Understanding South Korea’s New AI Law: Key Considerations for Multinational Employers

South Korea has enacted the Framework Act on the Development of Artificial Intelligence and Establishment of Trust (the “AI Basic Act” or the “Act”), which took effect on January 22, 2026. The law represents one of the first national regulatory regimes to combine AI governance, industrial policy, and risk-management obligations into a single statutory framework. The purpose of the AI Basic Act is to protect human dignity and rights while strengthening national competitiveness through the sound development and trustworthy use of AI. Government commentary suggests that enforcement will be phased, with an initial period focused on guidance and ecosystem development.

Although the Act primarily regulates “AI business operators,” defined to include entities that develop AI as well as those that provide products or services using AI, employers may fall within its scope in certain circumstances, particularly where they develop AI systems, provide AI-enabled services, or deploy AI tools that materially affect individuals’ rights or obligations. Multinational employers with operations in Korea—or those deploying centralized HR technologies affecting Korean employees—should begin evaluating potential compliance impacts now.

Broad Scope and Extraterritorial Application

The AI Basic Act applies not only to conduct occurring within South Korea but also to activities outside the country that affect the Korean market or users. This extraterritorial reach may extend obligations to employers whose centralized AI tools affect Korean employees or applicants, even if those systems are developed or hosted abroad.

Foreign AI business operators meeting certain user or revenue thresholds must designate a domestic representative in Korea and report that designation to the Ministry of Science and ICT (Information and Communication Technology). The thresholds required are AI business operators meeting: (1) global annual revenue of 1 trillion Korean won ($681 million USD) or more, (2) domestic sales of 10 billion Korean won ($6.9 million USD) or more, or (3) at least 1 million daily users in South Korea. Several compliance details—including thresholds triggering certain safety obligations—are expected to be clarified through presidential decrees and implementing guidance. Multinational employers should therefore monitor regulatory developments as enforcement expectations evolve.

High-Impact AI and Workplace Decision-Making

A central concept in the AI Basic Act is “High-Impact AI,” broadly defined as AI systems that may significantly affect human life, safety, or fundamental rights. The law explicitly includes systems used for judgments or evaluations affecting individuals’ rights or obligations, including employment-related determinations. 

This definition may encompass workplace technologies such as resume screening tools, candidate ranking systems, AI-based skills assessments, performance evaluation algorithms, workforce analytics platforms, promotion or compensation decision tools, and automated disciplinary systems. Because employment-related judgments are expressly referenced in the statute, employers should assess whether AI-driven HR tools fall within the high-impact category. The employment implications are significant because workplace decisions directly affect individuals’ rights and opportunities.

Transparency and Notice Obligations

The AI Basic Act requires AI business operators providing high-impact AI or generative AI services to notify users in advance that AI is being used. It also requires clear labeling when content is AI-generated and may be difficult to distinguish from authentic material. 

Although the Act does not create a broad workplace disclosure regime, these provisions may create expectations that employees or applicants are informed when AI materially influences employment decisions. Employers may therefore wish to evaluate whether recruiting tools, automated screening systems, or generative AI workplace outputs require additional transparency measures. Clear and consistent communication may reduce employee relations concerns and mitigate litigation risk where AI tools influence workplace outcomes.

Risk Management and Governance Expectations

High-impact AI providers are expected to implement additional measures, including risk management planning, documentation demonstrating safety and reliability, human oversight mechanisms, and user protection measures. The Ministry of Science and ICT may issue detailed guidelines regarding these obligations.

Additionally, for certain AI systems—particularly those meeting specified computational thresholds—AI business operators must implement lifecycle risk identification and mitigation measures, maintain incident monitoring systems, and submit compliance information to the government. 

For employers, these expectations resemble compliance programs already familiar in employment contexts, including policy governance, internal audits, documentation protocols, and supervisory oversight. Early development of internal AI governance frameworks may support defensible decision-making and reduce regulatory exposure.

Generative AI and Workplace Use

The Act also includes specific requirements for generative AI systems, including the obligation to notify users when a product or service produces AI‑generated outputs. As generative AI becomes more deeply embedded in workplace tools and everyday employee workflows, employers are increasingly exposed to new risks. Employees may now use generative AI to draft business communications, prepare HR documents, create training materials, or even support internal decision‑making. These obligations apply to AI business operators but may create expectations that employers disclose when AI materially influences employment decisions.

Even when these tools are not classified as high‑impact systems, employers still face potential issues related to confidentiality, data protection, intellectual property, and the accuracy of AI‑generated content. To mitigate operational and reputational risks, employers should consider updating their workplace AI policies, setting clear expectations around acceptable use, and providing targeted training for employees.

Regulatory and Enforcement Environment

The AI Basic Act establishes a centralized governance structure, including a National AI Committee under the President, as well as supporting institutions such as an AI Policy Center and an AI Safety Research Institute. These entities are expected to shape ongoing AI policy and regulatory interpretation. Although the Act provides for administrative fines and corrective orders in certain circumstances, early government commentary suggests that initial enforcement may emphasize guidance and ecosystem development. Nevertheless, compliance expectations are likely to increase as implementing decrees and guidance mature. Employers should therefore view the current period as an opportunity to assess and strengthen AI governance before enforcement practices fully solidify.

Practical Considerations for Multinational Employers

Accordingly, multinational employers may consider the following steps:

• Conduct an inventory of AI systems used in employment decision-making
• Evaluate whether systems may qualify as high-impact AI
• Review vendor agreements to ensure transparency, documentation access, and compliance cooperation
• Implement internal AI governance and oversight processes
• Update workplace policies addressing generative AI use
• Monitor presidential decrees and regulatory guidance in Korea
• Coordinate cross-border compliance among legal, HR, and technology teams

Because AI systems are often deployed globally, centralized tools may require localized compliance adjustments to address Korean regulatory requirements.

Key Takeaways

• South Korea’s AI Basic Act is now in force and may affect workplace AI systems influencing employment decisions.
• Employers deploying AI in recruiting, evaluation, or workforce management should assess potential classification as high-impact AI.
• Proactive governance, vendor coordination, and clear internal policies may reduce regulatory and litigation risk.

For details, please see the AI Basic Act here, and the corresponding Presidential Decree can be found here.