Embassy of the United States

Teaching English

Contracts

Foreign instructors in Korea occasionally have contract disputes with their employers.  Many have observed that in Korea, a contract appears simply to be a rough working agreement, subject to change depending on the circumstances.  Many Koreans do not view deviations from a contract as a breach of contract, and few Koreans would consider taking an employer to court over a contract dispute.

Instead, Koreans tend to view contracts as always being flexible and subject to further negotiation.  Culturally, the written contract is not the real contract; the unwritten or oral agreement one has with one’s employer is the real contract.  However, many employers will view a contract violation by a foreign worker as serious, and will renege on verbal promises if they feel they can.  Any contract should be signed with these factors in mind.

BASIC FEATURES OF MOST TEACHING CONTRACTS 
Contracts for teaching positions should include provisions for the following: salary, housing, airplane tickets home, working hours, class size, severance pay, taxes, and medical insurance.  If these items are not included, one should negotiate until they are.  Information on these topics is provided below.  When in doubt, ask.  Get it in writing, and remember that only the Korean-language version of the contract is legally binding in Korea.

SALARY 
Most contracts provide either for a set monthly salary or for a salary based on the number of hours taught.  In any event, a guaranteed monthly payment should be included in the contract.  Payment dates, methods, and currency should be specified in advance.

HOUSING 
Few contracts provide for housing in Seoul.  This can be a serious problem, as housing in Seoul is among the most expensive in the world.  Housing options include key money (yearly deposit), monthly rent, shared housing, dormitories, lodging houses, and inns.  If your institute does not provide housing, it should at least be able to help you find it and negotiate the appropriate rent and utility payments.  Teachers who have been promised housing may want to request photos, floorplans or furniture inventories in advance.  Koreans have very different ideas of what ‘western’ and ‘furnished’ housing means.  ‘Furnished’ might only mean a linoleum floor and a 2-burner stove.  ‘Western’ usually just means an apartment with an indoor bath.  Koreans measure housing space in pyong.  One pyong is approximately 36 square feet.  Pyong measurements usually include the front porch, utility room, etc.  Monthly rent can run from US $500 to .US $2,000 for a modest apartment.

KEY MONEY SYSTEM (CHUNSEE) 
Key money (chunse) is a year’s rent paid in advance, with no monthly rent payment.  At the end of the contract period, the renter receives the chunse back without interest.  Chunse can be risky because property ownership may change in the middle of the contract period, or an unscrupulous owner may simply decide that the foreigner is in no position to fight for the chunse.  One can reduce this risk by having the employer agree to pay the chunse.  Chunse payments run from a minimum of 30 million won (US $30,000) for a studio in a modest part of town to 500 million won (US $500,000) for a small apartment in one of the wealthier neighborhoods.  Wolse is a variation of chunse.  The renter pays a certain amount per month plus an initial deposit, which s/he receives back when s/he moves out.  The same caveats apply as with chunse.

DORMITORIES, LODGING HOUSES (HASUK) AND INNS (YOKWANS)
Yonsei, Ewha, Seoul, Hanyang, Konkuk, and Hankook Universities all have dormitory accommodations available.  In addition, the Korea Research Foundation runs an International House for foreign students.  Sometimes these dormitories can accommodate foreign instructors, but they usually only accommodate their own regular faculty.  Rent for a dorm typically runs from 650,000-700,000 won (US $650-700) per semester for a double room (singles are rare in Korea; Yonsei University, for example, does not offer them at all).  Shared housing is a popular alternative, but you should be careful when choosing roommates and spell out financial arrangements in advance.

Lodging houses (hasuk) are popular with young Koreans in college or just starting their professional careers.  Single rooms run about 300,000-450,000 won per month (US $300-450), and some include Korean-style breakfast and dinner and laundry machines.  A disadvantage is the lack of privacy.

Another option is staying with a local family.  This can be an excellent opportunity to experience Korean life and culture, but again, the lack of privacy can be a disadvantage.  Most instructors who live in such homestays eventually move into private accommodations.

Finally, some people rent rooms in inns (yogwans) on a monthly basis.  This is similar to staying in a lodging house, at about the same cost, but with no food provided.  Inns offer far less security and less privacy than lodging houses as well.  Some yogwans cater to short-term clients and criminals, so staying in one may cause some Koreans to treat you with a lack of respect.

TICKETS HOME
Some institutes promise to provide tickets home upon completion of a contract or to reimburse teachers for the trip to Korea.  One should be aware that sometimes this commitment is not honored.  Consider requesting an open-ended round trip ticket in advance.

WORKING HOURS
Most institutes require foreign instructors to teach five to six hours per day, Monday through Friday, and some also ask instructors to teach Saturday morning as well.  Universities will usually require 10 to 15 hours per week plus participation in student activities, such as editing school newspapers.  Research centers usually require 40 hours per week, with occasional uncompensated overtime.  Saturday morning is a normal part of the Korean work week.  Teachers may have to teach early morning or late evening classes to accommodate working students.

CLASS SIZE
This is usually not spelled out in the contract.  Private institutes usually have classes between 10 to 20 students, while universities can have as many as 100 students in a class.

SEVERANCE PAY (Taechikum)
The Embassy receives many inquiries and complaints about severance pay issues.  It is a good idea to broach this subject early in your employment, and to be prepared for resistance.  By Korean law, discussed below, all full-time employees – Korean or foreign – are entitled to receive severance pay of one month’s salary for each year of employment.  Employers cannot ask you to waive this, nor can they get around it by employing you on an 11-month contract.  However, Korean courts have ruled that unless a hakwon instructor teaches 40 or more hours per week, as spelled out contractually, he or she is not ‘full-time’ and is not eligible for severance pay.

The Ministry of Labor has jurisdiction over severance pay matters.  In Korea, dial 1350.  If calling from the U.S., dial 011-82-1350.  The Ministry of Education may also, at your request, call employers to remind them of their legal obligations.  If you have exhausted all other avenues and feel that you need to take legal action, the Embassy can provide you with a list of local attorneys.

Severance pay rights are covered by the Labor Standards Act of the Korean Legal Code. English language translations of the Code are available at the Kyobo Bookstore, located near the Embassy. The key provisions of the Labor Standards Act as they relate to severance pay include the following:

Article 28 (Retirement Allowance System): 1) An employer shall establish a system by which average wage of not less than thirty days per year for each consecutive year employed shall be paid as retirement allowance to a retired employee. Provided, however, that this shall not apply in cases in where the period of employment is less than one year.

Article 5 (Equal Treatment): No employer may include any discrimination in the terms of labor conditions because of nationality, religion or social status.

Article 10 (Scope of Application) stipulates that the act applies to all enterprises except small family businesses, domestic servants, and those exempted by Presidential decree.

KOREAN TAXES
Most foreign employees are required to pay Korean income taxes, which are generally withheld and paid by the employer.  Teachers working for colleges or universities are sometimes entitled to an exemption from paying Korean taxes for up to two years because of the U.S.-Korea Tax Treaty.

Article 20 of the Korean tax code: An individual who is a resident of a contracting State, and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State on his remuneration for such teaching or research.

The Tax Office maintains a list of institutes that are tax exempt.  This provision applies only to teachers employed at universities, research centers, or university-operated institutes (teachers at hakwons and private companies have to pay taxes).  The General Affairs section of the university or research center should be able to apply for the exemption.  If the institute wrongly withholds taxes, it is required to pay a refund.

For guidance on these matters, contact the Korean Tax Office, as it has been helpful in arranging compliance with these provisions.  The office also publishes an English language Income Tax Guide for Foreigners.  This guidebook comes out in April of each year and is available free from any tax office.   The Korean tax year runs from May 31 to the following May 1, with May income estimated.  In most instances, one’s employer files the appropriate tax forms, but if the employer does not file, the individual must do so.

If you believe that your employer is not complying with Korean tax laws, your first step should be to discuss the matter with him or her.  If that does not work, you should discuss the matter with the Korean Tax Office, International Taxation Division, 397-1447, or the nearest Korean Tax Office.  If the problem is still not solved, you may wish to contact an attorney.

PENSION PROGRAM
Foreigners living in Korea are required to pay into the national pension plan, just as foreigners living in the U.S. must pay into Social Security.  An agreement effective April 1, 2001 between the U.S. and Korea improves Social Security protection for people who work or have worked in both countries.  For more information on this agreement, please see the website for the Social Security Administration, www.ssa.gov.

These payments are a common source of concern for ESL teachers.  You can learn more about how the system works in Korea at www.npc.or.kr, or call the general affairs department of the National Pension Center at 02-2240-1085.  It is a good idea to apply for pension a month before leaving the country.  You will need to provide your U.S. passport, certificate of alien registration, bank book or number, copy of one-way ticket to home country, and contact number and email address.

U.S. TAXES
Americans residing abroad are not exempt from filing requirements, but are, under certain conditions, entitled to exclusions on foreign-earned income.  More information on overseas income and filing is available from the IRS website www.irs.gov.  Federal tax forms can be downloaded from the IRS website (only a limited number of copies for the federal tax forms are available at the Embassy).

CONTACTING THE IRS

PHONE SERVICES
          Individuals  1-800-829-1040
          Business     1-800-829-4933
          Available 24 hours
          Philadelphia Service Center   1-215-516-2000

ELECTRONIC SERVICES
          IRS Home Page: www.irs.gov

MEDICAL INSURANCE
Foreign instructors are entitled to Korean medical insurance through their employer.  This should be clarified at the time of acceptance of employment.  Employers often buy the minimum policy required, which provides about 400,000 won (about $400) worth of coverage.  Those desiring more coverage should negotiate with their employers or buy their own.

Medical care in Korea is generally good, but while not as expensive as in the United States, can still be costly.  Many practitioners and hospitals will not accept overseas health insurance and may require payment before treatment.  It is therefore very important for individuals to make sure that insurance or funds are available in case medical care is needed.  The Embassy maintains a list of English-speaking medical and dental care providers in Korea, as well as a list of insurers willing to write policies for Americans residing in Korea.

Another option is staying with a local family.  This can be an excellent opportunity to experience Korean life and culture, but again the lack of privacy can be a disadvantage.  Most instructors who live in such homestays eventually move into more private accommodations.

Finally, some people rent rooms in yokwans (inns) on a monthly basis.  This is similar to staying in a lodging house, at about the same cost with no food provided, but offers far less security and less privacy as well.  Some yokwans cater to short-term clients and criminals, so staying in a yokwan may cause some Koreans to treat you with a lack of respect.

TICKETS HOME 
Some institutes promise to provide tickets home upon completion of a contract or to reimburse teachers for the trip to Korea.  One should be aware that sometimes this commitment is not honored.  Consider requesting an open-ended round trip ticket in advance. Please note that the Embassy does not have funds to help you obtain tickets home.

WORKING HOURS 
Most institutes require foreign instructors to teach five to six hours per day, Monday through Friday, and some also ask instructors to teach Saturday morning as well. Universities will usually require 10 to 15 hours per week plus participation in student activities such as editing school newspapers.  Research centers usually require 40 hours per week, with occasional uncompensated overtime.  Saturday morning is a normal part of the Korean work week.  Teachers may have to teach early morning or late evening classes to accommodate working students.

CLASS SIZE 
This is usually not spelled out in the contract.  Private institutes usually have classes of between 10 to 20 students, while universities can have as many as 100 students in a class.

SEVERANCE PAY (Taechikum) 
The Embassy receives many inquiries and complaints about severance pay issues.  It is a good idea to broach this subject early in your employment, and to be prepared for resistance.  By Korean law, discussed below, all full-time employees, Korean or foreign, are entitled to receive severance pay of one month's salary for each year of employment.  Employers cannot ask you to waive this, nor can they get around it by employing you on an 11-month contract.  However, Korean courts have ruled that unless a Hakwon instructor actually TEACHES 40 or more hours per week, as spelled out contractually, he is NOT 'full-time' and is NOT eligible for severance pay.

The Ministry of Labor has jurisdiction over severance pay matters.  The Ministry of Labor's general number is (02) 503-9727.  The International Labor Policy Division of the Ministry of Labor (Tel 02-504-7338) may, at your request, call employers to remind them of their legal obligations.  The Ministry of Education may, at your request, call employers to remind them of their legal obligations.  If you have exhausted all other avenues and feel that you need to take legal action, the Embassy can provide you with a list of local attorneys.

Severance pay rights are covered by the Labor Standards Act of the Korean Legal Code.  English language translations of the Code are available at the Kyobo Bookstore, located near the Embassy.  The key provisions of the Labor Standards Act as they relate to severance pay include the following

Article 28 (Retirement Allowance System) 1) An employer shall establish a system by which average wage of not less than thirty days per year for each consecutive year employed shall be paid as retirement allowance to a retired employee. Provided, however, that this shall not apply in cases in where the period of employment is less than one year.

Article 5 (Equal Treatment) No employer may include any discrimination in the terms of labor conditions because of nationality, religion or social status.

Article 10 (Scope of Application) stipulates that the act applies to all enterprises except small family businesses, domestic servants, and those exempted by Presidential decree.

KOREAN TAXES 
Most foreign employees are required to pay Korean income taxes, which are generally withheld and paid by the employer.  Teachers working for colleges or universities are sometimes entitled to an exemption from paying Korean taxes for up to two years because of the U.S.-Korea Tax Treaty.

Article 20 of the Korean tax code states  An individual who is a resident of a contracting State, and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State on his remuneration for such teaching or research.

The Tax Office maintains a list of institutes that are tax exempt.  This provision applies only to teachers employed at universities, research centers, or university-operated institutes.  (Teachers at hakwons and at private companies have to pay taxes.)  The General Affairs section of the university or research center should be able to apply for the exemption.  If the institute wrongly withholds taxes, it is required to pay a refund.

For guidance on these matters contact the Korean Tax Office, as they have been helpful in arranging compliance with these provisions.  They also publish an English language Income Tax Guide for Foreigners.  This guidebook comes out in April of each year, and is available free from any tax office.  The Korean tax year runs from May 31 to the following May 1, with May income estimated.  In most instances, one's employer files the appropriate tax forms, but if they do not file, the individual must do so.

If you believe that your employer is not complying with Korean tax laws, your first step should be to discuss the matter with him or her.  If that does not work, you should discuss the matter with the Korean Tax Office, International Taxation Division, 397-1583/4, or the nearest Korean Tax Office.  If the problem is still not solved, you may wish to contact an attorney.

PENSION PROGRAM 
Foreigners living in Korea are required to pay into the national pension plan, just as foreigners living in the U.S. must pay into Social Security.  An agreement effective April 1, 2001 between the U.S. and Korea improves Social Security protection for people who work or have worked in both countries. For more information on this agreement, please see the website for the Social Security Administration

These payments are a common source of concern for ESL teachers. Follow this link to learn more about how the system works in Korea (on the main page is a link to an abbreviated version of the site in English), or call the general affairs department of the National Pension at 02-2285-2618.

U.S. TAXES 
Americans residing abroad are not exempt from filing requirements, but are, under certain conditions, entitled to exclusions on foreign-earned income.  More information on overseas income and filing is available from the IRS publications "Tax Guide for U.S. Citizens Abroad" and "Overseas Filers of Form 1040."  These and other Federal tax forms are available at the Embassy, or may be downloaded at U.S. Federal Tax Forms. more

MEDICAL INSURANCE 
Foreign instructors are entitled to Korean medical insurance through their employer.  This should be clarified at the time of acceptance of employment.  Employers often buy the minimum policy required, which provides about 400,000 won (about $500) worth of coverage.  Those desiring more coverage should negotiate with their employers or buy their own.

Medical care in Korea is generally good, but, while not as expensive as in the United States, can still be costly.  Many practitioners and hospitals will not accept overseas health insurance, and may require payment before treatment.  It is therefore very important for individuals to make sure that insurance or funds are available in case medical care is needed.  The Embassy maintains a list of English-speaking medical and dental care providers in Korea, as well as a list of insurers willing to write policies for Americans residing in Korea.