Introduction:-

The following lays out the legal framework within which Private individuals (Koreans) run a private school, (hagwon.) n.b. enterprising foreigners can also start a hagwon business if they wish.

It is worth identifying the legal nature of your future Employer, as clearly, some frameworks are better protected than others within the myriad of laws. Whilst the vast majority are Korean owned and run, a few foreign companies/individuals have set up businesses.

This section does not relate to setting up International Schools which are registered in a foreign country

TTI - the 1st 100% foreign owned (Australian) school in Korea (see Business)

Hagwon Types:

Sole Owner:
Registered in one person's name. A Korean national. He is the owner/director/boss. He can be declared bankrupt, yet the school carry on work the next day under the name of a family member. You may have no-one to 'chase' in this case. There are thousands of these legal entities in Korea.

Partnership:
Two or more Koreans.

Incorporated company:
Articles of Incorporation are prepared, which, inter alia, list the Directors, shares issued and value, rules for meetings. Similar in nature to western concepts.

Franchise:
There are some well known franchises in Korea. They are Ewha A.L.S, YBM Education Inc ECC Division, ECY, etc.

Hagwon Owner's Ancillary Obligations:

Owners must process the business registration papers as in any jurisdiction and lodge certain documents with various government departments. All schools are obliged under the law to Register their school with their Local Board of Education Office. Each POE District Office has a Register maintained that records; the school's name, address, staff members names working there, and the fees charged by the school to its students. School fees have a maximum limit that may be charged. There are 5 categories of hogwons, the fifth category relating to owner/teacher and confined to music/sport/ dancing instruction. In this category, the owner is the sole teacher. Of the other four categories, the category depends upon the size of the hagwon, ranging from 1000 square meters or above, (b) 500-1000 (c) 300-500 (d) 100-300. The owner lodges with the District Office of Education various documents, ranging from his business registration certificate, a copy of the building lease if leased, etc. Depending upon which category the business falls under, the owner must pay certain fees. After a hogwon owner lodges the documents with the appropriate District Education Office, an Inspector from that Office will inspect the hagwon and then issue a Certificate to the owner.

Another obligation of the owner, if his school employs 5 or more staff, is to pay contributions to Korean Labor Welfare Organization, pursuant to Article 2 of the Enforcement Decree of Employment Insurance Act. Payments can either be a lump sum yearly, or paid quarterly. The categories of payment are:- Unemployment Benefit, 0.6% shared equally by employer/employee, Employment Security, 0.3% paid by the Employer only, and Vocational Ability Development calculated at 0.1% premium paid by the employer only.

Advice On Choosing an Employer:

Of course, if you are in Korea and applying for a job, there is much direct information you can elicit that helps you in deciding about the viability of your future contract/employer. However, if you are coming from overseas, based upon the wording of an advertisement or unseen recruiter, you may have little verifiable information as to the financial viability of your future employer.

Some simple cost effective steps you can take are:
-try to talk to employees at your future place of employment
-schools with less than 5 permanent employees should be avoided
-try to discover the legal nature of the employer
-find out how many students in the school - less than 150 should raise your concerns
-find out how long your school has been operating - a boom in new schools over the last few years has seen many new operators enter the industry, thus diminishing the student pool per school- established schools tend to have a good reputation and sound capital reserves

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