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Contracts stating 3.3% (or higher) tax rate

 
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duke of new york



Joined: 23 Jan 2011

PostPosted: Sat Jun 04, 2011 11:37 am    Post subject: Contracts stating 3.3% (or higher) tax rate Reply with quote

I think it is pretty well established on this forum that 3.3% is an incorrect but extremely commonly offered tax rate, usually hiding the fact that the employer is trying to hire you as an independent contractor. According to the advice in the contract review thread, when you receive a contract like this, you should immediately point out the tax rate and insist that it be corrected. The employer/recruiter can then either

1. Admit the rate is wrong and correct it, or
2. Argue in the face of overwhelming evidence and refuse to change the contract (or just stop contacting you).

Obviously, in the event of 2, reject the offer and probably stop dealing with the recruiter altogether if there is one. My question is, firstly, does 1 even ever happen? In other words, is it even possible to get a legitimate contract out of an exploitative (or at least shaky) one through negotiation? And if this does happen, assuming the negotiated contract is solid and contains everything you need, should you accept the offer, even in light of the fact that you were originally sent a bad contract, which could reflect on the employer's business ethics in general?

I feel inclined to immediately throw out any offer that initially states an inflated tax rate, but I'm worried that it is nearly impossible to get a fair contract right off the bat, and you just have to arrive at one through negotiation. Obviously I'm not talking about rejecting contracts without negotiating things like hours, pay, and discrepancies in wording, I'm talking about contracts specifically with erroneous tax rates.
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TheUrbanMyth



Joined: 28 Jan 2003
Location: Retired

PostPosted: Sat Jun 04, 2011 7:25 pm    Post subject: Re: Contracts stating 3.3% (or higher) tax rate Reply with quote

duke of new york wrote:
I think it is pretty well established on this forum that 3.3% is an incorrect but extremely commonly offered tax rate, usually hiding the fact that the employer is trying to hire you as an independent contractor. According to the advice in the contract review thread, when you receive a contract like this, you should immediately point out the tax rate and insist that it be corrected. The employer/recruiter can then either

1. Admit the rate is wrong and correct it, or
2. Argue in the face of overwhelming evidence and refuse to change the contract (or just stop contacting you).

Obviously, in the event of 2, reject the offer and probably stop dealing with the recruiter altogether if there is one. My question is, firstly, does 1 even ever happen? In other words, is it even possible to get a legitimate contract out of an exploitative (or at least shaky) one through negotiation? And if this does happen, assuming the negotiated contract is solid and contains everything you need, should you accept the offer, even in light of the fact that you were originally sent a bad contract, which could reflect on the employer's business ethics in general?

I feel inclined to immediately throw out any offer that initially states an inflated tax rate, but I'm worried that it is nearly impossible to get a fair contract right off the bat, and you just have to arrive at one through negotiation. Obviously I'm not talking about rejecting contracts without negotiating things like hours, pay, and discrepancies in wording, I'm talking about contracts specifically with erroneous tax rates.


Yes number 1 does happen...more usually with public schools but sometimes with hakwons as well. With the wrong tax rate however the problem is twofold. Not only are you paying more than you need to and the director is pocketing the extra, it also encourages him to rip you off in other ways.

Now if I understand you right, you are asking about a situation (hypothetical) in which you were orginally sent a contract with a inflated tax rate but through negotiation were able to get it down to the correct tax rate. And you are asking should you accept that?

Sorry but the answer is there is no way to tell. Some schools will agree to any change you ask for and once you are over there, pull out the orginal unchanged contract and tell you to sign that one or you are fired and will have to find your own way back home. On the other hand some schools will abide by it.
Oh and remember that the recruiter has NO POWER TO AGREE TO ANY CHANGES. They are only a middleman (meeting service). Always be sure to check directly with the school (or teachers there) before signing.
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duke of new york



Joined: 23 Jan 2011

PostPosted: Sat Jun 04, 2011 10:13 pm    Post subject: Reply with quote

Yes, that's exactly what I was asking. Thanks for helping.

Now that you mention that, how can you avoid a hagwon giving you a different contract than the one you agreed upon before you arrive in Korea? Seems like you would be royally screwed--without you signing a contract, the school would not be obligated to reimburse you for your flight to Korea, much less your return airfare. I can't imagine you could hold them to a contract agreed upon before you left, could you?

So unless you wanted to pay for a vacation to Korea out of your pocket, you would be forced to take whatever contract they give you? As dishonest as many hagwons are, why don't they just offer everyone good contracts, then pull the ol' switcheroo as soon as the teacher arrives?

Is there any way to ensure this doesn't happen?
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marsavalanche



Joined: 27 Aug 2010
Location: where pretty lies perish

PostPosted: Sun Jun 05, 2011 3:12 am    Post subject: Reply with quote

I was recently job hunting before settling and only one job interview didn't have the 3.3% tax. I've called them out numerous times, and have only had it changed ONCE (which is the job I'm eventually signed with).

So yes it is possible, although slim to none chance that they will change it (in my experience with interviews).

Either a) They won't budge, which has happened to me multiple times despite me showing them the website where you calculate the CORRECT tax rate
b) They rescind their offer, which has also happened to me since the school KNOWS, if you don't accept it, the next dumbo who didn't do his research will (the funny thing is, I recently received a PM from a teacher getting fired after 1 week asking for help since I blacklisted that same school which had a 5% tax rate, LOL).

My advice would to be assuming you're not tight on time/money keep rejecting crap offers. If they aren't going to meet with you on the correct tax rate, they WILL screw you in other ways. Eventually one good job will come up, albeit longer than you expect. But it's worth it imo.

And good for you for sticking up for yourself. Too many dumb foreigners here taking awful contracts and letting themselves get stepped on.
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duke of new york



Joined: 23 Jan 2011

PostPosted: Sun Jun 05, 2011 7:28 am    Post subject: Reply with quote

marsavalanche wrote:
I was recently job hunting before settling and only one job interview didn't have the 3.3% tax. I've called them out numerous times, and have only had it changed ONCE (which is the job I'm eventually signed with).


So how is this job? Think you're being treated fair now, in spite of the original 3.3% contract they thought was OK to offer you?
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TheUrbanMyth



Joined: 28 Jan 2003
Location: Retired

PostPosted: Sun Jun 05, 2011 6:37 pm    Post subject: Reply with quote

duke of new york wrote:
Yes, that's exactly what I was asking. Thanks for helping.

Now that you mention that, how can you avoid a hagwon giving you a different contract than the one you agreed upon before you arrive in Korea? Seems like you would be royally screwed--without you signing a contract, the school would not be obligated to reimburse you for your flight to Korea, much less your return airfare. I can't imagine you could hold them to a contract agreed upon before you left, could you?

So unless you wanted to pay for a vacation to Korea out of your pocket, you would be forced to take whatever contract they give you? As dishonest as many hagwons are, why don't they just offer everyone good contracts, then pull the ol' switcheroo as soon as the teacher arrives?

Is there any way to ensure this doesn't happen?


Well if you have a contract signed by both parties BEFORE you leave for Korea that is usually a good indication...although not always. Generally speaking public schools are pretty good about sticking to the contract and may even throw in a few extras for free. For example I'm currently on my third public school and although none of the contracts mentioned A/C I was able to get it at each residence (twice without even asking for it...)

But there are also honest hakwons out there that will abide by a signed contract and not give you the shaft as soon as they spy an opportunity. And the "ol' switcheroo' seems to be far less common these days than it was a decade or two ago.

To answer your question...there is no ironclad way to ensure you won't get shafted. Even if you sign with a good hakwon...there is no guarantee that the business won't change hands, go bust, or the owner/students don't develop an irrational dislike to you or your teaching methods...

One last point to keep in mind is that because a school intially offers the 3.3% tax rate it does not mean that they are trying to cheat you. Some honestly believe that is the tax rate while others simply have no clue and go by what they are told at their local hakwon association...which explains their reluctance to change the tax rate. If that is what their hakwon association has agreed on....it would be a brave hakwon owner indeed who went against that.
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