Korean Job Discussion Forums

[HarryMorgan]

Bear with me, if you care to. I�ve kind of come into a strange situation and want to make sure that I handle it in the best possible way that I can. I�ve been working at a big chain hagwon where I�m the only western teacher for a little over a month. The school itself has only been open 2-3 years and the person in charge is not exactly the best manager out there, though very nice.

I made a foolish mistake initially by signing a contract with a 3.3% tax rate, and realized it almost immediately after. I had made sure my contract referred to me as �the employee� and not an �independent contractor,� but I messed up by neglecting to make sure the tax rate was what it should be at 2.1 mil won, so don�t get on me for that, please. From what I read a while back, as long as it doesn�t refer to you as an independent contractor, you are OK, so I hope that information is correct.

Anyway, as I rightly assumed, I haven�t been signed up for pension or the NHIC public healthcare plan, which are both legal and mandatory, from what I�ve also read. I wrote her a note explaining the rates and documentation I would be needing from her as soon as possible, and I got offered a bump from 2.1-2.3, though I would still be taxed at 3.3%. She also told me I could pick a private health care provider. I think the teacher I replaced had been getting unknowingly hosed this way for 3 years (only 1 at this school) without realizing it, because she never mentioned this to me, and she was getting paid 2.3 in her third year; though it should be worth noting that she received her severance in full as well as her flight home.

I�m not really sure what to do at this point. I�m fairly certain the law is on my side and that I could obviously drop this on them at any time. I�m also fairly certain that the cost of obtaining me in the first place and the fact that I�m the only western teacher at the school gives me a bit of leeway. But am I right in thinking that? I mostly enjoy the job, it�s very lax comparatively, the people are good, and the location is perfect. The apartment sucks though.

My concerns/questions are these, and I�m sorry if I�m off the mark on anything:

1) I�m trying to figure out how things will even out with the extra 200,000 won, minus what I should be having taken out/receiving in future pension, plus the extra taxation. Could someone help me out with that? At 2.1, the tax should be just under 26,000 a month, I believe, and the pension 4.5% split between both parties. I�m confused about pension though� aren�t they obligated to pay it no matter what? I�m not even sure if this benefits me in the end, however.

2) I�m obviously losing regarding the public vs private healthcare, though I do have health insurance in America if anything horrible happens, but how much am I losing out on service wise? And price wise. I�m unsure how much/whether I�ll be paying for the private insurance, but I�ll ask about that.

3) This cannot be a generally positive thing for my personal job security, but to what degree, I don�t know. Like I said before, the teacher I replaced got her severance and flight home, but it�s unknown to me what problems could arise from this situation (especially after the six-month mark), so any ideas? Eleven month firing in my forecast? What other concerns should I have?

I would like to either figure out the best way to handle this situation or decide if I should make a run in a month or two and find something, well, a bit more legal. Any input would be appreciated and I apologize for the long winded post. My inclination is to think that this doesn�t necessarily have to be a horrible situation if I can work some perks out for myself and come out in the positive monetarily. But there are a great deal of negatives that could also arise. This is pretty new information to me so I�m trying to weigh the pros and cons. Thanks for any advice.

[CarolinaTHeels]

How much should tax be for 2.3 mil won? I just sent in a counter offer for this hagwon to up the pay from 2.2 to 2.3. They initially offered 2.1 but after I said I aint working that many hours for 2.1 they bumped it to 2.2. That aint cutting it either so I told them to bring it to 2.3 and I might sign.

[koreatimes]

I am seeing 3.5 mentioned on many sites, are you sure 3.3 is that bad? Do you have sites which are 3.1 instead?

[northway]

The tax rate isn't nearly as big of an issue as health insurance and pension.

[CarolinaTHeels]

[ontheway]

[ontheway]

For the OP. It is obvious from your post that your employer is willing to pay you more in a raise than what you are losing by not being enrolled in pension. You will also save on insurance, unless you have a major illness or injury. Then it could cost you more.

Your employer is apparently keeping part of her school in the underground economy, so she wants you to work in the underground economy. She is willing to pay you more than whe would have to if she enrolled you legally. This is because her big gain comes from cheating on her taxes and not because she wants to cheat you (although she was apparently willing to do that until you noticed).

By keeping you off the books, she can keep a larger portion of her revenues off the books as well and her tax savings is much bigger than the small sums a single teacher worries about.

Since the previous teacher got her airfare and bonus, chances are you will as well. If you don't mind being in this underground (illegal) economy, then you'll probably gain as well.

[HarryMorgan]

Thanks ontheway, good information. I was aware of the likely tax scheme I was jumping into even before I walked in the door, I was just trying to do my job and wait for the first pay check before I called anyone out on the details. The note I gave to the principal with all the correct figures obviously freaked some people out. I'm just trying to put myself in a position to benefit as much as possible now, I guess.

For others, this site will help you calculate the actual tax rate:
http://www.nts.go.kr/eng/help/help_52.asp?top_code=H001&sub_code=HS05&ssub_code=HSE2

I know 3.3% is oft quoted, but, from the little that I know, it should be much lower than that unless you're making over 3 million won/month. When I read that two days after sending my documents to Korea it made me cringe, as I realized the crap I had possibly set myself up for. But the job is actually pretty good for someone in their first year, I'm never at the school for more than 7 hours total, never attend meetings, never do extras, no one is in my classes but me and the Korean kids, and I'm generally left alone.

I'm not quite sure how much I'll be benefiting in terms of pension though, if I stay the whole year or quit after the six-month mark. I'll do a little research tomorrow. And I'm equally unsure about how much more I should ask for. I was offered a toaster, toaster oven, wifi, and a new TV... I feel like I should just ask for a new apartment, a bit larger than the coffin I presently live in. The last part of that is kind of a joke, and it's very central Seoul so I understand the expenses (though the principals' family owns the building), but as long as I have some weight on my side, it might not hurt to ask.

Yeah, I'm fine with the underground economy thing as long as it benefits me; and that's what I figured, as ontheway backed up. I would like to know more about private vs public healthcare but I'll do some research on that tomorrow as well. Likewise with the pension stuff, which is something I should know much more about before posting here about it. Just pretty sudden and I want this post to hit a weekday before it dies.

Thanks for input. I'll try to retrieve the pension/health care info on my own tomorrow if I can, but if anyone has alternative information/advice, please post it here. Happy weekend, people.

[koreatimes]

[Mr Lee's Monkey]

The OP says, "yeah I'm fine with the underground economy thing as long as it benefits me." This is one reason directors and hagwons cannot or will not establish or comply with standards.... I am taking a job for which I had to negotiate standard benefits because the guy before me thought beer money was more important than health insurance, at least until he was hit by a car. The director thinks he's doing me a big favor by providing health care and pension, and wanted to offer very low monthly wages because of it. The director seems like an awesome guy, so I'm willing to accomodate what I think is a learning curve on his part and mine. My point is that while the OP is only looking out for himself, what happens to the teacher who follows him?

[SeoulNate]

[CarolinaTHeels]

So how much should the tax be for someone making 2.2 mil won? 3.3%?

The 3.3% doesnt include the pension and national healthcare does it?

All things equal there should be a set rate for most NET's?

[meangradin]

As an owner, let me give me chime in here. According to our local tax office, the tax rate is 3.3% and if you pay less than that, you could receive a bill later. I know a guy who underpaid for the last few years and just received a bill for over a million won. Secondly, pension and medical are the law and it is in your best interest to have them. However, the pension plan does make my life difficult in an unexpected way. Specifically, most Korean teachers refuse to pay in to the pension plan, but once you have the plan for the E-2 worker, every employee must be in the plan, including bus drivers and even the owner. Therefore, most applicants refuse to work for our school, regardless of pay, which is horrible for my business, as the reality is that a hagwon lives and dies by the quality of its Korean teachers, not the FT.

[SeoulNate]

[meangradin]