My company is going to replace the head of a Korean branch office due to an ongoing disagreement between headquarters and the branch head. In this case, will the dismissal restrictions in Korean labor law apply to the branch head?
Due to many foreign-invested companies entering Korea, many problems related to dismissal of Korean branch office heads are occurring. If the branch head is the representative director of an independent establishment in Korea, as an employer who has signed a “delegation contract” and not an employee who has an employment contract, he/she is not protected by the Labor Standards Act. However, in general, the head of foreign-invested companies carries out work upon receiving direct instructions from the main office, although he/she works as the representative director of the Korean branch. In reality, he/she has more characteristics as a worker as defined by Korean labor law than as an employer. In this case, there must be a justifiable reason to terminate the branch head. If such justifiable reason would be difficult to prove, it may be desirable that the company pays a reasonable retirement allowance to the branch head and terminates him/her after the branch head signs an “advisory resignation” in return for the retirement allowance. Although advisory resignations are recommended by the employer, it is still a termination of the labor relationship with agreement from both the worker and the employer. Therefore, it is a desirable way to preempt labor disputes.

Definition of a “worker” in the current Labor Standards Act
Under the current Labor Standards Act, the term “worker” means a person, regardless of the kind of occupation, who offers labor to a business or workplace for the purpose of earning wages. The conceptual element of worker is explained as “regardless of the kind of occupation,” “to a business or workplace,” “a person who offers labor for the purpose of earning wages.” Wages are the central concept in the definition of workers, and the subordinate relationship between labor providers and labor employers is recognized as a core element of the word. In other words, a worker is a person who provides work for the purpose of wages in a subordinate relationship.
Also, the same Supreme Court case ruled that “Whether or not a worker is covered by the Labor Standards Act will depend on whether the contract has been provided to the employee in a subordinate relationship for the purpose of wages, regardless of the type of contract. Therefore, even for an officer, such as a director or an auditor of a company, if his/her position or title is formal or nominal only but, in fact, he/she is in a subordinate relationship and under the direction and supervision of the CEO or employer, goes to work every day and provides certain labor in exchange for wages, or in addition to dealing with the work delegated by the Company, if he/she is in charge of certain duties under the direction and supervision of the CEO, and has received a certain amount of remuneration, then such officers are employees under the Labor Standards Act.” So, whether or not the person has executive authority is the main criterion in judging whether someone is an employer or not. In addition, the Supreme Court case shows that the following contents should be specifically considered and judged comprehensively when seeking to identify a person as a worker or not:
(1) Whether the content of the work is determined by the employer and subject to the rules of employment or service/personnel regulations, and whether the employer gives specific and individual commands and supervision during the work process;
(2) Whether the hours and places of work are designated and bound by the employer;
(3) Who owns the furnishings, raw materials, and work tools;
(4) Matters relating to remuneration, such as whether the nature of the remuneration is the subject of the labor itself, whether there is a base or fixed rate, and whether income tax is withheld;