Part 2. Management of Irregular Employees - Types of Irregular Employees
- Chapter 3 Dispatched Employees
-
I. Working Conditions of Dispatched Employees
1. Concept of Worker Dispatch
The term “employee dispatch” refers to a system in which the sending employer, while maintaining employment relations after hiring a worker, engages the worker to work for a using employer with directions and orders under a worker dispatch contract (Article 2-1 of Act Relating to Protection, etc. for Dispatched Workers; hereinafter called “Worker Dispatch Act”).
① In an “outsourcing contract,” one party promises to complete the work assigned and the opposite party pays remuneration for the work provided (Article 664 of the Civil Act).
② In a “commission,” one party entrusts the opposite party with partial work and the opposite party accepts it (Article 680 of the Civil Act).
③ An “outsourcing contract” is distinguished from “worker dispatch”, based upon whether the contractor party or the contracted party conducts business independently or not, without comparing outsourcing contracts and commission (MOEL, Notification 98-32).
2. Length of Dispatch Period
The service period of dispatched workers shall not exceed one year. However, if an agreement is made between the sending employer, the using employer, and the dispatched worker, then the period, which cannot exceed one year may be extended once to a total maximum of 2 years.
The purpose of Article 6 of the Worker Dispatch Act is to treat the dispatched employee as a regularly hired employee when the using employer continues to use the dispatched employee for more than two years. This is designed to promote the employment of the dispatched employee as a regular employee and prevent the abuse of the employee dispatch system. Accordingly, using a dispatched employee for more than two years under the above referenced Article means that the using employer uses the same dispatched employee for more than two years. Based upon this understanding, if the using employer has replaced the dispatched employee with an interval period of less than two years, the using employer does not have a legal obligation to hire the dispatched employee back.
In cases where the employer has utilized the same dispatched employee for more than two years, he shall be responsible for the employee not as the using employer of a dispatched employee, but as an employer under the Labor Standards Act. Seoul Appellate Court ruling on Mar. 14, 2003, 2002Nu2521.
Even if the worker was illegally dispatched, when he/she has worked for more than two years at the using employer's company, the using employer shall employ the worker as a regular employee, in accordance with Article 6, Paragraph 3 of the Worker Dispatch Act.
3. Jobs to which the Employee Dispatch System Applies
1) Jobs available at all times
Jobs permitted for worker dispatch shall be those 32 jobs judged suitable for that purpose given their nature and the expertise, skills, or experiences they require and prescribed by Presidential Decree, but excluding direct production jobs in the manufacturing fields (Article 5 (1) of the Worker Dispatch Act).
2) Jobs available for a limited time
In companies where labor shortages (due to workers on leave for child birth, illness, injuries) or an urgent need to temporarily/occasionally secure manpower, the worker dispatch system shall be permitted (Article 5 (2) of the Worker Dispatch Act).
3) Jobs where worker dispatch is not allowed (Article 5 (3) of the Act):
① Jobs performed at construction sites;
② Unloading activities of the harbor transport business;
③ Activities of seamen;
④ Hazardous and dangerous activities (Article 58 of the Occcupational Safety and Health Act);
⑤ Work subject to issuance of health management pocketbooks;
⑥ Work of medical persons and medical technicians;
⑦ Driving work in the passenger vehicle transport business (city, local, and chartered buses, taxis); and
⑧ Driving work in the freight vehicle transport business.
4) Restrictions on worker dispatch
Companies who are experiencing the following situations cannot dispatch workers:
① Companies in which industrial disputes are taking place (Article 43 of the Labor Union Act)
② Companies in which employees are dismissed for managerial reasons (Article 24 of the LSA)
4. Duties of the Sending Employer and Using Employer
Employee dispatch is fundamentally based on a three-way relationship between the sending employer, the using employer, and the employee. As the employee dispatch mechanism involves distinction in the hiring and using process, the responsibilities of an employer as prescribed in Labor Standards Act are divided between the sending employer and the using employer.
1) Sending employer
Provided that the sending employer is the one who has hired the dispatched employee, he/she holds the employer's responsibility for most articles in the Labor Standards Act. That is, Chapter 2 (Labor Contract), Chapter 3 (Wage), wage-related articles in Chapter 4 (Working Hours and Recess), labor contracts and wage articles in Chapter 5 (Females and Minors), and Chapter 8 (Accident Compensation), where the sending employer is the employer.
2) Using employer
The using employer is in charge of the dispatched employee and holds employer responsibility concerning the employee's start and finish times, recesses, extended work, holidays, etc.
3) Joint responsibility of sending employers and using employers
Sending and using employers shall take joint responsibility for the following items: equal treatment, prohibiting forced labor, eliminating intermediary exploitation, guaranteeing the exercise of civil rights, and have the duty to report and follow the requirements in the Worker Dispatch Act—Chapter 1 (General Provisions); Chapter 7 (Apprenticeship); Chapter 11 (Rules of Employment); and Chapter 12 (Penal Provisions) (Article 34 of the Worker Dispatch Act).
5. Occupational Safety and Health Act
By regulating special cases related to application of the Occupational Safety and Health Act, the using employer shall be deemed an employer to dispatch work for the dispatched worker during the dispatch period (Article 35).
II. Guidelines for Determining if Subcontracting is Actually Illegal Dispatch and Related Cases
1. Introduction
Dispatched workers are used for the flexibility and reduced labor costs they entail for companies. However, as dispatched workers can only be used for 2 years and only for a limited range of jobs, companies have been looking for a way to make use of workers in a similar way. In-house subcontract workers are one way to gain the continuous benefit that dispatch employment cannot provide. In-house subcontracting requires independence and expertise. However, many companies in Korea do not outsource these specialized tasks, but often make use of in-house subcontracting for simple work or to increase their manpower for lower costs. If a company directs and orders subcontract workers in their work, this will be judged illegal dispatch and the employer will be subject to criminal punishment and an obligation to directly employ the in-house subcontract worker (Article 6-2 of the Dispatch Act).
To prevent illegal dispatch, on April 19, 2007, the Ministry of Employment and Labor provided “Guidelines on Determining ‘Dispatch Workers’ to Distinguish between Dispatch and Subcontracting.” Nevertheless, the use of illegal dispatch and disguised subcontracting have expanded across all industries. Accordingly, on December 30, 2019, the Ministry of Employment and Labor began emphasizing the criteria through its “Guidelines on Criteria for Determining Dispatch Workers.”
2. Determining Illegal Dispatch
(1) Understanding illegal dispatch
The term “worker dispatch” refers to a system in which a sending employer, while maintaining employment relations with a worker after hiring, has the worker work for a using employer under the direction of the using employer in accordance with a worker dispatch contract (Article 2 of the Dispatch Act). Whether or not this amounts to worker dispatch is judged based on the facts rather than the name or form of the contract between the using and sending employers.
A contract for work becomes effective when one of the parties has agreed to perform a certain job and the other has agreed to pay remuneration for such work (Article 664 of the Civil Act). This means that the subcontractor, at his own discretion and responsibility, uses his own employed workers to complete the work. In-house subcontracting refers to having a subcontractor perform some of the work in the contractor’s workplace. When a subcontractor worker is under the command and control of the contractor at the contractor's workplace and provides work to the contractor, a dispatch relationship is established. In this case, it is illegal because the contractor does not meet the legal requirements for dispatch workers. Lim, Jongyul, Labor Law (18th Ed.), Parkyoungsa, 2020, p. 647; Ka, Kapryel, The Labor Standards Act (33rd Ed.), Joongang Economy, 2020, p. 793.
(2) Procedures for determining disguised subcontracting and illegal dispatch
First, whether the subcontractor is a substantive company needs to be verified. If there is no substantive employer entity, the subcontractor workers are given direct employment instructions. When a subcontract employer entity is recognized, the next step is to judge whether disguised subcontracting is occurring or not.
(i) Determining the substantive employer entity: When engaged in subcontracting using external personnel within the company, first review whether the subcontractor is recognized as an employer entity. If the subcontractor entity is not recognized as the employer, the subcontract workers are deemed to have a direct labor contract relationship with the contractor company.
(ii) Determining whether a subcontract worker is dispatched: When a subcontractor is recognized as the substantive employer entity, next to be determined is whether the contractor actually exercises command and control over the subcontract workers, and whether a subcontract worker is in fact a dispatch worker.
3. Criteria for Determining Disguised Subcontracting and Related Cases
(1) Whether a subcontractor is the substantive employer entity
The Supreme Court provides the following criteria in relation to a subcontract to hide the employment relationship in a contract. “As a person hired by the original employer provides labor service for a third party at the third party’s location, to be regarded as an employee of the third party, his employment shall satisfy the following: 1) The original employer does not have independence in management and works as an agent of the third party in managing employees; 2) The original employer’s business entity is nothing more than formal and nominal, and the employee shall be subordinate to the third party in reality; 3) The party that actually pays wages to the employee is the third party; 4) The party to which the person provides labor service is the third party. Based on these criteria, it should be concluded that there was already an implicit employment contract made between the employees and the third party.” Hyundai Mipo Shipbuilding Company: Supreme Court ruling on Sept. 23, 2003 2003du3420.
Whether the subcontractor is recognized as a substantive employer entity is determined by considering whether the subcontractor has an entity and independence as employer regardless of the type and name of the contract between the subcontractor and contractor. However, if the subcontractor has some degree of entity and independence as a business owner, it is judged that there is a substantive entity as employer. Supreme Court ruling on Feb. 26, 2015, 2010da106436.
1) Rights to hire, dismiss, etc.: Review whether the subcontractor decides on the working conditions and personnel affairs of the worker.
2) Responsibility to raise funds and make the necessary expenditures: Review whether the subcontractor raises its own money for establishing a business, renting an office, and other tasks.
3) An employer’s legal responsibilities: Review whether the subcontractor has withheld earned income tax, whether or not its workers have been subscribed to the four social insurance plans, and whether rules of employment have been established and enforced.
4) Responsibility for providing machinery, facilities, tools and instruments: Review whether the subcontractor possesses the machinery, facilities, and legal documentation necessary to do business independently.
5) Professional skills and experience: Review whether the subcontractor plans the business independently, exercises management decision-making power and has the professional skills or experience necessary for the business.
(2) Related cases
1) Cases where substantive employer entity was recognized
① A subcontractor established a separate company away from the contractor, acting as an independent business entity, and registering the business; ② joined the 4 social security insurances; and ③ prepared separate employment rules and controlled working status.
① Subcontractors have separate employment rules, control working status, and exercise disciplinary rights; ② They signed service contracts with other companies besides this contractor, and hired 2,730 workers assigned to several companies.
2) Cases where substantive employer entity was denied
① The contractor instructs the subcontractor’s employees to work without distinction from its own employees, and performs all personnel management directly; ② The subsidiary of the contractor holds 100% of the stock of the subcontractor, and this subcontractor carries out the contractor’s work.
è The contractor only used the subcontractor’s business registration in order to take advantage of workers in the form of disguised subcontract. However, in reality, there is an employment contract relationship as if they’d been hired directly.
① The subcontractor has been contracted for about 25 years handling assigned tasks from the contractor, who notified the subcontractor of hiring, disciplinary requests, and a list of eligible persons for promotion; ② The contractor decides working hours and overtime work for the subcontractor workers, and assigns them to work other than the contracted work; ③ The contractor pays the bonus, severance pay, etc. directly to the subcontractor workers.
èActually, without having independence in business performance or in business management, the subcontractor functions as a business unit of the contractor or as a worker provision agency.
4. Criteria for Determining Illegal Dispatch and Related Cases
The Supreme Court set the standard precedent for illegal dispatch as follows. “Whether employment is employee dispatch or not shall, regardless of the formal and nominal contract made between the two parties, be determined by collectively considering the purpose of the contract or job characteristics, specialty and technology, business registrations of the contracting parties and managerial independence, and the using employer’s actual command and control.” Hyundai Motor Case: Supreme Court ruling on Feb. 23, 2012, 2011doo7076.
(1) Substantial contractor command and control
Whether the contractor directly or indirectly instructs the subcontractor workers on the specifics of the work to be performed is reviewed, and whether the subcontractor workers are significantly controlled by these instructions and commands from the contractor. Even if the subcontractor's field manager gives specific instructions and orders to the subcontractor workers, it can be a sign of dispatch employment if the subcontractor’s field manager only conveys decisions not made by the subcontractor. However, if ① the contractor only determines such things to an appropriate extent for a contractor, such as specifying the scope of the subcontractor's work, while specific work details are determined and instructions on such are conveyed by the subcontractor's field manager and ② the contractor does not order subcontractor workers on a regular basis, but instead instructs only in emergencies or only in temporary situations, then requiring subcontractor workers to follow the contractor's safety and health instructions as required in accordance with Article 63 of the Occupational Safety and Health Act does not, in itself, mean the subcontract workers are actually dispatch workers.
○ In cases where the contractor has decision-making authority to assign work to the subcontractor’s workers, and decides the place and time. Hyundai Motor Case: Supreme Court ruling on Feb. 26, 2015, 2010da106436.
○ In cases where the contractor prepares a work manual or work instructions with work methods and details, etc., and issues it to the subcontractor’s workers, and they have to perform the work accordingly. Kumho Tire Case: Supreme Court ruling on Dec. 22, 2017, 2015da32905.
< Examples of when command and control do not determine dispatch employment>
○ When the subcontractor establishes its own work plans to execute the contract, and accordingly and independently determines the number of workers to be put to the work, the work arrangement and changes, and work time.
○ Even if the contractor is involved in the work of subcontractors, such as by placing a work manual, etc., in cases where the subcontractor workers carry out their work in accordance with their own field manager’s work instructions. KT&G Case: Supreme Court ruling on Jan. 25, 2017, 2014da211619.
(2) Subcontractor's actual engagement in the contractor’s business
① Subcontractor workers can consist of groups working with the contractor's workers, ② groups performing work besides the contractual work, and ③ those who substitute for contractor workers in the event of the latter’s absence. In these cases, it will be reviewed whether the subcontractor workers have actually been transferred to engagement in the contractor’s own business.
If a subcontractor worker performs the same work in the same space as a contractor worker, there is a high chance it will be deemed dispatch employment. Even if the workplaces are the same, it is difficult to assume that the individual workers are included in the contractor's business when they perform the work independently according to the contract purpose of the subcontractor.
○ (Same workplace) When subcontractor and contractor workers are placed in the same group and perform the same tasks together. Hyundai Motor Case: Supreme Court ruling on Feb. 26, 2015, 2010da106436.
○ (Different workplace) When subcontractor and contractor workers are spatially separated, but subcontractor workers participate in one of a series of processes or subdivided work steps in one process and are closely linked. Kumho Tire Case: Supreme Court ruling on Dec. 22, 2017, 2015da32905.
○ (Same workplace) Even if subcontractor workers work together in the same space as contractor workers, when the details of the work are different and the work is done independently and has no relation to the work of the contractor workers. KT&G Case: Supreme Court ruling on Jan. 25, 2017, 2014da211619.
○ (Different workplace) When subcontractor workers do not perform the same tasks when mixed with contractor workers. Korea Tire Case: Supreme Court ruling on Dec. 13, 2018: 2015na2023411.
(3) Personnel and labor-related decisions
Reviewing who makes decisions related to personnel and labor determines whether the subcontractor exercises management authority independently.
○ New placements of subcontractor workers must be approved by the contractor, and subcontractor workers must be replaced if the contractor requests it. Gunpo-si Case: Supreme Court ruling on July 22, 2016, 2014da222794.
○ The contractor decides the subcontractor’s working hours and whether overtime is to be performed, etc. Hyundai Motor Case: Supreme Court ruling on Feb. 26, 2015, 2010da106436.
< Examples of the subcontractor being able to exercise personnel rights>
○ When subcontractors provide training necessary to perform their jobs at their workplace, and have basic authority on recruiting and disciplinary action to directly manage the work time and worker attendance. KT&G Case: Supreme Court ruling on Jan. 25, 2017, 2014da211619.
(4) Subcontractor expertise and technology
Whether the work to be performed by the subcontractor worker(s) is specifically determined shall be reviewed, as well as whether it is distinct from the work of contractor workers and whether the subcontractor has the necessary expertise and technology.
○ When the subcontractor’s scope of work is undefined and it simply carries out the work assigned by the contractor.
○ When the subcontractor's work is the same as that of the contractor and is not clearly classified. Hyundai Motor Case: Supreme Court ruling on Feb. 26, 2015, 2010da106436.
○ In cases where the subcontractor's work is performed independently from the contractor's work.
○ When subcontractor workers perform only the work specified in the contract, but do not perform additional work under direction of the contractor. KT&G Case: Supreme Court ruling on Jan. 25, 2017, 2014da211619.
(5) Company organization and facilities
It is reviewed whether the subcontractor has an independent business organization, equipment, or equipment necessary to achieve the purpose of the contract as a party to the contract.
○ If the subcontractor has not invested its own technology or capital. Hyundai Motor Case: Supreme Court ruling on Feb. 26, 2015, 2010da106436.
○ If the subcontractor does not have separate human and material facilities, does not have specific expertise and consists simply of a large number of workers. Kumho Tire Case: Supreme Court ruling on Dec. 22, 2017, 2015da32905.
○ The subcontractor has an organization to achieve the purpose of the contract, and is actually working for a number of companies besides the relevant contractor.
5. Conclusion
Recently, the Korean subsidiary of a foreign automobile company consulted with me about correcting illegal dispatch. In addition to diagnosing the situation, I suggested measures for correcting illegal dispatch in accordance with the related labor law, court rulings, and Ministry of Employment and Labor Guidelines. While consulting with the company, it was surprising to learn that the company was like a body where only the head and chest were managed directly, while the torso and limbs were outsourced to subcontractors. These subcontractors ran the company's car sales, car deliveries, its car parts warehouse, customer call center and in-house training, while they also managed the in-house computers and vehicles, as well as quality.
Such subcontract management is used as a way for companies to reduce costs and adjust their employment situation in a globally competitive system. However, such subcontracting is possible only through strict management of subcontractors. In other words, subcontractors must maintain their independence and possess the expertise needed by the contract. It is easy for an employment situation to be deemed illegal dispatch unless thorough and continuous action is taken to avoid these and other examples of it.
III. Cases of Disguised Outsourcing
1. Introduction
The greater utilization of dispatched employees has benefited companies in maintaining labor flexibility and in reducing labor costs. However, the ban of hiring dispatched employees for more than two consecutive years has consequently forced companies to seek internal outsourcing. Although the company may offer an outsourcing contract, it treats the employee like a dispatched employee in practice. Addressing this issue, the Supreme Court clearly distinguished the difference between a dispatched employee and outsourcing employee with its judicial ruling. The following will review the main contents from the rulings that outlined dispatch and outsourcing and the criteria for ‘worker dispatch’. There have been two recent cases heard by the Supreme Court which provide good examples of this. In this article, I would like to look at the details of these rulings and review the criteria used in making their decisions.
2. Case of Disguised Outsourcing by Hyundai Mipo Shipbuilding Company (1/2)
(1) Summary
Hyundai Mipo Shipbuilding Company (hereinafter “the Shipbuilder”) terminated a service contract with Yongin Company (hereinafter “the Subcontractor”) when a labor union was established inside the Subcontractor. Right after termination of this contract, all 30 employees (hereinafter “the applicants”) of the Subcontractor were dismissed, and the company closed down on January 31, 2003. The applicants filed a claim for confirmation of employee status against the Shipbuilder. Busan Appellate Court rejected this claim on the grounds that the service agreement between the Shipbuilder and the Subcontractor could be recognized as an outsourcing contract. However, the Supreme Court overturned the Appellate Court’s decision, stating that it was possible to recognize the Shipbuilder and the Subcontractor’s employees as having an implied employment contract.
(2) Supreme Court Ruling (July 10, 2008, Supreme Court 2005da75088)
A. Legal principles for implied employment: As a person hired by the original employer provides labor service for a third party at the third party’s location, to be regarded as an employee of the third party, his employment shall satisfy the following: 1) The original employer does not have independence in management and works as an agent of the third party in managing employees; 2) The original employer’s business entity is nothing more than formal and nominal, and the employee shall be subordinate to the third party in reality; 3) The party that actually pays wages to the employee is the third party; 4) The party to which the person provides labor service is the third party. Based on these criteria, it should be concluded that there was already an implicit employment contract made between the employees and the third party (Supreme Court, Sep 23, 2003 2003du3420).
B. Confirmed facts: The Subcontractor where the applicants had been employed had worked exclusively for the Shipbuilder as an outsourcing partner to inspect and repair marine engine heat exchangers, safety valves, etc. for the previous 25 years. The Shipbuilder required that employees who wished to work for the Subcontractor pass a skills test before being hired by the Subcontractor. They were then qualified to receive an additional allowance directly paid by the Shipbuilder. Furthermore, the Shipbuilder had substantive authority for employment and promotion of the Subcontractor’s employees, including the ability to demand disciplinary action or choosing candidates for promotion.
In addition, the Shipbuilder directly monitored the applicants’ attendance (including if they left work early), leaves, overtime, hours worked, and their work attitude. The Shipbuilder also determined the volume of work, working methods, work orders, and when and how the applicants would cooperate, and directly assigned work duties or placed applicants for substantive work duties through the Subcontractor’s responsible manager. The Shipbuilder required the applicants to complete its own work assignments in addition to work given by the Subcontractor, paying a certain wage even when there was no work from the Subcontractor by assigning other duties such as receiving education, cleaning of the workplace, and assisting other departments in their work. The Shipbuilder directly supervised and managed the applicants.
Furthermore, the Subcontractor was, in principle, supposed to receive a service fee calculated by multiplying each time unit by the volume received, to which the Shipbuilder added the wages paid when Subcontractor employees were engaged in other Shipbuilder-assigned work not directly related to the Subcontractor duties (such as fixing the marine engines). The Shipbuilder also paid bonuses and severance pay directly to the applicants.
While the Subcontractor handled income tax deductions, income reports, and bookkeeping for its employees under its own business name and registration, it used offices provided by the Shipbuilder, as well as all required facilities such as rooms for its own employee education.
C. Judgment: Upon review of the confirmed facts in B above, and based on the legal principle mentioned in A, it can be determined that even though the Subcontractor had entered into a formal outsourcing contract with the Shipbuilder and had a formal structure in which its own employees (the applicants) performed the necessary labor service, the Subcontractor did not substantially manage itself in terms of work performance or management of its business. The Subcontractor worked just like a department of the Shipbuilder would, or as a labor management agency for the Shipbuilder. Rather, as it is assumed that the Shipbuilder received subordinate labor service from the applicants and decided their working conditions (including wages), an implied employment should be estimated to exist between employees of the Subcontractor and the Shipbuilder, just as if the Shipbuilder had hired the applicants directly.
3. Case of Disguised Outsourcing by Hyundai Motor Company (2/2)
(1) Summary
While Yesung Company (hereinafter “the Subcontractor”), an in-house outsourcing company of the Hyundai Motor Factory – Ulsan (hereinafter “HMC”), was engaged in assembling automobile parts, it dismissed its 15 employees (hereafter “the applicants”) on February 2, 2005, due to union activities. The applicants then filed for remedy for unfair dismissal and unfair labor practices against HMC and the Subcontractor, immediately after the Subcontractor closed down. The applicants’ claims were not accepted in the lower courts, who determined that the Subcontractor, who had already closed down, was their real employer, and not HMC. While the Supreme Court did not determine an implied employment relationship existed between HMC and the Subcontractor, it determined that a dispatch relationship did. According to the Employee Dispatch Act before its revision, in cases where a dispatched employee has served more than two years, the applicant is determined to be a direct employee of the using employer.
(2) Supreme Court Ruling (February 23, 2012, 2011du7076)
A. Legal principles for employee dispatch: Whether employment is employee dispatch or not shall, regardless of the formal and nominal contract made between the two parties, be determined by collectively considering the purpose of the contract or job characteristics, specialty and technology, business registrations of the contracting parties and managerial independence, and the using employer’s actual command and control.
B. Confirmed facts: Of the work processes directly and indirectly necessary to produce cars, assembly on the conveyer belt system does not require the Subcontractor to possess much in the way of technological or specialized skills, and the Subcontractor can give few instructions to its employees in this process.
The applicants were placed on either side of the conveyor belt assembly line together with regular employees of HMC, carrying out simple and repetitive tasks according to the various instructions prepared and distributed by HMC, and using HMC’s own facilities, parts, and supplies. In this manufacturing process, the Subcontractor did not supply its own unique technology or invest its own capital.
HMC possessed the general rights to give the applicants their work duties and change their work area, and determined the volume of work to be finished, working methods and working procedures. HMC directly managed the applicants or indirectly gave them substantial work orders through an on-site manager of the Subcontractor. In considering the characteristics of the applicants’ work, the responsibility of the on-site manager was simply as the messenger of HMC orders to the applicants.
HMC decided the starting and finishing times of each work shift, recess hours, overtime and night work, shift duties, the pace of manufacturing, etc., for the applicants, and in cases where HMC’s regular employees were absent due to occupational accidents or leaves, the applicants would fill in.
C. Judgment: The Appellate Court ruled that, based upon legal principles for employee dispatch and the confirmed facts, the employees were, in actuality, working under HMC’s direct supervision after hiring by the Subcontractor and dispatch to HMC.
4. Conclusion
The two cases in this article are typical examples of disguised outsourcing. The first, with Hyundai Mipo Shipbuilding, shows the most common disguised subcontract where, despite the fact that an outsourcing service contract has been entered into by the two parties, an implied employment relationship existed, in light of the lack of Subcontractor independence in personnel management or management of business. The second, with Hyundai Motor Company, deals with an illegal employee dispatch. Even though a service contract was evidently recognized between the two parties, the Contractor was the one who directed and supervised both its own and the Subcontractor’s employees while they worked together in the conveyor belt assembly line, which, again, means there was no subcontractor independence.
-
