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If You Need Help Reporting Unpaid Compensation as a Freelancer and Seeking Assistance from the Labor Office, Read This Carefully
Why Is Unpaid Compensation So Common for Freelancers? One of the most frequent problems freelancers face is the non-payment of service fees or compensation. Phrases such as “Let’s settle everything next month,” “The client hasn’t paid us yet,” or “The performance is unclear, so it’s hard to finalize the amount” come up repeatedly. Payment responsibility is often postponed on the grounds that the individual is “not an employee,” or work proceeds without a clearly defined payment structure from the outset. The absence of employment insurance or coverage under the four major social insurance schemes, combined with an environment where it feels difficult to raise issues about non-payment, makes freelancers even more vulnerable. At this stage, however, one point must be clearly understood. The root of the problem is not the freelancer’s status itself, but contracts and compensation structures that were disadvantageously designed from the beginning. Being a Freelancer Does Not Mean “Wages” Are Never Protected Many freelancers facing unpaid compensation conclude, “I’m not an employee, so I’m not protected.” However, legal determinations are not based on the title of the contract, but on the actual nature of the work relationship. Courts consider factors such as whether the user determined the content of the work and exercised substantial direction and supervision during its performance, whether working hours and locations were designated and binding, and whether the individual could independently operate a business—for example, by owning equipment or hiring third parties to perform the work. They also assess whether the compensation constitutes payment for the labor itself, whether a base or fixed salary was set, and whether there was continuity in the work relationship and exclusivity toward the user. When these elements are recognized, there are many cases where, despite a “freelancer” contract, worker status is acknowledged and the issue of unpaid service fees is treated as unpaid wages under the Labor Standards Act. Even if worker status is ultimately denied, that does not mean there is no way to respond. Claims can still be pursued as civil claims for unpaid service fees or compensation. The most dangerous decision is to prematurely rule out these possibilities on your own. Why Handling the Issue Alone Often Makes Things Worse for Freelancers When payment is withheld, emotions can easily take over. However, a single hastily sent message can put the entire response to unpaid freelancer compensation at a disadvantage. Such messages are often used to justify non-payment or are exploited as evidence to evade responsibility. Outcomes vary significantly depending on whether a payment date was specified, how performance-based clauses are interpreted, and what legal meaning is attributed to verbal agreements or messenger conversations. If handled incorrectly, freelancers may be directly exposed to arguments such as “the compensation was never agreed upon,” “performance was insufficient,” or “there is no obligation to pay due to contract termination.” This is not an issue an individual should be expected to endure alone. Without reassessing the underlying structure, unpaid compensation issues for freelancers tend to become prolonged. Decent Law Firm’s Approach to Handling Unpaid Compensation for Freelancers Decent Law Firm does not view unpaid freelancer compensation as a simple matter of payment demands. From the initial stage, we review both the contract and the actual work performed to conduct a detailed analysis of potential worker status. We systematically organize messenger records, emails, and past payment practices to prevent the formation of justifications for refusing payment. Where worker status is recognized, we pursue claims that include unpaid wages, severance pay, and statutory late payment interest (20% per annum under Article 37(1) of the Labor Standards Act and Article 17 of its Enforcement Decree). Where worker status is denied, we shift strategy to claims for unpaid service fees or damages under civil law. There is only one guiding principle. Whether the chosen approach makes it realistically possible to recover the money. If you are a freelancer losing sleep over this issue, remember clearly that you are not alone. If, on the other hand, you treat this matter lightly, even amounts that could have been recovered may be lost, and unpaid compensation can solidify into irreversible financial damage.
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Must-Read if You Want to Avoid Penalties and Administrative Surcharges for Violations of the Fair Trade Act
Why Do We Become Parties to Violations of the Fair Trade Act? Most violations of the Fair Trade Act begin with transactional structures that have been repeated as customary practice. Conditions that have continued for years without question often come to light unchanged during investigations. Many companies assume that the mere existence of contractual provisions shields them from legal liability. However, the Fair Trade Act assesses illegality based not on the formal agreement of the contract, but on the substantive nature of the transaction and the imbalance of bargaining power between the parties. In particular, where the counterparty is in a position of economic dependence and cannot realistically refuse the terms, the conduct may be deemed unlawful regardless of the business operator’s subjective intent. In such cases, the corporation itself and the representative who holds actual decision-making authority may ultimately become the responsible parties under the Fair Trade Act. Key Transaction Structures Targeted by the Korea Fair Trade Commission Under the Fair Trade Act, abuse of superior bargaining position may arise where a business operator is recognized as having a superior position in trade vis-à-vis the counterparty (Article 45(1)(6) of the Monopoly Regulation and Fair Trade Act). If direct or indirect control over pricing, transaction terms, or business operations exists, the situation has already entered a risk zone. Using a superior bargaining position to impose unfair disadvantages on a counterparty—such as by threatening contract termination or suspension of transactions—may be regulated as abuse of superior bargaining position. In particular, discrepancies between internal standards or manuals and actual operational practices themselves can serve as grounds for determining a violation of the Fair Trade Act. Accordingly, the Korea Fair Trade Commission evaluates not only formal documents such as contracts, but also actual trading practices and operational realities in a comprehensive manner. Structures that appeared to be mutually agreed upon on the surface are often interpreted as unilateral control during the course of an investigation. From This Stage, Investigation and Sanction Risks Become Real Fair Trade Act cases may begin through complaints filed by counterparties or through ex officio investigations initiated by the Korea Fair Trade Commission. Once a complaint is received or an ex officio investigation is launched, the Commission may examine transaction records and related materials concerning the alleged violation. For this reason, the response strategy at the initial stage is a decisive factor in determining the outcome. Inaccurate explanations during document submissions, poor internal document management, or inconsistent statements can become fatal grounds for adverse findings. If the degree of violation is not minor, corrective measures and administrative surcharges may be imposed. Where the violation is objectively clear and serious enough to substantially harm the competitive order, criminal referral may follow. When criminal punishment is imposed for violations of the Fair Trade Act, the dual liability provisions may apply, resulting in penalties not only for the corporation but also for its representative officers. This is therefore a matter that must never be taken lightly. How Decent Law Firm Provides Assistance Decent Law Firm works in collaboration with corporate law specialists to practically assess and respond to fair trade risks arising in the course of corporate operations. Rather than limiting our review to formal contractual terms, we focus on actual transaction structures and operational realities, providing assistance in the following ways: Preemptive risk assessments of transaction structures, contracts, and operational practices Clarification of criteria for potential Fair Trade Act violations and advisory on structural improvements Development of response and substantiation strategies for KFTC investigations Practical, industry- and company-size–specific compliance support Fair Trade Act penalties are an area where it is already too late to begin considering solutions after issues have arisen. Assessing whether current transaction practices may fall within the scope of regulation is, in itself, the most realistic and effective form of response.
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Validity of Share Nominee Trust Agreements for Startups
What is a Share Nominee Trust Agreement? A share nominee trust agreement is a contract between the actual shareholder (trustor) and the nominal shareholder (trustee), where the external shareholding structure differs from the internal shareholding arrangement. Why Are Share Nominee Trust Agreements Created? Legal Restrictions: When ownership of shares is prohibited by law or other regulations. Privacy Reasons: To conceal share ownership for practical purposes. Industry Practices: To avoid potential management disputes by consolidating shares under one name while actual ownership is divided among multiple stakeholders. Are Share Nominee Trust Agreements Illegal? No, such agreements are not inherently illegal. Contracts are governed by the principle of freedom of contract, and there are no specific provisions penalizing share nominee trust agreements under the law. Are Share Nominee Trust Agreements Valid? The answer depends on the perspective: Internal Relationship (Trustor vs. Trustee): The agreement is valid. The trustee is bound by the contractual obligations outlined in the agreement, and the trustor can hold the trustee accountable for breaches. External Relationship (Trustee vs. Company): According to the Supreme Court, only the shareholder listed in the company’s shareholder registry is considered the legitimate shareholder. This means the nominee is recognized as the official shareholder in dealings with the company. Importance of a Well-Drafted Share Nominee Trust Agreement For startups, situations may arise where equity is divided among stakeholders but listed under the name of the founder or another nominee. In such cases, the drafting of the share nominee trust agreement is critical. The agreement must clearly define the rights and responsibilities of each party to avoid potential disputes. Key Provisions to Include in a Share Nominee Trust Agreement Clear Identification of Parties: Clearly define the trustor and trustee. Transfer Restrictions: Specify limitations on the transfer of shares. Shareholder Registry: Include clauses regarding the nominee’s entry in the shareholder registry. Liability and Damages: Outline provisions for compensation in the event of a breach. Termination of Agreement: Define the conditions and procedures for contract termination. Practical Note: The effectiveness of the agreement depends on its substantive content rather than its title or formal structure. Each provision must be carefully reviewed for legal enforceability. Relevant Case Law Supreme Court Decision 2013. 2. 14. (2011Da109708) Supreme Court En Banc Decision 2017. 3. 23. (2015Da248342) These rulings underscore the importance of properly drafted agreements and the distinction between internal and external validity in share nominee trust arrangements.
