[HOAM Foreign Law Column] Illegal Contract Penalties: Can They Charge You for Quitting?

Many hagwon contracts contain frightening clauses such as: "If you quit before the end of the year, you must pay $2,000 for training and recruitment costs." Under the Korean Labor Standards Act (LSA), these clauses are almost always ILLEGAL and unenforceable. You cannot be forced to pay for your freedom to resign.

1. Prohibition of Predetermined Damages

Article 20 of the LSA strictly prohibits an employer from entering into a contract that pre-sets an amount of damages or a penalty for a breach of an employment contract. Even if you signed a contract with a 'Quitting Fee' or 'Penalty Clause,' those specific sections are legally void from the moment they were written.

2. Recruitment and Training Costs

Employers often claim they spent a lot of money to bring you to Korea (flights, housing setup, agency fees). While they can technically sue for actual, proven damages if you quit without notice, they CANNOT deduct these costs automatically from your pay or force a fixed penalty amount. Most 'training' at hagwons is considered part of the business's normal operating expense, not a debt owed by the teacher.

3. The 'Bonded Labor' Trap

The reason these penalties are illegal is to prevent 'Bonded Labor.' If an instructor is afraid to leave a toxic or abusive environment because of a $3,000 penalty, their basic human rights are being violated. The Korean government takes this very seriously to protect the rights of foreign workers.

4. What if They Already Deducted the Money?

If your hagwon has already withheld part of your salary as a 'penalty,' this is Wage Arrears. You should immediately file a petition with the Ministry of Employment and Labor. The fact that you signed a contract agreeing to the penalty does not make it legal.

5. Why Hoam Law Firm?

Hagwon owners often use these illegal clauses as a tool of intimidation. Hoam Law Firm provides the legal backing to call their bluff. We send formal notices to hagwons explaining why their penalty clauses are void and assist you in recovering any illegally deducted wages through the Labor Office or civil litigation.

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