According to a report by the Fair Trade Commission (FTC) on March 7, a total of 6 unjust terms within trainee contracts used by large-scale entertainment companies has been corrected.
The entertainment labels whose trainee contracts were involved are SM Entertainment, YG Entertainment, JYP Entertainment, Cube Entertainment, Loen Entertainment, FNC Entertainment, Jellyfish Entertainment, and DSP Entertainment, a total of 8 major companies.
Trainee contracts, signed between labels and potential debut candidates, or trainees, exist so that labels can legally carry out the process of educating and caring for their trainees. Terms which have been corrected by the FTC recently include:
1. Request of excessive compensation for damages/pressuring trainees to pay compensation fees once they leave the company. (compensations fees amounting to 2-3 times the expenses spent toward trainees will now be changed to only the exact expenses spent.)
2. Fees or penalties applied after the termination of a trainee contract, i.e. a fee owed for signing with another label within 3 years after leaving. (Both will be eliminated; labels will only be able to carry out negotiations to renew or terminate contracts.)
3. Rights of the company to terminate a trainee contract at any time. (Companies will now have to suspend the contract for a given period of time, during which unsatisfactory issues may be resolved. If issues remain unresolved, companies may terminate a contract at the end of the suspended period.)
4. Claiming arbitrary reasons to terminate a trainee contract, such as due to defamation of the company name or investment losses. (They will be prohibited.)
The FTC commented that these changes will "strengthen the rights of trainees" and "bring about a change to the trainee-to-entertainment label contract culture."