I. Summary and Main Points of Dispute

A Korean American (hereafter referred to as “the Employee”) who had worked for the Incheon city government for two years moved to a subsidiary of an American parent company (the subsidiary hereafter referred to as “Company A”) established to develop the Incheon-Songdo City project. After working as vice-president for four years, the employee was suddenly dismissed on January 21, 2011 due to a lack of work. He was informed of the dismissal by the American parent company (hereafter referred to as “Company B”). In the dismissal notice, Company B requested that the employee sign an agreement to resign, offering the employee compensation in the form of four years’ severance pay (equivalent to the Employee’s number of service years), but the Employee refused. Instead, the Employee applied for remedy against Company A with the Seoul Labor Commission on February 15, 2011 to get legal protection against what he considered unfair dismissal.
Company A claimed that the Employee belonged to Company B and was dispatched to Korea to do work for Company B. According to Company A, Korean labor law did not apply to the Employee because his salary was paid to his American bank account by Company B, and because the Employee was covered by the American national pension and medical insurance, and worked under Company B’s direction. Company A added that even though the Employee had the position of vice-president with Company A, Company B had personnel management rights for him, so the Employee could not apply for remedy against Company A.
Here, the main points of dispute are, 1) whether Company A played the role of employer or not with the Employee, and 2) whether Company B, located in a foreign country, was the real employer having employment relations with the Employee, and if so, does Company B have legal obligation regarding employment of the Employee. After reviewing these points substantially, I would like to explain this labor case in detail.

- January 21, 2011: the Employee was suddenly dismissed (with written notice)
-February15,2011:theEmployeefiledforremedyagainstCompanyAforunfair dismissal
- April 5~8, 2011: the Employee withdrew the case; in a few days, he filed again against both Company A and Company B.
-June3,2011:justbeforethejudgmenthearing,bothpartiesagreedona
settlement, followed by the Employee withdrawing the case.

II. The Employer’s Claim
1. “In estimating a business and workplace in application of the Labor Standards Act, in cases where a branch office, detached office, and plant are located separately and operated independently for management of labor and accounting, each such location is regarded as a separate workplace respectively” (Labor Standards-8048). According to this explanation, Company A and Company B are different business entities.
2. The Employee was sent by Company B to Company A as a dispatched employee. His salary was paid to his American bank account by Company B, and he was covered by an American national pension plan (401K) and corporate medical insurance (COBRA). Company B paid these premiums for the employee.
3. For foreign-invested companies, it is a very general practice that employees dispatched by foreign parent companies fulfill their duties assigned by the foreign parent company while working with the Korean branch and its employees. This dispatched Employee did not receive any directions from or work for Company A, but usually took supervisory duties in determining how well Company A followed Company B’s directions. Therefore, the Labor Standards Act does not apply to this dispatched Employee as he belonged to Company B.
4. When considering that the Employee signed an employment contract with Company B, who also gave him work directions and other responsibilities, paid his salary directly, and covered his American national pension and medical insurance premiums, the Employee cannot be regarded as a person to whom Korean labor law applies, so the case should be dropped.

III. The Employee’s Claim

1. From the time he was hired in Korea by Company A, the Employee had worked for Company A, and was dismissed after four years of carrying out his duties with Company A. The Employee could not help but file for remedy against Company A for unfair dismissal. When Company B dismissed the employee for managerial reasons, it had to satisfy content and procedural requirements for dismissal for managerial reasons, but Company B did not have any justification to dismiss the Employee.
2. When a foreign director is dispatched temporarily to a Korean branch office during his employment and receives directions and supervision from the head office, than the foreign country’s labor laws apply to that employee, and Korean labor law does not. However, if the foreign director signs an employment contract with the Korean branch office and provides labor service to the Korean branch, Korean labor law applies to that director.
3. The Employee 1) had performance evaluations by the president of Company A, 2) had once received from Company A a rejection notice for renewal of the employment contract, 3) had his name and position on Company A’s organization chart, the headcount report, and operating procedures document, and his job description stipulated that the Employee reports to the president of Company A, 4) was supervised and directed by Company A, 5) had Company A stipulated as an employer on his ‘Tax Clearance Certificate’ issued by the National Tax Service, 6) received pay slips every month and reimbursement for expenses from Company A, and worked wherever Company A assigned him.

IV. Case Details and Conclusion

1. After both parties’ statements had been submitted, it was realized that in practical terms, Company A could not be the final decision-maker in whether to dismiss the Employee. Due to this, the Employee understood that if he filed against Company A as his only employer, his application for remedy against unfair dismissal would be rejected, so the Employee withdrew his application for remedy against only Company A. He then filed for remedy again, this time listing Company B as his employer, as well as Company A. He also claimed in his second filing that the governing law on labor disputes according to Article 28 of the “Conflict of Laws” was local labor law. Company B intentionally ignored the first application for remedy, but when it too was included as an employer, Company B proactively intervened in the case. In the end, just before the judgment hearing, Company B agreed to settle with the Employee for financial compensation of ₩180 million on June 3, 2011, whereupon the Employee withdrew his application.
2. The Employee referred in this case to Article 28 of the “Conflict of Laws” regulation, which states that, even though jurisdiction in a labor dispute related to the employment contract is stipulated as belonging to the court in a foreign country, Korean labor law and its compulsory rules apply to employees working in a Korean branch office of a foreign-registered company. The Employee’s contract signed with Company B stipulated that any disputes arising over employment conditions between the parties shall be the jurisdiction of the laws of the US state of Georgia. However, Article 28 of the “Conflict of Laws” clarifies contract-based employment relations. Even though Company B was authorized in actuality to dismiss the Employee, for as long as the Employee provided labor service in Korea, the Korean Labor Standards Act (and other labor laws related to protecting employment conditions) shall apply to the Employee, and jurisdiction shal