8/07/2014

So you Want to Hire a Korean Independent Contractor?

We receive many requests for drafting independent contractor agreements and we, normally, decide with the client, that it is better to have a distribution or agency agreement with a company, because of uncertainity in Korean Labor & Employment law and other reasons.  Korea's court decisions on Korean Labor Law is predictable as the Korean weather and the standard to determine if one is an independent contractor or an "employee" is as clear as a Beijing sky.

The factors a Korean Court will, typcially, look at to determine if one is an "employee" are:
  • Does the company have decision making power over the content of work of the individual?
  • Are company rules of employment applied to the individual?  
  • Does the individual have business risks associated with working with company? 
  • Does the company substantial control over the work processes of the individual?  
  • Does the company set the time and date and other specifics of work of the individual?  
  • Does the company own the work assets of the individual?
  • Can individuals use a third party to replace the work of the individual?
  • Are earnings based on work - not success/sales?
  • Does individual near exclusively depend on the work from the particular company?
  • Is the work with the company continuous,thus, not temporary?  
  • Is the individual deemed an employee under the Social Security System? 
The "independent consultant," also, when explained the reality - finds this type of arrangement more advantageous.  Normally, having a business, allows, tax benefits for the independent consultant. 

We have written a good deal on this blog on distribution agreements in the past.  Please take a look at these, below, articles for more details on doing business in Korea, Korean employment law and distribution and agency agreements.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.