8 Major Entertainment Companies Face Reforms In Unfair Contract Clauses

Eight major entertainment companies were revealed to have signed “slave contracts” with their trainees.

On March 7, Korea Fair Trade Commission (KFTC) investigated eight entertainment companies with total assets over 12 billion won (approximately $10.5 million) and rectified six types of unfair contract clauses. The eight agencies evaluated were SM Entertainment, YG Entertainment, JYP Entertainment, Loen Entertainment, FNC Entertainment, Cube Entertainment, Jellyfish Entertainment, and DSP Media.

Read below to find out which clauses were modified.

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.

The head of the contract evaluation team at KFTC explained, “Protection of trainee rights will be strengthened further with the rectification of agencies’ contracts with trainees. This will create an environment for agencies and trainees to sign fair contracts with each other.”

Source (1)

*A previous version of the article incorrectly stated that all eight agencies pertained to the first clause on the list.