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new? evidence re legality of 3.3%tax, no pension/health, IC
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Wildbore



Joined: 17 Jun 2009

PostPosted: Wed Nov 13, 2013 2:35 am    Post subject: Reply with quote

Ontheway is correct regarding the legalities.

However, since in this case, an EMPLOYMENT CONTRACT was agreed upon, he should be classified as an EMPLOYEE with the tax office, as well as the health and pension offices.

It is quite dodgy, but you can bring your evidence of employee status to the tax office and file a complaint. But you should bring an esteemed Korean person to make the case for you, it will go much better.
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navogel



Joined: 14 May 2013
Location: United States

PostPosted: Wed Nov 13, 2013 8:15 am    Post subject: Reply with quote

Thanks for the insight guys.

Ive heard from a lot of people that are of the opinion that threatening to go to the labor board or actually going to the labor board and forcing their hand might cause them to fire you, but Im not so sure.

When you break down the additional cost to the hagwon of paying a teacher as an "employee", we are talking about approx 100k pension plus 60k health per month. (In my case, the school has already agreed to pay health insurance, so the additional cost would be 100k/mo.)

However, when factoring in costs of keeping employee vs firing and rehiring you have to think about replacement costs as well. My school hired me through a recruiting firm. I actually worked as a recruiter in the states so I know that a recruiting company will make 10-30% of a salary. Even at the absolute minimum of 10% (and ive heard that ESL recruiters can make quite a bit more than 30%) it is cheaper for my school to suck it up for 12 months, rather than pay another placement fee (2.6 mil @ 10%), and also another plane ticket (1 mil). That would mean an additional investment during a 12 month period of over 3.5 mil won. All for another teacher who could very well do the exact same thing after they arrive. it would be MUCH cheaper for the school to just pay for a teacher's extra 1.9 million won (max) over 12 months.

I almost want to challenge the school simply bc my contract gives a lot of evidence for employee status, and maybe through the process I could provide some insight into the best way to go about it for other teachers. No question it will be a massive headache though. I do have some access to legal assistance here in Korea, which I could use too.

Unfortunately, based on my calculations, switching to employee status will only get me an additional 500-1000k won over the course of the year (plus better insurnace). Is that worth it? Im still debating...
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John Stamos jr.



Joined: 07 Oct 2012
Location: Namsan

PostPosted: Wed Nov 13, 2013 9:34 am    Post subject: Reply with quote

You used to be an esl recruiter for korea and you still got suckered into the IC scam? Damn, son. They could also just hire some desperate person who's already in korea and who won't rock the boat on the little scam they're running. Doesn't sound to me like you're going to do anything though, which is fine. But if you know koreans, you know you'll be pushing them into a face saving situation, and they don't react well to those kinds of confrontations, so I'd start browsing the job listings if you plan on pushing the issue.
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navogel



Joined: 14 May 2013
Location: United States

PostPosted: Wed Nov 13, 2013 11:04 am    Post subject: Reply with quote

haha no, I was a corporate recruiter in the states.
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CentralCali



Joined: 17 May 2007

PostPosted: Wed Nov 13, 2013 1:17 pm    Post subject: Reply with quote

Whatever your job was in the US, it has no bearing, other than job title, to that same job in Korea. Don't worry, it's a common mistake newbies make.

Another common mistake is to fight the fight while it's still a losing fight. If you're still in the magic 6-month window, mentioning the issue to your boss very well might get you fired. That's because you're still a probationer for the first six months. Also a mistake is pushing the issue before your safely into the last month of the contract. Now, some bosses might can you anyway, although it's a losing fight then for them. The key is that you time your battle correctly. Of course, the very best timing is to wait until you're working for another outfit and thus the last boss has nothing to hold over your head.
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navogel



Joined: 14 May 2013
Location: United States

PostPosted: Thu Nov 14, 2013 7:08 am    Post subject: Reply with quote

Im confused... are you saying I can go after my employer for the pension $ after ive finished my contract, if I have a contract that says "employee" and not "contractor"?

As in, after he has paid out my severance and my plane ticket home?

Because that is definitely what I would do. I was assuming once I filed taxes as a IC it was a lost cause...
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ontheway



Joined: 24 Aug 2005
Location: Somewhere under the rainbow...

PostPosted: Thu Nov 14, 2013 7:20 am    Post subject: Reply with quote

navogel wrote:
Well believe me dude I wasnt trying to argue your points that some E2s are legal ICs. That tax document I found just says an "employment agreement" makes you an employee. From a tax perspective...

But please you tell me what you think of my contract:

a. no where does it mention contractor or independent contractor.

b. it does say 3.3% tax

c. It mentions employee twice:

"The employee should not teach classes or students at any other..."

"The term of this contract is from September 2013 to September 2014. This agreement constitutes the entire agreement between the employee and employer and supercedes all previous oral and written representations and understandings between the parties."

It is also signed as "employer" and "employee"

d. It also says this:

"Health Insurance: The Teacher will be covered by Health Insurance. According to the government guideline for teachers, the monthly insurance charge will be shared by the Institute and the Teacher."

So...

Should I request full national health insurance, pension (which should come along with it) and a lower tax rate?

Or maybe just start with the health insurance per the contract? Once I get national health insurance, he should HAVE to sign me up for the pension, right? He should also HAVE to pay me back the tax refund from the 3.3% bc as an employee he is filing my taxes.

What would you do?


A good contact should be clear. Either it says you are an "employee" with National Health Insurance and National Pension spelled out, or it says that you are an "independent contractor" and that you have to enroll yourself and pay the full amount of the Health and Pension taxes.

Your contract sounds like one that was rewritten from an employee contract with the intent of hiding the fact that it was an IC contract, but they forgot to change some of the terms. It's fairly obvious that they meant to treat you as an IC from the outset. The fact that they make no mention of Pension and the health insurance is not written as National Health Insurance Plan or some variation makes this clear.

The 3.3% tax withholding rate is commonly used even by employers who enroll their employees in National Health Ins and Pension. This is a commonly held view that all E2 teachers should pay 3.3%. You can file for a tax refund, but it's legal for your boss to overwithhold if he pays all the money he withholds to the tax office or if he returns the overage to you when he files his required tax report (for many, only once per year.)

As others have mentioned, if you push to get the National Health Insurance instead of the private plan you risk bad relations with your boss or even being fired, and likely with no Letter of Release, leaving you unable to get a new job in Korea until your 1 year visa expires.

If your boss does sign you up for National Health Insurance, eventually the Pension Office should notice and require that you be enrolled for Pension as well. They don't always notice, however. But your boss can continue to withhold your income tax at 3.3%, even if you're being treated as an employee.
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