I just read a great post on an even better blog entitled the New York Small Business Law Blog. The blog post – Tips on Making your Independent Contractors Audit Proof – notes that the feds are increasing their efforts to crack down on misclassified independent contractors.
They advise the attorney gave on how to avoid the scrutiny of the government would have also been useful for a client of ours that ran into an issue with the Korean National Tax Service and the Ministry of Labor a few years back.
The client, who was working with a large ubiquitous Korean law firm, lost a costly battle with the Ministry of Labor and National Tax Service because of a naively drafted contractor agreement and poor advice given by a team that consideres itself the leading team in labor law. Never believe those publications that rate law firms. The blog post reawakened my memory of this incident.
The practical advice noted in the New York Small Business Law Blog can also be useful for your independent contractor needs in Korea.
•Keep them away from your “real” employees and don’t dress and equip them like employees, i.e. don’t give them company business cards, don’t let them use your company letterhead, don’t let them perform the exact same tasks that your employees perform.
•Keep the independent contractors on a long leash (give them their “independency”). They should be able to control when they can work and how they work; Avoid micro-managing their work.
•Don’t forbid them from working for other employers on similar projects. But you could require them to at least inform you when they do, to give you the option to limit their engagement at that time.
•Put all of the above into an independent contractor agreement, a.k.a. consultant agreement. “”
- Korean Independent Contractor Risks: Korean Labor Standards Act Basics
- So you Want to Hire a Korean Independent Contractor?
- Korean Manufacturing/Sub-Contractor Agreement Payment Terms Matter: Don’t fall for the “Service” Trap
- Korea’s Fairness in Subcontracting Transactions Act Amendments of July 2021
- Status of Interns Under the Korean Labor Standards Act: Employees Entitled to Severance/Minimum Wage?
- English-Speaking Korean Labor & Employment Lawyers in Korea
- Korean Commercial Liens versus Korean Civil Liens
- Small Business Compliance in Korea: No Not Only for the Big Boys
- Guidelines on Rules of Employment & Guidelines on Fair Personnel Management Withdrawn by Korean Ministry of Employment
- Mandatory Retirement Age of 60 may be Mandatory for Most Companies in Korea