Korean Job Discussion Forums

[Weigookin74]

I copied this from a reply I made on another thread. I think it sums up the independant contractor situation. Then, you can think about it if you should accept it or not.



How does the independent contractor position work out? I am guessing you would need to make over 3 million won a month. (This would be including the money for a housing allowance and compensation to pay for medical, pension, and taxes yourself. You should also have the freedom to work an extra side job.)

My pension deduction is 100,000 and my medical deduction is 75,000. Multiply that by two and that is yours and your employer contribution. Aprox 350 and min of 500 for your rent. Average hakwon salaries range from 2.1 to 2.3 million a month. Using 2.3 as a base, I'd guess you should get at least 3.2 million salary as an indepant contractor. But if your tax is higher, you should get more, plus the hassle of getting pension and medical yourself. So, I would say an independant contractor should earn 3.5 million a month minimum to make it worth it. Then you can make more by working a side job since you are an independant contractor.

If you aren't getting 3.5 as an independant contractor run away. What is your 2 cents worth Ttompatz?

If you are making less than that, you're getting ripped off. (I am using a standard 30 hour - 50 min class - workweek as a standard.)


Accept nothing less people. Read this and heed the advice. If you all refuse it or demand 3.5 million won a month in return for doing it, then you will be ok and companies will stop trying to pull any scams.

[Weigookin74]

PS No tax comes off my pay. I pay it all at the end of the year. It was 800,000 won in February. Benefits and your full salary are taxed now. Independant contractors will pay more than this at a higher rate. But your bank will keep track of your debit transactions, and if you purchase any car insurance, and carry a card to be scanned every time you pay in cash. If you use online banking, you can print out a form for taxes and use these things for a tax deduction and lower what you pay no matter what your rate is.

[Lazio]

[Skippy]

My thought is if yo are going to do the Independent Contractor route, you need to make sure it is legit. What I want is to BE INDEPENDENT not in name but legally and fully too. Meaning if a school says you are an IC then they should be able to give you three things right away

One - full and direct permission to work other places. Caveats are the work must be legal, thus if another hagwon in the mornings if free, but no privates. Possible understanding of no direct working for competition aka working for another afternoon hagwon in the same neighborhood. Details need to be hashed out and written down in contract. NO understandings or unwritten promises or shook upon deals.

Two - Contract is agreed and modified for what is expected. Thus duties are written down. Benefits are agreed upon. Plus if I want, I have control over what is my responsibility. Thus if I want the employer will NOT collect any taxes, pension, or health insurance for me. I will pay those myself. I want no chance of forgetfulness or cheating. Everything is agreed upon and written down.

Three - A presigned release letter likely held by a neutral third party. That release letter will be handed over if one of either party wants to end contract BUT properly. Thus proper notice is given or just cause for terminating contract. Thus if school wants to let me go at 11 months they can properly. Same with me if I want to quit 3 months in, I give notice and get my letter.

If any school wants to make you an IC they must be willing to live by the rules of it.

I could probably think of more demands. Still also weigook74 advice is good, make sure, the math is done. Many schools like to use the IC so they can fudge on the math.

As like with number 2 is know what benefits are agreed upon. Who is responsible for what. If you go IC you would very likely consider going full on responsibility, mean all schools does is pay you money for work. You want airplane ticket you get yourself, apartment, you find and rent yourself. Thus if you are paying for so much your base wage should go up.

[CentralCali]

[Skippy]

[CentralCali]

Skippy: Regardless of what one particular other poster is fond of posting here about independent contractors, the issue now is that E-2 are not factually such and cannot be.

I agree with your viewpoint, though. The school has to start acting like you are independent if they want to gain the benefits of having you as such. And, of course, it has to not only be factual, but legal. As in legal with immigration. Step One: get immigration approval to be your own sponsor. Until that happens, the rest of this is moot.

[Skippy]

[ontheway]

[ontheway]

The second element that is confusing everyone has to do with the word "Independent" within the context of being an Independent Contractor.

Like all words with a legal definition, that definition can be defined in statute, in regulatory rulemaking, by the ruling of a court, or through common law. It is not, however, defined by a dictionary or the minds of casual observers, such as uninformed Dave's posters.

In Korea, at the present time, the functioning regulatory use of the term "independent" as it pertains to being an IC is very loose. An IC can be legal while being restricted to a single workplace. This may seem contradictory, and it is the most likely and optimal place for reform to take place, but it is what it is at present.

It would make sense that the rules shoud be such that an IC has the option to seek and obtain other jobs and not be restricted to a single place of work. Of course, there are confidentiality limitations that may preclude providing the same services for direct competitors - imagine a systems design specialist providing the same design patent work for two contacting businesses - so some restrictions must not be prohibited. Even this change, must be wisely considered and cannot be undertaken blithely.

A bit of US history regarding ICs would help all to understand.

In the US, until the latter part of the 1980s, the Independent Contractor rules were wide open. Essentially anyone could be declared to be an IC. In a given office you could have two secretaries working side by side - same duties, rules, hours and nearly the same pay (other than benefits affected by the IC status) - yet one would be legally working as an employee and one as an IC.

IC status in the US allowed the employee to pay lower taxes. The IC worker often would negotiate (or the business would offer) to have their pay augmented by the amount of Social Security tax due by the employer and maybe a bit more. Then the IC worker would pay the full amount, however, for an IC the full amount was 1.5 times not double, so a major savings would result. Likewise, the IC worker would have other obligations but the opportunity for greater deductions on their income taxes.

So, the IRS, in a bid to round up more money for the treasury and for the bankrupt SS coffers tighted up on the IC rules. (Remember, Social Security has been legally bankrupt since the mid 1950s. This is known to all except the general public.) The IRS set a series of tests to determine if an IC was truly an IC. The most important one was, as has been mentioned here numerous times, that the worker must be able to take other jobs.

The IRS was required to grandfather in all those workers who were already registered as ICs in the US. They cannot make retroactive law. So a generation of favored individuals was able to continue their work. However the tax gap between self employed or ICs and employees for SS payments was later closed which ended one of the primary motivations.

The IRS also used coercive means to force grandfathered employees and/or businesses to give up their IC status or IC workers. As an accountant this was one of my areas of speciality - guiding individuals through the maze of coercive tactics. Some prevailed and were able to maintain their IC status, some had to surrender to the IRS, especially where the IRS had something to extort the desired behavior from the victim.

In the end, the IRS went too far and many opportunities for self employment have been closed by the overly stringent IC rules. This has caused a permanent uptick in the level of structural unemployment that is considered full employment. About 0.5% to 1% point of the structural unemployment rate is a result of overly restrictive self employment rules issued by the IRS. On an aggregate basis this is an economic disaster, but it was generated by the avarice of government for ever increasing revenues to fill an ever increasing unfunded liability gap - now over $110 trillion in the US.

Unfortunately, this has meant the the overly tight US rules have prevented hundreds of thousands of workers from actually working in areas where they could be gainfully employed as ICs, jobs where common sense tells us that workers generally can be truly independent and should be allowed to be ICs: as electricians, plumbers, bricklayers and stonemasons, carpenters and other construction trades, day laborers, cleaning and maintenance services, HVAC installation and repair, and in technical fields such as computer programming, systems design, and computer repair and various architectural and engineering services to name a few. Indivudals who have the financial resources and business acumen to manage their affairs as corporations or to navigate the arcane regulatory enviornment are still able to operate and earn a very good living. However, the marginal service providers who can perform the services but cannot navigate the rules themselves nor afford outside legal and accounting services are left out and left unemployed or underemployed. Such is the nature of faulty government policy.


The only change that would be wise for Korea at the present time would be a requirement that, in order to be recognized by the Tax Office as an IC, an individual must be allowed to take other jobs that do not directly compete with or threaten to make use of or expose trade secrets or confidential matters.

Korea needs to make it easier to be and IC, not harder, and Korea needs to learn to ignore the whining of a handful of uninformed E2 teachers posting on Dave's ESL. Already, some recent changes have been adoped in Immigration rules, MOE rules, and tax rules that have come in part due to whining of E2 teachers that are detrimental to the long-term economic and social future of the Korean people and the Republic of Korea.

[TDC troll]

[Weigookin74]

[fustiancorduroy]

At my job, I specifically chose to be an independent contractor. I don't need health insurance, and having money put into pension does not improve my financial situation now, so I see both deductions as money out of my pocket. Also, the 3.3 percent tax rate is far lower than I would otherwise pay. For me, signing as an independent contractor was a no-brainer.

[Weigookin74]

[ontheway]