Korean Job Discussion Forums

[freewheelin]

I have a simple question, would anybody please be able to confirm that a teacher working with an E2 Visa in Korea must be covered under the Natonal Pension scheme? By the way I am a Canadian. Hence, is it a mandatory requirement for your school and you to pay into the National Pension scheme? The answer I am looking for is yes, however, my recruiters are telling me that I am not covered for this, and I am thinking they are incorrect, but I wanted to make sure that it is a necessary requirement legally, prior to approaching my boss about this.

Any clarifying info. would be much appreciated.

[OculisOrbis]

The basic answer is yes, you are required to be covered and your employer must contribute to the pension plan. Under your E-2 visa, you are a de-facto employee.

That said, there is a scam that, while technically illegal, goes unenforced where if your employer designates you an 'independent contractor' and they do not have to contribute to pension, provide the national health insurance, and then you are also required to pay almost double the regular employee income tax rate.

If your recruiter says that you arent an employee and you will not receive pension, refuse to sign the contract and decline the job. There is very good chance that they will not only screw you on the above mentioned items, but you will very likely have many other issues with such a slimy employer.

Pass and find A)a better position and/or B) another recruiter

[Nester Noodlemon]

[freewheelin]

Thanks so much for your prompt reply.

But for better or worst, I am in fact newly employed and working for this employer as we speak. I'm currently in week #2, so needless to say I have not been paid yet....and in fact I may naturally just pay into the plan....I'm not sure.

But as sort of a heads up I asked the recruiter about this, and that is what they told me....but I actually don't trust them (the recruiters) in the slightest. Although, I generally am a very trusting human....too trusting one could argue sometimes. Judging from my first 2 weeks I believe my employer's are decent and trustworthy....but whether or not I am deemed an "independent contractor," I'm not sure...is there anyway to confirm this? Additionally, I am as dictated by my contract covered under the standard 50/50 medical agreement....but no pension is mentioned. I have worked in Korea in the past, and although this may make me seem naive and uninformed....I never got paid a pension (or paid into) one before. So beleive it or not, it has just recently come to my attention that it is common place to pay into a pension.

So I am not entirely sure what my follow up question is, but judging from the above information, would you think that I should be entitled to this?....or perhaps one could not say for sure with this limited information.

Any suggestions? Thanks for your time.

[tophatcat]

[World Traveler]

[ontheway]

The facts about Pension are as follows:

The E2 visa is irrelevant. The pension and tax laws are separate. Many eople with no experience in taxes, accounting, government and law are confused about this. There was a Dave's myth which has now been completely debunked in another thread that you could not be an independent contractor on an E2 visa. However, this was proven to be not true.

1) It is perfectly legal to be an independent contractor on an E2 visa. The big IF is that your contract must not say that you are an employee. The contract must make it clear, even if the words "independent contactor" do not appear, that you are not an employee or that you do not have benefits that employees would have.

So, if you sign a contract as an "independent contractor" or an hourly worker without benefits etc. then school is NOT legally required to enroll you in the National Pension Scheme. However, you are legally required to enroll yourself in the pension. Being an independent contractor does not make you exempt, it means that you must enroll yourself.

In fact, in Korea today, nearly half (over 48%) of all enrollees in the National Pension Plan are self employed or Independent Contractors.

Korean law does not treat foreign workers any different from its own citizens in this regard. Being on an E2 visa is unrelated to your status under other agencies. Immigration cannot make the rules for the tax, pension or national health insurance agencies.

It is quite easy to be a legal independent contractor or self employed in Korea. You have to enroll yourself in the plan.

Teachers from countries that do not get a Pension refund are likely to prefer this kind of position since they can cheat, not pay the Pension, and keep the money that other teachers are able to get refunded.

Being an independent contractor is probably not a good deal for most teachers. But it is perfectly legal. Anyone who says otherwise is woefully misinformed.


2) Another myth popular in Korea not only on Dave's, but among Korean accountants and business owners, is that businesses with fewer than 5 workers are exempt. This used to be true, but no more.

If you are an employee, then you must be enrolled in the National Pension and Health Insurance Schemes. This is true even if the business only has one employee.



3) Finally, another bit of foolish advice sometimes heard on Dave's is that it doesn't matter if Pension and Health Insurance insurance are mentioned in your contract, since they are legally required. This is really bad advice.

First, you could be signing up to be an independent contractor and your school will have no legal obligation to enroll you.

Second, you could be signing up for a school that thinks that they are exempt under the 5 employee rule. There is still a large number of these. Most will comply with the law when they are faced with the facts provided by the teacher or a visit from the authorities, but there is no benefit to the teacher in signing a contract that guarantees a battle, even if you might win.

Third, a significant percentage of schools will try to cheat on the amount they pay. They will enroll you, but they will underreport your earnings so as to reduce the pension they pay in. There are many variations on this theme.

The National Pension Office actually promoted a 30% reduction, which used to be legal, and hundreds of public school teachers along with many hogwan teachers had their pension amounts legally reduced under this plan. Many were never aware of this and never knew that they were getting less than other teachers at more honest hogwans. A handful of public school teachers noticed and got the rate corrected. The rest never noticed. This is no longer allowed, but many schools still try to use this or other means to underreport and underpay their share of the pension cost.


Fourth, about 1 or 2% of schools refuse to enroll their teachers in the National Pension plan at all, even though they know its the law and their employees are not "independent contractors." You do not want to fight with these people as they will use almost any means to avoid paying, and although you could win some judgement, you might still never collect and the lengthy battle is not worth it.


Finally, you should not sign a contract that does not have the proper tax withholding , according to the national tax service website (income tax is not a flat rate, it's progressive from 0 to 36%), the proper pension, and the proper health insurance rates spelled out in some way.

When these items are missing, it is generally a good indication that the school does not want to pay, and may use some method to avoid paying these items

[OculisOrbis]

I hate the fact that I am even asking this, but, show your references that validate all the claims youve been making above regarding pension, e-2 visas and independent contractors. And also please show the numbers and sources of your claim that only 1-2% of employers dont contribute to pension from previous threads.

[wooden nickels]

I call B.S. on, only 1-2% of employers don't contribute to pension.

Of the E-2 visa holders I know, the numbers would be more like 15-20%.

[ontheway]

[wooden nickels]

[ontheway]

I call B.S. on, The 15-20% I know aren't independent contractors.


Post their contracts.

[World Traveler]

[hari seldon]

[OculisOrbis]