SEOUL: One of South Korea's biggest entertainment companies, SM Entertainment, was ordered on Thursday by the country's Fair Trade Commission (FTC) to revise the "unfair" contracts that bind their artistes, reported Korean media.
"We issued SM Entertainment a warning to voluntarily correct the unfair exclusive contracts that their artists, as well as trainees, are bound to.
"SM is to reduce all contract lengths by three years," said FTC in a statement.
SM Entertainment, which represents popular K-pop groups like Super Junior and Girl's Generation, had been at the centre of investigations by Korean authorities after the fan club of one of the company's acts, Tohoshinki (TVXQ), submitted a complaint in August last year.
TVXQ fans alleged that SM Entertainment had used its position as one of the key players in the Korean entertainment industry to pressure the group into signing unfair 'slave contracts'.
Acting on this complaint, FTC eventually found that SM Entertainment's contracts with some artistes lasted for "13 years starting from the day of signing, and extend 10 years from the day of debut".
In addition, SM Entertainment reserved the right to schedule activities both local and overseas for its artistes without their prior consent.
There were also harsh penalties for artistes who breach the contract – they would have to pay three times the amount SM Entertainment invested in them and double the amount they would have made in the remaining years of the contract.
SM Entertainment has since modified their contracts to "seven years from the day of debut" while the breach-of-contract penalties have been greatly reduced, with defaulters having to pay SM Entertainment a sum equal to their average monthly sales (over a period of two years) multiplied by the months remaining on their contract.
The clause that allowed SM Entertainment to schedule activities for their artistes without their consent has also been removed.
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