. Joint Ventures: Foreign companies can enter into joint ventures with North Korean state-owned enterprises. In such arrangements, the North Korean partner typically handles the hiring of local workers. This can be an effective way to navigate the local labor market, as the state-owned enterprise will have the necessary connections and understanding of local regulations.

  3. Special Economic Zones (SEZs): North Korea has established several Special Economic Zones, such as the Kaesong Industrial Complex (though its operations have been suspended at times due to political tensions). In these zones, foreign companies have more flexibility in hiring local workers, often through arrangements facilitated by the North Korean government.

  4. Intermediary Agencies: There are intermediary agencies, often state-run, that can assist foreign companies in hiring North Korean workers. These agencies manage the recruitment process and ensure compliance with local laws and regulations.

  5. Employer of Record (EOR) Services: While the concept of an Employer of Record (EOR) is more common in other countries, in North Korea, this would typically involve a state-run entity acting as the official employer. The EOR would handle all employment-related responsibilities, including payroll, taxes, and compliance with local labor laws, while the foreign company would manage the day-to-day activities of the worker.

Using an EOR service, like Rivermate, in North Korea would involve working closely with a state-approved entity that can navigate the complex regulatory environment. The benefits of using an EOR in this context include:

  • Compliance: Ensuring that all employment practices adhere to North Korean laws and regulations, which can be particularly challenging given the country's unique legal framework.
  • Simplified Administration: Handling payroll, taxes, and other administrative tasks, which can be complex and time-consuming in North Korea.
  • Risk Mitigation: Reducing the risk of legal and regulatory issues by leveraging the expertise of a local entity familiar with the intricacies of North Korean labor laws.
  • Focus on Core Activities: Allowing the foreign company to focus on its core business activities while the EOR manages employment-related responsibilities.

In summary, hiring workers in North Korea requires navigating a highly controlled and regulated environment. Utilizing government mediation, joint ventures, SEZs, intermediary agencies, or an EOR service can help foreign companies manage the complexities of employing local workers while ensuring compliance with local laws and regulations.

What is the timeline for setting up a company in North-Korea?

Setting up a company in North Korea is a complex and highly regulated process due to the country's unique political and economic environment. The timeline for establishing a business can vary significantly based on several factors, including the type of business, the industry, and the level of government involvement required. Here is a general outline of the steps and an estimated timeline:

  1. Initial Research and Feasibility Study (1-3 months):

    • Conduct thorough research on the North Korean market, including industry-specific regulations and potential business opportunities.
    • Prepare a detailed feasibility study to assess the viability of the business venture.
  2. Engagement with North Korean Authorities (2-6 months):

    • Establish contact with relevant North Korean government agencies, such as the Ministry of External Economic Relations.
    • Submit a formal proposal outlining the business plan, investment amount, and expected benefits to the North Korean economy.
    • Engage in negotiations with government officials to obtain preliminary approval.
  3. Joint Venture Agreement (3-6 months):

    • Most foreign businesses in North Korea are required to operate as joint ventures with local partners.
    • Identify and negotiate with a suitable North Korean partner.
    • Draft and finalize a joint venture agreement, which must be approved by the relevant authorities.
  4. Registration and Licensing (3-6 months):

    • Submit the joint venture agreement and other required documents to the State Administration for Industry and Commerce for registration.
    • Obtain necessary licenses and permits, which may include business licenses, tax registration, and sector-specific approvals.
  5. Infrastructure and Setup (6-12 months):

    • Secure office space, manufacturing facilities, or other necessary infrastructure.
    • Set up utilities, communications, and other essential services.
    • Hire and train local staff, ensuring compliance with North Korean labor laws and regulations.
  6. Operational Launch (1-3 months):

    • Finalize all operational details, including supply chain logistics, marketing strategies, and customer service plans.
    • Conduct a soft launch to test operations and make any necessary adjustments.
    • Officially launch the business and begin full-scale operations.

Overall, the timeline for setting up a company in North Korea can range from 1.5 to 3 years, depending on the complexity of the business and the efficiency of negotiations with local authorities. It is crucial to work closely with experienced legal and business advisors who are familiar with North Korean regulations to navigate the process successfully.

What are the costs associated with employing someone in North-Korea?

Employing someone in North Korea involves navigating a unique and highly controlled economic and political environment. Here are the key costs and considerations associated with employing someone in North Korea:

  1. Wages and Salaries: The North Korean government typically sets wage levels, and these can vary depending on the industry and the specific agreement with the government. Foreign companies often pay wages to the government, which then distributes a portion to the workers. The exact amount paid to workers can be significantly lower than what the company pays the government.

  2. Social Security Contributions: Employers may be required to contribute to social security funds, which cover pensions, healthcare, and other social benefits. The rates and specific requirements can be dictated by the government and may vary.

  3. Taxes: There may be various taxes imposed on employers, including corporate taxes, payroll taxes, and other levies. The tax regime in North Korea is complex and can be subject to change based on government policies.

  4. Administrative Fees: There can be additional administrative fees for permits, licenses, and other bureaucratic processes required to employ workers in North Korea. These fees can add to the overall cost of employment.

  5. Training and Development: Given the controlled nature of the North Korean economy, foreign employers might need to invest in training and development to ensure that workers meet the required standards and skills for the job.

  6. Compliance Costs: Ensuring compliance with North Korean labor laws and regulations can incur costs. This includes legal fees, consultancy fees, and costs associated with maintaining proper documentation and reporting.

  7. Accommodation and Living Expenses: In some cases, employers may need to provide accommodation and other living expenses for their employees, especially if they are bringing in foreign workers or if the job location is in a remote area.

  8. Operational Restrictions: The North Korean government imposes strict controls on business operations, which can lead to additional costs. This includes limitations on the movement of goods and people, restrictions on communication, and the need for government approvals for various business activities.

  9. Currency Exchange and Transfer Costs: Dealing with the North Korean won and the restrictions on currency exchange and transfer can add to the financial burden. Companies may face challenges in repatriating profits or managing currency risks.

  10. Risk Management: Given the geopolitical risks and the potential for sudden policy changes, companies may need to invest in risk management strategies, including insurance and contingency planning, which can add to the overall cost of employment.

Using an Employer of Record (EOR) like Rivermate can help mitigate some of these costs and complexities. An EOR can handle the administrative and compliance aspects of employment, ensuring that all legal requirements are met and reducing the burden on the employer. This can lead to cost savings and allow the company to focus on its core business activities while navigating the challenging North Korean employment landscape.

How does Rivermate, as an Employer of Record in North-Korea, ensure HR compliance?

Navigating the complexities of HR compliance in North Korea can be particularly challenging due to the country's unique political and economic environment. Rivermate, as an Employer of Record (EOR) in North Korea, ensures HR compliance through several key strategies:

  1. Local Expertise and Knowledge: Rivermate employs local HR professionals who are well-versed in North Korean labor laws, regulations, and cultural nuances. This local expertise ensures that all employment practices are in strict compliance with national laws and regulations.

  2. Regulatory Updates and Monitoring: North Korean labor laws and regulations can change, sometimes without much notice. Rivermate continuously monitors any legislative changes and updates its HR policies and practices accordingly to ensure ongoing compliance.

  3. Employment Contracts: Rivermate ensures that all employment contracts are drafted in accordance with North Korean labor laws. This includes adhering to regulations regarding working hours, wages, benefits, and termination procedures. Contracts are typically bilingual, written in both Korean and the language of the foreign employer, to ensure clarity and mutual understanding.

  4. Payroll Management: Rivermate handles all aspects of payroll processing, ensuring that employees are paid accurately and on time. This includes calculating wages, withholding taxes, and making necessary contributions to social insurance programs as required by North Korean law.

  5. Tax Compliance: Rivermate ensures that all tax obligations are met, including income tax, social security contributions, and any other mandatory payments. This helps foreign companies avoid legal issues and potential penalties associated with non-compliance.

  6. Employee Benefits Administration: Rivermate manages employee benefits in accordance with North Korean regulations. This includes health insurance, pensions, and any other statutory benefits. By doing so, Rivermate ensures that employees receive all the benefits they are entitled to under local law.

  7. Labor Relations and Dispute Resolution: In the event of any labor disputes or issues, Rivermate acts as an intermediary to resolve conflicts in accordance with North Korean labor laws. This helps maintain a harmonious working environment and protects the interests of both the employer and the employees.

  8. Training and Development: Rivermate provides training to ensure that both the foreign employer and local employees understand their rights and responsibilities under North Korean labor laws. This includes training on workplace safety, anti-discrimination policies, and other relevant topics.

By leveraging these strategies, Rivermate ensures that foreign companies can operate in North Korea with confidence, knowing that all HR and employment practices are fully compliant with local laws and regulations. This allows companies to focus on their core business activities while minimizing the risks associated with non-compliance.

What is HR compliance in North-Korea, and why is it important?

HR compliance in North Korea involves adhering to the country's unique set of labor laws, regulations, and government directives that govern employment practices. This includes understanding and following rules related to employment contracts, wages, working hours, social insurance, and employee rights. Given the highly centralized and controlled nature of North Korea's government, compliance also means ensuring that all employment practices align with the state's policies and directives.

Key Aspects of HR Compliance in North Korea:

  1. Employment Contracts: Employers must provide clear and detailed employment contracts that outline the terms of employment, including job responsibilities, wages, working hours, and conditions for termination. These contracts must comply with state regulations.

  2. Wages and Compensation: North Korean labor laws dictate specific wage standards and compensation structures. Employers must ensure that they are paying employees according to these standards, which are often set by the government.

  3. Working Hours and Conditions: There are strict regulations regarding working hours, overtime, and working conditions. Employers must adhere to these regulations to avoid penalties and ensure the well-being of their employees.

  4. Social Insurance: Employers are required to contribute to social insurance programs, which may include health insurance, unemployment insurance, and pension schemes. Compliance with these contributions is mandatory.

  5. Employee Rights and Protections: North Korean labor laws provide certain protections for employees, including rights related to safe working conditions, non-discrimination, and fair treatment. Employers must respect and uphold these rights.

Importance of HR Compliance in North Korea:

  1. Legal Protection: Ensuring HR compliance protects the organization from legal repercussions, including fines, penalties, and potential shutdowns by the government. Non-compliance can lead to severe consequences given the strict enforcement of laws in North Korea.

  2. Reputation Management: Compliance with local labor laws helps maintain a positive reputation with both the government and the local workforce. This is crucial for the sustainability of operations in a tightly controlled environment like North Korea.

  3. Employee Morale and Productivity: Adhering to labor laws and ensuring fair treatment of employees can lead to higher morale and productivity. Employees who feel protected and fairly treated are more likely to be engaged and committed to their work.

  4. Operational Continuity: Compliance ensures that the business can operate smoothly without interruptions from legal disputes or government interventions. This is particularly important in North Korea, where the government has significant control over business operations.

  5. Risk Management: Understanding and adhering to local labor laws helps in identifying and mitigating risks associated with employment practices. This includes avoiding conflicts with local authorities and ensuring that the business is not inadvertently violating any regulations.

Using an Employer of Record (EOR) like Rivermate in North Korea:

Given the complexities and risks associated with HR compliance in North Korea, using an Employer of Record (EOR) like Rivermate can be highly beneficial. An EOR can help navigate the intricate legal landscape, ensuring that all employment practices are fully compliant with local laws. This includes managing payroll, taxes, social insurance contributions, and other HR functions, thereby reducing the administrative burden on the company and minimizing the risk of non-compliance. Additionally, an EOR can provide valuable insights and guidance on best practices for operating within the unique context of North Korea, helping to ensure smooth and compliant business operations.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in North-Korea?

Using an Employer of Record (EOR) service like Rivermate in North Korea involves navigating a complex and highly regulated environment. Here are the key legal responsibilities a company must consider:

  1. Compliance with Local Labor Laws: North Korea has stringent labor laws and regulations. An EOR ensures that all employment contracts, working conditions, and employee benefits comply with local laws. This includes adherence to working hours, minimum wage requirements, and mandatory benefits.

  2. Taxation and Social Contributions: Companies must ensure that all taxes and social security contributions are correctly calculated and paid. An EOR handles these obligations, ensuring compliance with North Korean tax laws and avoiding potential penalties.

  3. Employment Contracts: North Korean labor laws require specific terms and conditions to be included in employment contracts. An EOR drafts and manages these contracts to ensure they meet all legal requirements.

  4. Work Permits and Visas: If a company plans to employ foreign nationals in North Korea, it must secure the necessary work permits and visas. An EOR manages this process, ensuring that all documentation is in order and that employees are legally authorized to work in the country.

  5. Employee Termination: North Korea has strict regulations regarding the termination of employees. An EOR ensures that any termination process is conducted in accordance with local laws, including providing the required notice period and severance pay.

  6. Data Protection and Privacy: Companies must comply with North Korean regulations regarding the handling and protection of employee data. An EOR ensures that all personal data is managed in accordance with these laws, protecting both the company and its employees.

  7. Health and Safety Regulations: Employers in North Korea are required to provide a safe working environment. An EOR helps ensure that all health and safety regulations are met, reducing the risk of workplace accidents and legal issues.

  8. Reporting and Documentation: North Korean authorities may require regular reporting and documentation regarding employment practices. An EOR manages these reporting requirements, ensuring that all necessary documentation is submitted accurately and on time.

By using an EOR like Rivermate, companies can mitigate the risks associated with non-compliance and focus on their core business activities, while the EOR handles the complexities of local employment laws and regulations in North Korea.

Do employees receive all their rights and benefits when employed through an Employer of Record in North-Korea?

In the context of North Korea, the concept of an Employer of Record (EOR) is highly complex and nuanced due to the unique political and economic environment of the country. North Korea operates under a centrally planned economy with strict government control over employment and labor practices. Here are some key points to consider regarding the rights and benefits of employees when employed through an EOR in North Korea:

  1. Government Control and Regulations: In North Korea, the government exerts significant control over employment practices. This means that any EOR operating in the country would need to comply with stringent government regulations. The government typically dictates wages, working hours, and other employment conditions, which can limit the flexibility of an EOR to provide additional benefits beyond what is mandated.

  2. Standard Benefits: Employees in North Korea are entitled to certain standard benefits as per government regulations. These include healthcare, housing, and education, which are typically provided by the state. An EOR would need to ensure that these benefits are administered in accordance with local laws and government policies.

  3. Wages and Compensation: The North Korean government sets wage levels, and these are generally lower compared to international standards. An EOR would be required to adhere to these wage levels. However, the EOR can ensure timely and accurate payment of wages, which is a critical aspect of employee satisfaction.

  4. Worker Rights: Worker rights in North Korea are limited compared to other countries. The government controls labor unions and there is little room for collective bargaining. An EOR would need to navigate these restrictions while ensuring that employees are treated fairly and in compliance with local laws.

  5. Compliance and Legal Protection: One of the primary benefits of using an EOR like Rivermate in North Korea is ensuring compliance with local laws and regulations. The EOR would handle all legal and administrative aspects of employment, reducing the risk of non-compliance for foreign companies. This includes managing employment contracts, tax filings, and adherence to labor laws.

  6. Risk Mitigation: Operating in North Korea comes with significant risks, including political instability and economic sanctions. An EOR can help mitigate these risks by providing local expertise and ensuring that all employment practices are in line with government expectations. This can protect both the employer and the employees from potential legal issues.

In summary, while employees in North Korea employed through an EOR like Rivermate would receive their rights and benefits as dictated by the government, the scope of these benefits is limited by the country's strict regulatory environment. The primary advantage of using an EOR in North Korea is ensuring compliance with local laws and reducing the administrative burden on foreign companies.

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