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marsavalanche
Joined: 27 Aug 2010
Location: where pretty lies perish
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 Posted: Tue May 24, 2011 3:47 am Post subject: Explain these shady hagwon tricks in detail |
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I know they are shady/possible illegal. But I do not know exactly why. So could someone explain why each of these are not correct from an ethical, legal, teacher's point of view?
- Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end
- Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction)
- Jobs offering you private health insurance not public and paying 100% (not 50/50) because it is their way of not offering you pension (since they are paying 100 whereas you would pay 50 and then 50 for pension)
- Jobs taking 3.3% tax and claiming if they don't offer pension, this is the correct tax rate (is this true?) |
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sojusucks
Joined: 31 May 2008
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| Posted: Tue May 24, 2011 5:00 am Post subject: |
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| Ethical? It's all about greed. They want to overcharge parents, they don't want to pay taxes, and they want to cheat Korean and foreign teachers out of money. |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Tue May 24, 2011 5:17 am Post subject: Re: Explain these shady hagwon tricks in detail |
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| marsavalanche wrote: |
I know they are shady/possible illegal. But I do not know exactly why. So could someone explain why each of these are not correct from an ethical, legal, teacher's point of view?
1- Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end
2- Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction)
3- Jobs offering you private health insurance not public and paying 100% (not 50/50) because it is their way of not offering you pension (since they are paying 100 whereas you would pay 50 and then 50 for pension)
4- Jobs taking 3.3% tax and claiming if they don't offer pension, this is the correct tax rate (is this true?) |
I took the liberty of numbering your posts for easier reference.
1. Pension is mandatory by law. Both you and your employer MUST contribute. That is why your first situation is not correct by a ethical honest teacher's point of view...it's flat out illegal under Korean law. The one exception to this rule would be if you are an independent contractor...but that's generally not the case for an E-2 (regardless of what you may have heard).
2. Not sure about this one...never encountered it.
3. Private health insurance is cheaper for them. And many hakwon directors will only pay if you are sick instead of paying the monthly installments. So it saves them money. But again you should be registered with the NHS...many of these private insurance companies are scams.
4. No it's not. The formula for calculating your correct tax rate can be found in the contract sticky thread. And not offering pension is illegal if you are registered as an employee. |
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marsavalanche
Joined: 27 Aug 2010
Location: where pretty lies perish
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| Posted: Tue May 24, 2011 5:42 am Post subject: |
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Hey Urban thanks for the feedback. Why do so many schools not offer pension? A good 80% of jobs I see do not offer pension. Actually 80% is being conservative.
Is it ever ok to sign with a school that doesn't offer pension (for the sake of the argument, let's say the salary is higher at this school than others you've seen)? Or is it one of the biggest red flags you should look out for? |
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kprrok
Joined: 06 Apr 2004
Location: KC
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| Posted: Tue May 24, 2011 6:07 am Post subject: |
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| marsavalanche wrote: |
| Hey Urban thanks for the feedback. Why do so many schools not offer pension? A good 80% of jobs I see do not offer pension. Actually 80% is being conservative. |
Whether they offer it or not is irrelevant. It's mandatory. If you like the job, take it and then once you get here, contact the pension board and confirm you are registered. If not, they'll straighten it out. This goes with the tax office and the NHIS as well. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue May 24, 2011 8:04 am Post subject: |
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| Quote: |
I know they are shady/possible illegal. But I do not know exactly why. So could someone explain why each of these are not correct from an ethical, legal, teacher's point of view?
1- Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end
2- Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction)
3- Jobs offering you private health insurance not public and paying 100% (not 50/50) because it is their way of not offering you pension (since they are paying 100 whereas you would pay 50 and then 50 for pension)
4- Jobs taking 3.3% tax and claiming if they don't offer pension, this is the correct tax rate (is this true?) |
#2 is not shady or illegal, although it could be inconvenient for either party in some cases.
Small employers, by law, only remit the income taxes they withhold once or twice per year. The amounts are too small and the tax office doesn't want to collect these payments monthly, so very small employers are not allowed to remit these amounts monthly. Although they may withhold monthly, it is not required.
By waiting till the end of the year they can have the exact amount due calculated and deduct that entire amount from your final pay or severance. As long as the amount deducted is correct, the employee doesn't lose out. Using an annual deduction can guarantee having the exact amount deducted - for most only a bit over 1%, almost always under 2%. Better to pay the correct amount at year end than to pay 3.3% or 3.5% or 5% etc all year long. |
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lifeinkorea
Joined: 24 Jan 2009
Location: somewhere in China
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| Posted: Tue May 24, 2011 11:42 am Post subject: |
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| - Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end |
If the end means they won't pay you your last month's salary, then yes they are right. Also, if they are paying you a higher salary, then this is also worth looking at. I understand in this case they technically still owe more, but this is one "innocent" case where they might be paying you what you owe. However, I haven't seen offers since 2007 which would coincide with this thinking.
| Quote: |
| - Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction) |
I think you mean take the total taxes out from your severance pay. If so, then this actually seems like it would be good for the teacher, assuming they pay you the difference. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Tue May 24, 2011 8:27 pm Post subject: |
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| ontheway wrote: |
| Quote: |
I know they are shady/possible illegal. But I do not know exactly why. So could someone explain why each of these are not correct from an ethical, legal, teacher's point of view?
1- Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end
2- Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction)
3- Jobs offering you private health insurance not public and paying 100% (not 50/50) because it is their way of not offering you pension (since they are paying 100 whereas you would pay 50 and then 50 for pension)
4- Jobs taking 3.3% tax and claiming if they don't offer pension, this is the correct tax rate (is this true?) |
#2 is not shady or illegal, although it could be inconvenient for either party in some cases.
Small employers, by law, only remit the income taxes they withhold once or twice per year. The amounts are too small and the tax office doesn't want to collect these payments monthly, so very small employers are not allowed to remit these amounts monthly. Although they may withhold monthly, it is not required.
By waiting till the end of the year they can have the exact amount due calculated and deduct that entire amount from your final pay or severance. As long as the amount deducted is correct, the employee doesn't lose out. Using an annual deduction can guarantee having the exact amount deducted - for most only a bit over 1%, almost always under 2%. Better to pay the correct amount at year end than to pay 3.3% or 3.5% or 5% etc all year long. |
It IS a great way to not pay out severance though.
"Where's my severance?"
OH, you have to pay taxes... It's all gone.
So, PAY ATTENTION to the details, folks. Personally, I'd rather pay it monthly and see the deduction on my pay stub and have a solid record of it. Be careful |
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SeoulNate
Joined: 04 Jun 2010
Location: Hyehwa
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| Posted: Tue May 24, 2011 9:28 pm Post subject: Re: Explain these shady hagwon tricks in detail |
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| TheUrbanMyth wrote: |
| marsavalanche wrote: |
I know they are shady/possible illegal. But I do not know exactly why. So could someone explain why each of these are not correct from an ethical, legal, teacher's point of view?
1- Jobs not offering pension and telling you they don't because it comes out to YOU getting more money in the end
2- Jobs not taxing you monthly because they claim it's easier to tax your severance pay at the end (one big tax deduction)
3- Jobs offering you private health insurance not public and paying 100% (not 50/50) because it is their way of not offering you pension (since they are paying 100 whereas you would pay 50 and then 50 for pension)
4- Jobs taking 3.3% tax and claiming if they don't offer pension, this is the correct tax rate (is this true?) |
I took the liberty of numbering your posts for easier reference.
1. Pension is mandatory by law. Both you and your employer MUST contribute. That is why your first situation is not correct by a ethical honest teacher's point of view...it's flat out illegal under Korean law. The one exception to this rule would be if you are an independent contractor...but that's generally not the case for an E-2 (regardless of what you may have heard).
2. Not sure about this one...never encountered it.
3. Private health insurance is cheaper for them. And many hakwon directors will only pay if you are sick instead of paying the monthly installments. So it saves them money. But again you should be registered with the NHS...many of these private insurance companies are scams.
4. No it's not. The formula for calculating your correct tax rate can be found in the contract sticky thread. And not offering pension is illegal if you are registered as an employee. |
Just to add a little bit more:
1. Under NO circumstance do you make more money by not getting pension. Even if you do not pay into any form of healthcare you still make less money. I did the calculations on another thread and showed how absurd that notion really is.
The ONLY exception to this is SA citizens who can not start a pension fund.
2. as on the way noted, for a small employer, this is the norm. Just be wary and contact the tax and pension offices frequently to make sure everything is in order
3. With private insurance you are not being registered with pension and NHIC, refer to #1 that shows how you are getting ripped off.
4. Illegal for 99% of the E2 workers out there since most of us are contracted employees and must be taxes accordingly. The reason why so many Hogwons try and have this scheme is because it keeps ALL of their taxes artificially low since they try and report that they 'technically' have only 2-3 employees and avoid paying higher taxes on their income.
Do not fall for this trick. Insist on proper taxation and pension. |
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winterfall
Joined: 21 May 2009
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| Posted: Wed May 25, 2011 12:09 am Post subject: |
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| You forgot. Under-reporting income so your pension and medical contributions are lower than they should be. IMO this is more common in ps than hagwon |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Wed May 25, 2011 1:19 am Post subject: |
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| marsavalanche wrote: |
Hey Urban thanks for the feedback. Why do so many schools not offer pension? A good 80% of jobs I see do not offer pension. Actually 80% is being conservative.
Is it ever ok to sign with a school that doesn't offer pension (for the sake of the argument, let's say the salary is higher at this school than others you've seen)? Or is it one of the biggest red flags you should look out for? |
Many schools do not offer pension because it costs them money. Under current law (unless it has changed recently) they must pay 4.5% of your salary into the pension fund (you pay a matching 4.5% as well). If your salary is say...2 million then that is 90 thousand a month. Multiply by the number of months (12) and that is 1 million plus 80,000 won .
I'd say it's a big red flag. Why? Because it is illegal not to offer pension to a contracted employee. And if he is comfortable with cutting corners on that..he's likely to be comfortable with cutting corners elsewhere later on...which will always be to his benefit and not always to yours. |
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marsavalanche
Joined: 27 Aug 2010
Location: where pretty lies perish
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| Posted: Wed May 25, 2011 1:52 am Post subject: |
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Do not fall for this trick. Insist on proper taxation and pension.
One more question.
Let's say I take a job that doesn't offer pension.
Do I contact the pension office (to go after them and pay me my money owed) AFTER I'm finished with the job or DURING my time there?
I figure after would be better, no?
If I do it during, aren't they going to be really pissed off at me and possibly try to fire me for having them fined/pay up?
If I do it afterwards, I don't have to deal with them face to face and feel this way is much smoother.
Will the pension office be on my side if pension is not mentioned in my contract?
Of course either way it eliminates the option of having a reference for my next job, which is unfortunate. |
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lifeinkorea
Joined: 24 Jan 2009
Location: somewhere in China
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| Posted: Wed May 25, 2011 2:10 am Post subject: |
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| Will the pension office be on my side if pension is not mentioned in my contract? |
If you are benefiting from something arranged under the table and not in the contract, then I don't think you should do anything about the pension. I have had 2 school experiences in Korea where this happened and I simply moved on because we made an agreement and they followed it. I also worked at 2 other schools in Korea where we played by the book, even contracting for pre-arranged overtime so I would get a higher salary. Pension was paid and I received it as planned.
Another aspect is this gives you leverage if problems come up. If the school fails to abide to private arrangements, then you can try to collect on pension. Going by the book means they have full control over you and this seems to only come out well with public schools. Hagwons are out for a profit.
More recently, I left a school in China in March. The school had a replacement teacher who wanted my apartment. In China, you can choose to pay 3 or 6 months rent upfront and get reimbursed by the school. So, it felt like I got evicted by my old school when I actually paid upfront for rent until mid-June. The leverage in this case is that I could go to the landlord and they could kick the replacement teacher out if the school didn't pay me for the remaining months (April-June 15th).
I see the pension the same way. You need to look at how much your salary is and what the savings would be if you earned less and got pension. Sometimes it will be in your favor, sometimes it won't. The owner at my previous school had some weird financial logic. He had no problem finding me an apartment for 1,000 RMB and paying me 1,500 per month if I paid for 6 months upfront. Last year, I really came out ahead. However, when the hours went from 20 to 30 and finally 35, he didn't want to pay me overtime. He feels that if you worked only 20 hours one week then you owe more later on or something. That explains why I left.
Anyway, he paid the remaining rent money, and if this were in Korea I would not be collecting on pension from him based on what I did (or didn't) do at the school. |
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shifty
Joined: 21 Jun 2004
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| Posted: Wed May 25, 2011 2:59 am Post subject: |
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Forgo the pension and request some benefit that you fancy, such as zero prep hour or slight increase in salary, some offer a greedy hakwon owner can't refuse.
Of course if some issue makes you disgruntled during the contract year, sure to happen, you could change your mind...making for a 'double-dip'. .
But it would be foolhardy to threaten reclamation of the pension when other benefits get into jeopardy.
So the question still arises, can one claim pension just after contract completion? |
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morrisonhotel
Joined: 18 Jul 2009
Location: Gyeonggi-do
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| Posted: Wed May 25, 2011 3:40 am Post subject: |
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| marsavalanche wrote: |
Will the pension office be on my side if pension is not mentioned in my contract? |
Is ignorance of the law ever, in any country, a defense against a problem? If it's not in the contract, and they come across that you haven't been paying, then you're going to be paying up as will your employer (with an additional fine on top). If, on the other hand, pension payments are removed from your salary, but not paid to the pension pot then they will be on your side (as long as you can prove it). |
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