Unfair Dismissal After Maternity Leave: A Case and Its Implications

Bongsoo Jung (Korean labor attorney, KangNam Labor Law Firm)

 

I. Case of Unfair Dismissal

Three months ago, a young couple came with their baby to our labor law firm office. When asked why they had come, they said the wife had worked at a company for 3 years and 6 months and was recently (1) dismissed, and that it had been two months since the dismissal but she still hadn’t received her severance pay.
  Here are the facts: this female employee was hired (2) as a freelancer because the company claimed there was no regular full-time hiring plan (no opening in the headcount). As a result, she was not enrolled in the four major social insurances and paid business income tax instead. However, she worked the same hours as other employees-8 hours a day, 40 hours a week. She also received annual paid leave and overtime pay.
  She had used her maternity leave, and returned to work on February 17, 2025. Three days after returning, on February 19, the company called and told her that there was no work for her because her workload had decreased, and that she could no longer work. At this, the employee, frustrated, sighed and said, “Then please process my resignation.” After that, (3) she waited for two months to receive her severance pay, but the company continued delaying the payment.

This labor attorney filed a claim for unfair dismissal on behalf of the employee. Subsequently, this labor attorney received a call from the company’s Vice President. The company offered to pay the severance pay and three months’ wages. The labor attorney then requested three months’ wages and (4) childcare leave, and the company said it was positively considering the request. However, in order to receive the childcare leave allowance, the company would have to retroactively pay three years’ worth of unpaid social insurance premiums. In the end, her only options were to return to work or receive adequate compensation.
  Therefore, this labor attorney requested sufficient compensation. The company did not respond at first, but later hired an attorney from a large law firm and sent a written reply. It stated that the employee had agreed to resign, and that (5) her statement over the phone saying, “Please process my resignation,” after (6) being informed of her dismissal by phone and realizing she had no other choice, constituted a voluntary resignation. The second argument involved the submission of written statements from about ten unwilling coworkers, asserting that the employee was a freelancer.
  In response, this labor attorney argued that (7) dismissing the employee three days after returning to work constitutes one of the gravest violations under the Labor Standards Act (LSA). This attorney also submitted documentation to prove the facts by applying precedents on (8) determining employee status based on the actual employment relationship and subordination to the employer.

On Thursday, June 19, a settlement was reached at the company’s request. The employee came to the Seoul Labor Relations Commission with her husband and their six-month-old baby. Under the condition that she would receive sufficient compensation and resign by mutual agreement, (9) the company and the employee agreed on the resignation and drafted a settlement agreement. The young couple repeatedly thanked me and finally regained cheerful expressions.

This case is a representative example of a claim for relief from unfair dismissal. In relation to this case, I will now explain the nine key labor law issues that employees need to be aware of, and examine the implications of this case.

 

II. Explanation of the 9 Key Issues Identified in the Case

1. Application for Remedy for Unfair Dismissal: (1) dismissed, and that it had been two months since the dismissal  When an employee is unfairly dismissed or experiences other unfair treatment, they may apply for relief with the Labor Relations Commission. The application must be filed within three months from the date the unfair dismissal or treatment occurred (Article 28 of the LSA). If the employee applies after this period, the case will be dismissed by the Commission. However, if more than three months have passed since the unfair dismissal, the employee may still seek relief through a civil lawsuit.[1] That said, resolving the issue through civil litigation requires a significant amount of time and money.

In this case, two months had passed since the dismissal. This was still within the three-month window, so application for remedy through the Labor Relations Commission was possible.

 

2. Hired as a Freelancer: (2) Hired as a freelancer. (8) The determination of employee status is based on the substantive employment relationship and subordination to the employer.

As various types of work have emerged, many individuals now work under service contracts or freelancers instead of as ordinary employees. In such cases, they are often not recognized as employees under labor law. For example, in large private academies, it is common for instructors to sign lecture service contracts and work as freelancers. When instructors work as freelancers rather than employees, the legal protections under labor law?such as rules on wages, severance pay, annual leave, and protection against unfair dismissal?do not apply. However, if such a freelance instructor is recognized as an employee, they can be fully protected under labor law. Therefore, instructors aim to be recognized as employees in order to receive these protections, while academies, concerned about the financial burden and the risk of collective action, prefer not to give their instructors employee status.

The criteria for determining employee status were clearly established in a 2006 case involving instructors of comprehensive courses.[2] First, the court ruled that “in determining whether someone qualifies as an employee under the Labor Standards Act, it must be judged based on the substance of the relationship, regardless of whether the contract is formally classified as an employment contract under civil law or a service contract.” This case law clarifies that determining employee status should not be based on the formal label of the contract but on the actual and specific nature of the working relationship.

Second, the court assessed employee status under the LSA based on whether the individual “provides labor under a subordinate relationship,” and laid out multiple criteria to determine the existence of such subordination. It adopted a framework in which these criteria are considered as a whole. In particular, the subordination indicators are divided into 12 items, and the degree to which each item supports the employee or employer’s position is analyzed and compared, so that the relative strength of each can be weighed to determine whether the individual qualifies as an employee.

Therefore, in this case, although the worker signed a freelance contract, was not enrolled in the four major insurances, and paid business income tax, these were all decisions made under the employer’s superior bargaining power. In reality, the worker worked fixed hours?8 hours a day, 40 hours a week?received overtime pay, and took annual paid leave. Moreover, she worked under the employer’s supervision and control in the course of her duties. Accordingly, she could be regarded as an employee in substance based on the actual employment relationship.

 

3. Payment of Severance Pay after Resignation: (3) The employee waited two months to receive her severance pay, but the company kept delaying the payment.

When an employee resigns, all payments such as wages and severance pay must be made within 14 days from the date the payment obligation arises. However, if there are special circumstances, the payment deadline can be extended by mutual agreement between the parties (Article 36 of the LSA). If wages and severance pay are not paid within this period, the employer must pay a delay interest of 20% per annum (Article 37 of the LSA and Article 17 of its Enforcement Decree).

In this case, there was no agreement between the parties to extend the payment deadline, yet the company delayed payment. Therefore, the employee is entitled to claim delay interest at an annual rate of 20%.
However, the company did not pay the severance pay because it believed the applicant was a freelancer, not a worker under the Labor Standards Act.

 

4. Guarantee of Parental Leave: (4) The employee requested childcare leave.

To be eligible to apply for childcare leave, the employee must have a child who is up to 8 years old or in the 2nd grade of elementary school or lower, and must have been enrolled in employment insurance for at least 180 days. As of 2025, the childcare leave allowance is as follows:

1. Months 1?3: 100% of ordinary wages, with a maximum of KRW 2.5 million and a minimum of KRW 700,000
2. Months 4?6: 100% of ordinary wages, with a maximum of KRW 2 million and a minimum of KRW 700,000
3. Months 7?12: 80% of ordinary wages, with a maximum of KRW 1.6 million and a minimum of KRW 700,000

In this case, the employer regarded the applicant as a freelancer and did not enroll her in employment insurance, which meant she was ineligible to receive the childcare leave allowance. To receive the allowance, the applicant must submit a request to the Korea Workers’ Compensation & Welfare Service (KCOMWEL) for confirmation of insured status and be recognized as a worker. If the applicant is recognized as a worker, the company will then be obligated to pay all unpaid social insurance premiums for the past three years.

 

5. Written Notice of Dismissal: (5) The employee was informed of the dismissal by phone.

Article 27 of the Labor Standards Act stipulates that when an employer intends to dismiss a worker, the employer must notify the worker of the reason and the date of dismissal in writing for the dismissal to be legally effective. If written notice of dismissal is not given, the dismissal is null and void. The purpose of requiring written notice is to ensure that the employer makes a more careful decision regarding dismissal and to clarify whether a dismissal occurred, when it occurred, and for what reason?so that any resulting disputes can be resolved more fairly and efficiently, and so the employee can appropriately respond to the dismissal.[3]

In this case, the employer informed the employee of her dismissal by phone, which violates the written notice requirement under Article 27 of the Labor Standards Act. Therefore, this dismissal is considered unfair.

 

6. Whether the Resignation Was Voluntary: ⑥ "Please process my resignation" as an expression of agreed resignation

A recommended resignation, which lies between resignation and dismissal, refers to a situation where the employee does not truly wish to resign but, under the employer’s recommendation, is compelled to submit a resignation letter, which the employer then accepts, thereby terminating the employment relationship. If an employee who does not intend to resign is coerced by the employer into writing and submitting a resignation letter, such expression of intent is not genuine and can be deemed invalid. According to court precedents, even if the employer takes the formal step of accepting a resignation letter from the employee to terminate the employment contract, if the employee did not genuinely intend to resign and was forced to submit the letter, the termination is in substance a unilateral act of the employer and thus constitutes a dismissal. If such dismissal is without just cause, it is considered unfair.[4]

In this case, the employer processed the resignation and made it impossible for the employee to continue working. Therefore, the employee’s statement?"Please process my resignation"?was not a genuine acceptance of dismissal, but rather an unavoidable response under pressure, and thus should be considered an expression of intent that does not reflect her true will.

 

7. Dismissal Just After the Employee Returned to Work: (7) Dismissing the employee three days after returning from maternity leave constitutes one of the most serious violations under the Labor Standards Act.

Article 23, Paragraph 2 of the LSA states: “An employer shall not dismiss a worker during a period of leave for medical treatment of an occupational injury or disease and for 30 days thereafter, nor shall an employer dismiss a woman during her maternity leave taken under this Act and for 30 days thereafter.” This provision explicitly prohibits dismissal within 30 days of returning from maternity leave. The law imposes the severest penalties for violations of this provision. Article 107 of the same Act stipulates: “A person who violates Article 23(2) shall be punished by imprisonment for not more than 5 years or a fine not exceeding KRW 50 million.” The reason for this strict protection is that pregnant and postpartum women are in a physically and socially vulnerable condition, warranting national-level protection.

In this case, the company notified the employee of dismissal just three days after her return from maternity leave, which is a serious violation of the Labor Standards Act. Regardless of the claim of unfair dismissal, the company is subject to the highest level of legal penalty. For this reason, the company sought to reach a settlement with the applicant before the Labor Relations Commission hearing took place.

 

8. Legal Effect of a Settlement at the Labor Relations Commission: (9) The company and the employee agreed on the resignation and prepared a settlement record.

According to Article 16-3 of the Labor Relations Commission Act: “Before the Commission issues a ruling, order, or decision under Article 30 of the Labor Standards Act, it may recommend a settlement or present a settlement proposal either upon the request of the parties concerned or ex officio. A settlement record signed by the parties has the same legal effect as a judicial settlement under the Civil Procedure Act.” Under civil law, a settlement is effective when the parties mutually agree to resolve a dispute by making concessions to one another. A settlement contract extinguishes the rights relinquished by one party and transfers those rights to the other party through the agreement (Articles 731 and 732 of the Civil Act). The courts have also held that, once a settlement agreement is concluded, and unless there are exceptional circumstances, the previous legal relationship based on existing rights and obligations is extinguished, and a new legal relationship is established by the settlement?regardless of the former legal circumstances between the parties.^[5]

In this case, the company and the employee signed a settlement agreement based on mutually agreed terms, with both parties affixing their seals. As such, the dispute is considered fully and finally resolved, and the document contains a clause stating that no further objections will be raised regarding this matter.

 

III. Implications

This case represents a typical example of unfair dismissal, which is still frequently witnessed at the workplace. Although labor laws are in place to protect workers, there remain many blind spots where the reach of labor law does not extend. All around us, there are many individuals who, despite being actual employees, sign freelancer contracts and are consequently excluded from the protections of the Labor Standards Act. For example, hair designers, truck owner-drivers, courier workers, private academy instructors, quick delivery drivers, and insurance sales agents are in reality workers, yet they are treated as freelancers or independent contractors and are thus not protected by labor law. In principle, to be genuinely recognized as a freelancer or self-employed person, one must possess a high level of professional skill generating significant income and must perform work independently. However, in reality, many of these individuals work under the control of a specific business or workplace and are essentially employees. Going forward, it is hoped that the protective function of labor law will be expanded so that these vulnerable workers will also come under the protective umbrella of labor legislation.