Korean Job Discussion Forums

Skippy · Joined: 18 Jan 2003 Location: Daejeon

I was reading a previous thread about Independent Contractors.

http://forums.eslcafe.com/korea/viewtopic.php?t=210987&postdays=0&postorder=asc&start=0

Commenters nachoinkorea and ontheway has some good points and explains some interesting things.

So I was wondering would it be possible to be an Independent contractor but make it work for you.

So as an IC the company does not pay benefits like health or pension. So my thinking is if get 2,3 regular job but if I am an IC I ask for a high pay to cover their cost of benefits. Roughly another 200,000.

Or course the downside is the higher tax rate at 3.3. But I feel with being aware of taxes and filing yourself you can still save.

Further protecting myself would be the assurance that I am an IC and I can work at any other place with permission from the school.

So does anybody have any advice about signing a IC contract with an E-2 visa.

Who's Your Daddy? · Joined: 30 May 2010 Location: Victoria, Canada.

The schools love putting you as IC but the hard part is getting the employer permission to work other locations.

jrwhite82 · Joined: 22 May 2010

Yeah, my advice is don't do it.

Basically, you need someone who is willing to hire you for a position that doesn't need a lot of hours, that will sponsor your visa AND give you permission to work somewhere else. Will this school give you an apartment and airfare?

Ok, that might be doable. But then you'll also need 2-3 other schools that need a part time employee.

If you could line all of that up, it might work for you. But remember, it would probably take you a bit of time to get all those PT gigs going. Which is lost wages. So for each month that you would have made 2.2 (which would actually be quite a bit higher because you're also getting pension, health care, apartment, and flights which you would not be collecting at your IC gig) at your regular hagwon gig, you now maybe were only pulling down 1.5. So it will take a couple of months to make up that lost wage while you fill your schedule with PT gigs. Then you'll start making more than you would have. But it will definitely take some time to get rolling.

Also, it might be hard to swing your vacation to all land at the same time. But if your willing to just work, work, work it might be good for you.

Big risk though and hard to set up well.

northway · Joined: 05 Jul 2010

It seems really impractical on an E2, for all the reasons outlined by jrwhite.

ontheway · Posted: Wed Nov 02, 2011 7:34 am Post subject:

As an E2 teacher you would need a primary school to be your visa sponsor. This would be your first contract. If you negotiate properly and write your own contract with the proper terms allowing you to work for multiple schools, then you could come out ahead.

You would have to pay your own pension and health insurance, double the regular amount, to be legal. But, you should be able to get a higher hourly rate than a regular E2 since the school saves on benefits. Generally, it costs a school 30,000 - 40,000 won per teaching hour (depending on a number of factors) to hire an E2 teacher. So, you should be able to get 25,000 to 35,000 per hour for large blocks of time with no benefits.

The way to make this work for you is to work more than the usual number of hours, be willing to forego any real vacation since your vacation times may not line up (except for major Korean holidays), have experience and contacts in advance, already be in Korea and have no visa or airfare issues, have a large urban area to find contracts in, and to rent or buy your own housing.

As to income taxes, Independent contractors do have the 3.3% withholding rate, but they actually pay the same tax rate as everyone else - it's on the same progressive tax scale, based on the total of your earnings. So, if you have the same total income as an employee at one job or a contractor working 5 jobs, you should still pay the same amount of tax. (Of course, as a contractor you would likely have additional deductible business expenses.)

The reason ICs pay a higher withholding tax rate even though they actually face the same progressive tax scale as everyone else is because an IC could have small earnings from numerous sources and it could be possible for earnings from each contract to be at or below the zero percent withholding tax level for an employee. So, 3.3% was set as a minimum IC tax withholding rate to make sure the IC pays in enough to cover his or her income taxes.

If you are a successful IC you should earn enough to pay far more than the 3.3% tax rate. Korea has progressive rates up to 36%.

TheUrbanMyth · Joined: 28 Jan 2003 Location: Retired

CentralCali · Joined: 17 May 2007

TUM: You're wasting your time trying to explain that to ontheway. That poster is fixated on the tax issue, completely oblivious to the actual issue of the employer<->employee relationship.

The sooner the CDI case is settled, the better so people will grasp the facts.

jrwhite82 · Joined: 22 May 2010

TheUrbanMyth · Joined: 28 Jan 2003 Location: Retired

Wildbore · Joined: 17 Jun 2009

ttompatz · Joined: 05 Sep 2005 Location: Kwangju, South Korea

big_fella1 · Joined: 08 Dec 2005

nachoinkorea · Joined: 25 Mar 2009 Location: Seoul

FYI guys, you do not have to be an independent contractor to have other jobs added to your visa. Some people seem to think if you are not an independent contractor you can't add other jobs. This is wrong.

All E-2 visa holders, whether they are "regular" or "irregular" (read: independent contractor) employees can add up to 12 jobs to their E-2 visa, provided that:
1. they have their visa sponsor's permission (this is the main problem for most people)
2. the 2nd job is allowed under their E-2 visa (you cannot work outside of a hagwon or public school usually).

I have seen people in the past add radio and TV jobs to their E-2 visas. I think a lot of times that depends on the Immigration officer you deal with (when I was on my E-2 I added a radio gig to my visa, which falls under the E-7 visa).

My company hires both "regular" (full-time) & "irregular" (independent contractors) teachers. The low down on these jobs:
1. regular - receive average monthly salary and all legally-entitled benefits (health insurance, pension payments, severance bonus, etc.)
2. irregular - less benefits (we split health insurance with them, but it's in their name. No pension or severance), but we let them add jobs to their visa. Most of them pick up after-school jobs. Most of our irregular employees are pulling in 4+ million KRW per month or more, and they are doing it legally. So generally independent contractors can make a lot more money, but get fewer benefits. You take the good with the bad.

TheUrbanMyth · Joined: 28 Jan 2003 Location: Retired

nachoinkorea · Joined: 25 Mar 2009 Location: Seoul

Actually Urban Myth, that was the old rule. It changed back in 2010 I believe.

Now, if you have an E-2 visa and you want to add a 2nd job to your visa (again, provided you have your visa sponsor's permission) you can add either a public or private school to that job regardless if your visa sponsor is public or private.

A few years ago the old system used to be:
1. private visa sponsor = only add public schools to your visa
2. public visa = only add public schools to your visa

You could not go "public to private" or "private to private", but like I said those rules changed. Some of our current staff are sponsored by public schools but they add us to their visa.