FTC regulates 6 unfair terms in Korean entertainment company contracts

The Fair Trade Commission (FTC) in Korea has stepped in to regulate the contracts of trainees, mentioning six areas of unfair terms and conditions. Eight entertainment companies with assets over $10 million were identified specifically: SM Entertainment, YG Entertainment, JYP Entertainment, FNC Entertainment, Cube Entertainment, LOEN Entertainment, DSP Media, and Jellyfish Entertainment.

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1. Imposing excessive penalties on contract cancellation

According to KFTC, YG Entertainment, JYP Entertainment, FNC Entertainment, Cube Entertainment, Jellyfish Entertainment, and DSP Media were imposing contract cancellation penalties of two to three times the amount invested in the trainee. Considering that the usual contract lasts three years, the penalty would amount to as much as 150 million won (approximately $130,500). KFTC judged the penalty to be excessive and changed the clause to demand only the amount directly invested into training.

2. Forcing artists to renew their contract after expiration

JYP Entertainment, Cube Entertainment, and DSP Media pressured their artists to renew their contracts after expiration or forced them to return a sum double the amount invested in them. KFTC modified the clause, allowing companies to only begin preliminary negotiations with the artist upon the expiration of a contract.

3. Canceling contracts immediately without notice

The clause permitting agencies to immediately cancel a contract without prior notice was changed to include a grace period giving the two parties time to work out their conflicts. This clause was previously part of contracts at Loen Entertainment, YG Entertainment, Cube Entertainment, JYP Entertainment, and DSP Media.

4. Canceling contracts for ambiguous reasons

The clause that allowed SM Entertainment, FNC Entertainment, and DSP Media to cancel a contract based on unclear or arbitrary reasons was removed.

5. Forcing trainees to pay penalties immediately

The clause forcing trainees to pay penalties immediately upon infringement of the contract was changed to strictly follow the Korean civil law.

6. Limiting jurisdiction over legal cases to the Seoul Central District Court

The clause limiting legal cases regarding trainee contracts to be dealt with solely at the Seoul Central District Court was modified to include all other authorized courts.

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Shouldn’t be surprised that some of these weren’t already a part of contracts, but I kind of am. A lot of these clauses are designed to make it essentially impossible for trainees to leave against the will of the company, but allows for the company to rid themselves of trainees at will. It’s not exactly the same as the “slave contracts” of yesteryear, but the goal is clearly the same.

Family!

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