Korean Job Discussion Forums

[plokiju]

I'm currently having it out with my employers over taxation issues. I am currently being charged 5% for income tax. I have called the tax office who told me that the rate should be 3.3% and the school called the tax office who told then told them I should actually only be charged 3.0%. So the school admits that I am being overtaxed but they point to my contract which says the following:

"Income tax and residence tax (5%) .... will be deducted from employee's salary."

I figure had it said "5% of the salary will be deducted for taxes" I'd have less of a chance but the contract says that income tax is 5% which they knew was not true. I believe it is fraud. Does fraud automatically void a contract under Korean law?

Thanks.

[Grotto]

it only voids the part of the contract that has that clause.

get in touch with the labour board.....they should be taking off your tax within the guidelines of the monthly withholding tax....on a salary of 2 mil its only 1.5%

[plokiju]

Thanks Grotto, I knew I could count on you.

The clause or just the subclause. It's listed under Payment as a subclause (is that right). Would it be section 4 that is void or just 4.3 is basically what I'm trying to ask?

What about this part? The school I work for has 2 locations. The contract says I work at the other one. My ARC card has it right though.

There's also a line that says I will be paid overtime for "any hours exceeding working hours beyond 34 units of 40 minute classes." It doesn't specify per week. Can I be vindictive and get paid overtime for the other 3 weeks I work per month or possibly since the very first week? I don't know whether to be excited about this or not.

[poof]

I don't think it technically 'voids' a contract. You signed this contract and agreed to the terms. It was theoretically your responsibility to be aware of the correct taxation rate before you signed. Your contract and all it's clauses will therefore always stand until it's term ends, or you give in your notice. Thus, either school can admit 'mistake' and reduce future deductions, or you can go to the labor board and make a claim for an overdeduction/embezzlement under the name of 'tax' against your employer.

[kprrok]

This shouldn't void your contract. All it means is that they're withholding more of your pay than they should and you'll get it back at the end of the tax year when you file your taxes. No problem.

BUT....if the school is not paying them to the tax office and you can show that they are deducting it (ie. payslips), then that's a whole other can of worms where you can have some fun with them for what they're doing.

KPRROK

[Squid]

As far as I understood a contract is a whole document, any clause dishonored makes the whole contract null and void.

Have fun with it.

[ontheway]

It is likely that the hogwan is not paying the 5% they are withholding from you, to the tax authorities. It is also possible that they do not know the actual rate they should be withholding. Hogwan associations and some public accountants routinely tell new hogwan owners to withhold 5%. Other accountants and even some government tax office workers believe that the rate should be 3.3%.

As Grotto mentioned, you should use the NTS website to show your boss the correct tax rate. Do not assume that it was fraud, but do show your boss the correct rate and insist on being charged the correct tax rate. You should also ask that your future tax withholding be offset by the money that was already over withheld from your pay.

Treat your boss with respect and let it be a minor error that needs correcting. If you accuse them of cheating, dishonesty or fraud you will create a major problem and you will have much bigger problems as a result.

Since you cannot prove that this was fraud on the part of the hogwan, this does not void any part of your contract. The provision requiring tax withholding must comply with the legal rate, but it is required by law, so all you can do is demand the correct amount be withheld.

[oldfatfarang]

I had exactly the same problem. My contract said 5% and my Hagwon deducted that amount for 14 months. I tried everything to get the Director to reduce my tax deductions to the correct 1.5% (2mil) and to also refund the 750,000 won for 14 months overpaid tax.

After numerous calls to the KNTO (who were very helpful), and the KNTO calling my Director, and my Director lying his face off to both the KNTO and me after every phone call, I got really annoyed.

Eventually, the school reduced my monthly tax to 1.5%, but they didn't refund my overpaid tax. This unpleasant situation continued for months until I told them that I would be taking the overpaid tax as 'paid holidays in lieu'. I took the holidays, wiped THEIR debt, and now only pay 1.5%.
However, this is Korea. My employer punished me by moving me to a new apartment over 2 recycling depots. I am woken up EVERY morning at 6am to the sound of breaking glass.

In short, it doesn't matter what your contract sais. The KNTO tax tables are the law and any provision in your contract can not legally over ride Korean (TAX) law. Good luck.

[plokiju]

Well, the thing that angers me is that my school now knows the correct tax rate or at least knows I'm being overcharged but like to point to the contract that says I agreed to pay 5% so will not refund the "tax" I paid to the hagwon owner or change the tax rate.

I really don't know if they are paying the taxes. When I enrolled in some Korean lessons and showed my boss that to enroll I would have to show some tax forms and other government documents, my boss called and apparently all the seats in the class had been filled. Afterwards though, when it turned out I didn't need the tax form just my ARC and passport my boss told that there were actually some spots available.

I know they don't pay the pension and got some excuse that paying into the pension would burden the school which is not doing well financially. Of course, that didn't stop the boss from taking a 2 week trip to Greece and Egypt with his family. I know they paid my recruiter late and consistently "forget" to pay overtime. It's just hard to believe the financial situation when there's a Jaguar sitting on the other side of the window and they plan on hiring additional foreign teachers.

My contract also says the working hours are Monday to Friday but was told I needed to work Saturdays which I agreed to since the teacher that worked Saturdays had 30 classes v. 37 M-F (34+ is overtime). Then during the summer camp, I was screwed out of money since they calculated the pay for those classes with the 34+ classes per week as being overtime despite being told that those classes would be paid separately. I told them I wanted to be paid overtime after 30 classes to avoid that happening again. They said that was impossible but when I threatened to stop teaching Saturdays since it wasn't in my contract, suddenly they changed their minds. At this point, the guy in charge of dealing with foreigners told me that the contract used to say Monday-Saturday but they couldn't find any teachers willing to sign so the M-F part was basically a trick. The amount of taxes they owe me isn't that big since I'm only at the 4th month but I'm just not willing to let them get away with their blatant dishonesty.

[plokiju]

So here's what the labour standards act says:

Article 26 (Violation of Conditions of Employment)
(1) If any of the conditions of employment set forth in accordance with Article 24 [Statement of Terms of Employment] is found to be inconsistent with the actual conditions, the worker concerned shall be entitled to claim damages resulting from the breach of the conditions of employment or may terminate the labor contract forthwith.
(2) If a worker intends to claim indemnity for damages in accordance with paragraph (1), he may do so with the Labor Relations Commission. If a labor contract has been terminated, an employer shall pay travel expenses to a worker who changes his residence for the purposes of securing new job.

Here's Article 24 just for clarity:
Article 24 (Statement of Terms of Employment)
An employer shall clearly state remuneration, working hours, and other terms of employment to a worker at a time when a contract of employment is concluded. In this case, matters as to each constituent item or remuneration, and the methods of calculation and payment shall be specified according to the methods prescribed by the Presidential Decree.

So if I'm correct, I believe the tax rate given to me in the contract (5%) does not match the 'actual conditions' (set forth under Korean tax law). The working hours were also not as stated in the contract. Am I in the free here? What do you think?

[dulouz]

Technically, there is no difference between the two concepts.