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big_fella1
Joined: 08 Dec 2005
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 Posted: Mon Apr 15, 2013 5:49 am Post subject: Hiring E2's as independent contractors is a scam |
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Hi guys, it is up to you whether you take a job as an independent contractor but know that if you work in one place for a fixed time, with a boss you are an employee not an independent contractor. Source: http://www.thekoreanlawblog.com/2011/06/independent-contractors-and-obligations.html
You can read an academic article about it here:
http://www.jstor.org/discover/10.2307/40377726?uid=3738392&uid=2&uid=4&sid=21102037833831
It's worth noting since this was written the exemptions for employer with less than 5 employees have been removed. The only legal way not to pay pension, health insurance, and retirement allowance is if you are family. Although South Africans don't have to get pension.
Getting the various Korean ministries involved to actually investigate this may be difficult so I recommend the following:
1. Keep a diary noting any meetings your boss has with you, what they said and your working hours;
2. Keep any documentation your employer gives you;
3. Know your rights and clearly state what you want;
4. Make it clear that you will be in Korea for quite a while longer. A university professor wrongly dismissed took one year to get a ruling in his favour. He was paid for the year he couldn't work.
I cannot promise that you will be paid the social security you are owed if you fight it, thus it is better to find a job with a company that follows the law.
If you must take a job as an independent contractor, you can seek reimbursement when you finish your contract. I cannot guarantee that you will be successful, but I can guarantee you won't be if you don't try.
A further note is if you accept an IC agreement with an E2 visa, you are breaking immigration law as well, an E2 is an employment visa. Luckily for you immigration does not care to enforce this. |
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Skippy
Joined: 18 Jan 2003
Location: Daejeon
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| Posted: Mon Apr 15, 2013 5:57 am Post subject: |
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Taking the squabble with ontheway to a new thread, huh?
Actually I agree with onetheway a bit. IC is not a scam, it is more of a scam move. What is needed is a sticky explaining what the IC is in relation to ESL and E2 visa.
The problem is every day more and more newbs and/or lazy people come in and accept the IC contracts. More often the naught life would be easier if people took the to time to learn about things before hand. Yet the tales of woe continue as people will not do the research or thinking needed. |
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Voyeur
Joined: 19 Jun 2003
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| Posted: Mon Apr 15, 2013 6:10 am Post subject: |
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You are missing the point.
IC status MAY be illegal--but it is not a scam.
From the employees pov it is an option--sometimes a good one. |
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big_fella1
Joined: 08 Dec 2005
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| Posted: Mon Apr 15, 2013 6:15 am Post subject: |
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I know, when I finish my trimester I will do a proper paper on IC contracts as this will help Koreans and Expats alike.
Unlike some other posters, I do try to provide links to my rants rather than just making stuff up. But between work, study and family there aren't enough hours in the day. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Mon Apr 15, 2013 8:34 am Post subject: |
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According the article itself, the factors that bigfella thinks prove his point actually disprove his point.
There are no rules and you cannot automatically say who is an IC in Korea, just as in the US. The factors are really just guidelines. In Korea nearly all of the factors must be met to get the courts to force a ruling that you are an employee and not a contractor. One important guideline: If your contract is for one year or less in Korea today, you are considered "irregular" and it is legal to be an IC. If you have agreed to be an independent contractor the courts will not overturn that choice.
| Quote: |
These factors are used by the Korean Supreme Court to determine if one is an �employee� under the Korean LSA.
The factors are not weighted equally by courts.
Please note that these factors are not weighted equally by courts and all factors are not required to be met for an independent contractor to be deemed an employee under the LSA. An answer in the affirmative to anyone one of the factors increases the risk to the employer |
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In short, none of the factors alone or in combination are determinant.
So, bigfella has proven himself wrong.
Nice reference bigfella. This also proves what I've been saying:
| jstor article referenced by bigfella wrote: |
The share of irregular workers in the total labor force in Korea has grown from 43.4% in 1996 to 52.7% in 2005. |
This article explains that contract workers with contract periods of 1 year or less can be legally classified as irregular workers.
The article also explains that it is a matter of government policy to encourage the use of irregular workers (ICs) in order to maintain full employment and this includes the use of loose standards and easy exceptions and exemptions from employment regulations regarding who is an employee - making the ICs legal.
The article goes on to explain that employment relationships are "ill defined" in Korea, meaning basically that there are no rules. There is no transparent and workable definition of irregular employment (ICs) in Korea at the present time.
(An interesting language note that the Korean writers or more likely, their translators, are confused about the difference between "avoidance" which is legal, and "evasion" which is illegal, when discussing compliance issues and therefore make an incorrect use of the word legal, for example when explaining that businesses with 5 workers are exempt from the laws (meaning legally able to avoid participation, and no longer true) the authors call such avoidance "illegal" which shows a failure to comprehend the correct use of English in this paper. Obviously if you are exempt from the law, then non-enrollment is legal.)
As I've repeated, over half of all workers in Korea are in the group of irregular workers that includes what we think of as ICs. The Korean government and the courts are not about to destroy the economy by upsetting this arrangement that keeps the people working, keeps the economy moving and keeps bread on the tables of the majority of Korean families.
The cited article supports my points:
1) It is legal to be an IC in Korea at the present time for a majority of workers including E2 teachers.
2) There is no definition that would allow anyone including bigfella the ability to claim who is an IC.
3) Enforcement of each element of this process lies with a different department (Immigration is not on the list.)
National Health Ins regulation - the National Health Insurance office
Pension regulation - the Pension office
Unemployment and Workman's comp regulation - the Labor office
Tax compliance and enforcement (including determination of IC status) - the Tax office
4) The majority of workers in Korea today are irregular workers or ICs
5) This sector of the economy is too important for the Korean government to substantially change the use of ICs. In fact government policy is to encourage the use of ICs except in the case of very large employers (many hundreds or thousands of workers).
| big_fella1 wrote: |
| A further note is if you accept an IC agreement with an E2 visa, you are breaking immigration law as well, an E2 is an employment visa. Luckily for you immigration does not care to enforce this. |
This is bigfella's wet dream.
There is no Immigration rule that you have to be an employee to be issued an E2 visa.
No one has ever found or linked such a law, rule, regulation or policy.
Immigration reads contracts every day with the words "Independent Contractor" boldly written in the first paragraph of the contract and grant an E2 visa. They do this because they cannot refuse based on whether the individual will be an employee or an IC. There is nothing in the law that lets Immigration deny an E2 visa for ICs ... so, they do not. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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big_fella1
Joined: 08 Dec 2005
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| Posted: Mon Apr 15, 2013 1:27 pm Post subject: |
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Dear E2s reading this as we are all university applicants we know the best sorces are peer reviewed journals, textbooks are acceptable, as are credible web pages. Credible web pages include government websites. Usuallly credible pages do not include blogs, however as the author of Korean Law blog is a lawyer who has worked in the Korean law system you can decide whether his blog is credible or not.
As fine as eslcafe is it does not constitute a reliable source for academic or legal purposes nor does wikipedia.
I won't be debating anyone that reads until they see what they want and stops reading or does not link to credible sources.
As all E2s are university graduates I know you will be skilled enough to weigh the arguments on their merits.
Good luck! |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Mon Apr 15, 2013 3:00 pm Post subject: |
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| big_fella1 wrote: |
Dear E2s reading this as we are all university applicants we know the best sorces are peer reviewed journals, textbooks are acceptable, as are credible web pages. Credible web pages include government websites. Usuallly credible pages do not include blogs, however as the author of Korean Law blog is a lawyer who has worked in the Korean law system you can decide whether his blog is credible or not.
As fine as eslcafe is it does not constitute a reliable source for academic or legal purposes nor does wikipedia.
I won't be debating anyone that reads until they see what they want and stops reading or does not link to credible sources.
As all E2s are university graduates I know you will be skilled enough to weigh the arguments on their merits.
Good luck! |
I understand that you are disappointed. I read and analyzed your own academic sources, which supported what I've been explaining.
It is legal to be an Independent contractor as an E2 teacher at the present time in Korea. Immigration has no rule against it. Over half of all Korean workers at present are in this same category of irregular workers which includes what we would think of as ICs. The rules for being an IC in Korea are different than in the US. The Korean government encourages this type of employment because the economy depends upon it. There is almost no chance of a major change at the present time in this necessary government policy.
So, for newbies, if you are coming to Korea, you should not rely on the completely incorrect notion that somehow it is illegal for your visa sponsor to make you an Indpendent Contractor. If you want to have National Health Insurance, National Pension and the correct, under 2% tax withholding then do not sign an IC contract. Make sure that your contract states clearly that you will be an employee and that you will be enrolled in Health Ins and Pension, your employer will pay half and that your withholding tax rate is according to the National Tax Service site.
As an IC you are required to pay your own Pension and Health Insurance at the full rate. So, unless you plan on breaking the law, if you sign an IC contract you will probably be losing money.
It is possible that as a legal IC you can come out ahead, that some schools will pay you more as an IC and that you will make more as an IC by working at multiple legal jobs. This applies to a small percentage of those on IC contracts, however, and probably not you.
But, don't count on being saved by Mommy the Government, cause they won't help you. It's legal to be an IC as an E2 teacher, so if your contract clearly states that you are an IC, you will be stuck.
Just don't sign up to be an Independent Contractor, and watch out for the warning signs of a hidden IC contract. |
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big_fella1
Joined: 08 Dec 2005
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| Posted: Mon Apr 15, 2013 3:30 pm Post subject: |
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Sorry was that a source?
We can all read, why don't you let people read and make their own decisions instead of telling the your opinion of which you have not provided a shred if evidence?
After May 13th I will do my papers and consult with lawyers about starting a class action representing all illegally employed ICs from the article I've read I'll have a lot of claimants.
I will do everything I can to stop this exploitation, so feel free to keep motivating me or you could provide some evidence I could admit I was wrong and move on.
There you go, provide proof to convince me and others that agree with me and we can move on.
Unless you provide evidence your behaviour is that of a troll. |
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smithy
Joined: 17 Aug 2009
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| Posted: Tue Apr 16, 2013 1:28 am Post subject: |
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| Here's a question - what if you had accepted an IC agreement in order to save your pension (which you are not entitled to claim back as a resident of certain countries) but then try to change jobs to one which will sign you up for the national pension and health insurance. Would one have to pay back the preceding unpaid months of pension and health insurance? |
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Skippy
Joined: 18 Jan 2003
Location: Daejeon
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| Posted: Tue Apr 16, 2013 2:07 am Post subject: |
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| smithy wrote: |
| Here's a question - what if you had accepted an IC agreement in order to save your pension (which you are not entitled to claim back as a resident of certain countries) but then try to change jobs to one which will sign you up for the national pension and health insurance. Would one have to pay back the preceding unpaid months of pension and health insurance? |
Likely yes. When hagwons and schools use the IC scam move. They are using it to pass the buck on pension and health insurance. The responsibility is the contractors (contractee?). Even as a IC, waygooks are legally obligated to be enrolled in both pension and health insurance. With the IC scam move, hagwons never inform the contractor/employee of the obligations. Some schools even bend the truth or out right lie about the obligation. So some people have been caught later on having to back pay for something they told not to worry about.
So if NPS and NHIC find out you been have not been enrolled. You can be expect to both payback the time you where not enrolled plus a fine (percentage). Some people say if you leave the country for a time, then come back, then you could possibly skip the notice of NHIC or NPS. So some patience and scrambling for paperwork (CRC,degree) could save you some money, but it might cost you money with visa trips. |
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bobbybigfoot
Joined: 05 May 2007
Location: Seoul
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| Posted: Tue Apr 16, 2013 3:38 pm Post subject: |
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It is not a scam and it is not illegal.
It is actually better to be an "independent contractor" (as I have been for the past 5 years). I get every penny of income tax I pay back every June. As my income has steadily risen over the years, it would be A LOT more expensive for me to be deemed an employee.
Thank heavens being labeled indepedent is not illegal! |
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big_fella1
Joined: 08 Dec 2005
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| Posted: Tue Apr 16, 2013 4:39 pm Post subject: |
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| bobbybigfoot wrote: |
It is not a scam and it is not illegal.
It is actually better to be an "independent contractor" (as I have been for the past 5 years). I get every penny of income tax I pay back every June. As my income has steadily risen over the years, it would be A LOT more expensive for me to be deemed an employee.
Thank heavens being labeled indepedent is not illegal! |
Are you working in only one place with a boss?
If you aren't you have the wrong thread.
Also it isn't a good idea to announce on a public thread that you're overstating your tax deductions and as you aren't complaining you probably aren't paying the correct NHIC or pension contribution either.
Really not a smart idea or I have it wrong and you're telling us that you earn less than 8 million won a year and thats why you get all your tax back and you're happy with this arrangement.
If you're an E2, the E2 visa is an employment visa. To legally IC you need a C4, D8, F2, F4, or F5 visa. |
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Weigookin74
Joined: 26 Oct 2009
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| Posted: Tue Apr 16, 2013 5:52 pm Post subject: Re: Hiring E2's as independent contractors is a scam |
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| big_fella1 wrote: |
Hi guys, it is up to you whether you take a job as an independent contractor but know that if you work in one place for a fixed time, with a boss you are an employee not an independent contractor. Source: http://www.thekoreanlawblog.com/2011/06/independent-contractors-and-obligations.html
You can read an academic article about it here:
http://www.jstor.org/discover/10.2307/40377726?uid=3738392&uid=2&uid=4&sid=21102037833831
It's worth noting since this was written the exemptions for employer with less than 5 employees have been removed. The only legal way not to pay pension, health insurance, and retirement allowance is if you are family. Although South Africans don't have to get pension.
Getting the various Korean ministries involved to actually investigate this may be difficult so I recommend the following:
1. Keep a diary noting any meetings your boss has with you, what they said and your working hours;
2. Keep any documentation your employer gives you;
3. Know your rights and clearly state what you want;
4. Make it clear that you will be in Korea for quite a while longer. A university professor wrongly dismissed took one year to get a ruling in his favour. He was paid for the year he couldn't work.
I cannot promise that you will be paid the social security you are owed if you fight it, thus it is better to find a job with a company that follows the law.
If you must take a job as an independent contractor, you can seek reimbursement when you finish your contract. I cannot guarantee that you will be successful, but I can guarantee you won't be if you don't try.
A further note is if you accept an IC agreement with an E2 visa, you are breaking immigration law as well, an E2 is an employment visa. Luckily for you immigration does not care to enforce this. |
But, it still happens. The government allows it and never does anything about it when it's reported. So, it's not really illegal under that definition. If it were, the government would get off their lazy @ss and stop it but they don't. Anyhow, if you do take an IC position make sure it pays enough to cover housing, buy medical, contribute to your pension, and pay the appropriate tax rate. I had seen CDI offering 30,000 won an hour about a year ago on an ad. Doing the math, it seemed fair. If you paid the fees (taxes, pension, etc) yourself, you still had slightly more than salaried employees. If you were only here for a year or two and risked not paying those things, you made more money in your pocket. Never worked for them. I've heard both good and bad.
Moral of the story, if you agree to the IC, you should be gauranteed a minimum of hours and get at least 30,000 and hour with pre paid flight or re-imbursement, if you trust the company.
Don't do an IC for 20,000 an hour. An offer like that, tell them to shove it you know where. |
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Weigookin74
Joined: 26 Oct 2009
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| Posted: Tue Apr 16, 2013 5:58 pm Post subject: |
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| smithy wrote: |
| Here's a question - what if you had accepted an IC agreement in order to save your pension (which you are not entitled to claim back as a resident of certain countries) but then try to change jobs to one which will sign you up for the national pension and health insurance. Would one have to pay back the preceding unpaid months of pension and health insurance? |
You're still required to pay it. If you're here for a long time, you will eventualy get caught. The bureacracy will find you and you will have to pay. Also, you can claim it when you turn 65, from whatever country you are in and get a monthly pension from here plus whatever other countries you worked in. Having a pension during retirement years is important. |
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