MyAIDevelopment · Product · Operations notes

Hiring · Social Insurance · Freelancers

This is general information, not legal or tax advice. Rules change often, so verify with the official source or a licensed tax accountant (semusa) or lawyer before acting.

The moment you bring in your first person, you become an employer or a client. The form of the working relationship changes tax, insurance and labor-law obligations all at once.

Employee or Freelancer

It is decided by how the work is actually done, not by the contract title. Supreme Court case law looks at the following factors of subordinate employment (summary of Ministry of Employment and Labor guidance).

Factor Facts pointing toward an employee
Work content The employer decides what the work is
Direction and supervision Specific, direct direction while doing the work
Time and place Working hours and place are set and binding
Substitutability Cannot hire a third party to do the work instead
Tools Equipment and tools are provided by the employer
Pay Pay is for the labor itself, not for a result
Continuity and exclusivity Continuous, exclusive work for one employer

Whether there is a base salary, whether wage income tax is withheld, and whether social insurance is paid can be set by the employer at will, so these alone do not rule out employee status.

flowchart TD
    A[Person to work with] --> B{Do you set their hours and place}
    B -->|Yes| W[Consider an employment contract]
    B -->|No| C{Do you direct how they work in detail}
    C -->|Yes| W
    C -->|No| D{Do you pay per deliverable}
    D -->|Yes| F[Consider a service contract with business income withholding]
    D -->|No| W
    W --> I[Employment contract, social insurance, withholding]

The Risk of Fake 3.3 Contracts

Bad example:

Daily 10 a.m. start, always in the team Slack, fixed monthly pay, yet we signed only a "freelancer contract" and withheld 3.3%.

Good example:

We kept a structure of no set hours and acceptance and payment per feature deliverable, both in the contract and in practice. When full-time presence became necessary, we switched to an employment contract.

Employment Contract

The Four Social Insurances

Insurance 2026 rate Notes
National Pension 9.5% Rising 0.5 percentage points a year from 2026 up to 13% (Ministry of Health and Welfare). Split equally between worker and employer
Health Insurance 7.19% Split equally between worker and employer
Long-term Care Insurance 0.9448% of income Ministry of Health and Welfare 2026 rate announcement
Employment Insurance Unemployment benefits 1.8% (worker 0.9%, employer 0.9%) + employment stability and vocational skills programs 0.25% to 0.85% (employer only, by size, from 0.25% under 150 workers) Enforcement Decree of the Act on the Collection of Employment and Industrial Accident Insurance Premiums, Article 12. Check with the Social Insurance Information Center calculator
Industrial Accident Insurance Published per industry Announced at year-end for the next year

What About the Owner or CEO?

Case National Pension and Health Insurance Employment Insurance Industrial Accident Insurance
Sole proprietor with 1 or more employees The owner is also a workplace (employee-type) member The owner is excluded in principle. With fewer than 50 workers, voluntary self-employed employment insurance is available The owner is excluded in principle. With fewer than 300 workers, voluntary SME-owner accident insurance is available
Sole proprietor with no employees Regional (self-paying) member Voluntary self-employed employment insurance available Voluntary SME-owner accident insurance available (check industry conditions)
Corporate CEO If paid, even a one-person corporation is a workplace member. If unpaid, submit evidence of no pay and join as a regional member A CEO is not a worker and is excluded in principle. Corporate CEOs are included among those who may join self-employed employment insurance Voluntary SME-owner accident insurance available

Freelancer (Business Income) Contracts

First-Hire Checklist

References