■ General Criteria for Determining Employee Status
According to the Labor Standards Act, an employee refers to "a person who provides labor to a business or workplace for the purpose of receiving wages, regardless of the type of occupation." A landmark case that represents the understanding of the concept of an employee is the standard for determining employee status for academy instructors in 2006.
According to the Supreme Court ruling Supreme Court ruling 2006. 12. 7. 2004da29736 Decision
, the criteria for determining employee status are as follows: "Whether a person is considered an employee under the Labor Standards Act should be determined based on whether the person provided labor to the Employer in a dependent relationship for the purpose of receiving wages, rather than the form of the contract, such as whether it is an employment contract or a contract for services.
Whether there is a "dependent relationship" referred to here should be determined based on the following factors: ① whether the Employer sets the work content, applies employment rules or duty (personnel) regulations, and exercises significant supervision during the work process, ② whether the Employer designates working hours and workplace and the worker is bound by them, ③ whether the worker owns equipment, raw materials, or tools through self-provision of labor, ④ whether the worker can operate the business independently and manage it as their own property by employing a third party to perform tasks, and ⑤ whether the worker bears the risks of profit and loss through labor provision, ⑥ whether the nature of the compensation is for the labor itself, ⑦ matters related to compensation, such as whether a base or fixed salary is set, and whether withholding tax is applied to labor income, ⑧ the continuity of the labor provision relationship and the degree of exclusivity to the Employer, and ⑨ whether the person is recognized as an employee under the relevant economic and social conditions, such as social security laws."
When applying these criteria, there are some points to note. Firstly, since the Employer has a great deal of room to arbitrarily determine whether basic or fixed wages are set, whether labor income tax is withheld, and whether the person is recognized as an employee under the social security system, etc., it is not acceptable to simply deny employee status just because these factors are not recognized. Secondly, the criteria mentioned above are not formally or uniformly applied, and it is necessary to determine whether these are due to the Employer's dominant position or inherent to the unique nature of the work.
When determining employee status, the court uses the "specific criteria for determining dependent relationships" presented above and the method of judgment is individual and case-specific. Kang Seong-Tae, “Special Employment Relations and Determination of Employee Characteristics under the Labor Standards Act”, 『Labor Law』, Vol. 11, 2000, p. 35 et seq.

First, the personal dependency factor refers to the degree to which the Employer directs and supervises the worker in the process of performing their duties. Recent precedents have relaxed the criteria for determining personal dependency factors by considering the emergence of various professions and independent performance of tasks, and have judged the Employer's work instructions as "significant supervision" rather than "specific and individualized supervision". Specifically, the type of contract, hiring, dismissal, exercise of disciplinary authority, whether the worker is subject to control over commuting, vacation, and whether they receive directives and supervision over their work are taken into consideration in the determination.
Second, economic dependency factors are determined by whether the worker can create profits on their own. In the case of part-time instructors, they were not considered workers because they received performance-based pay, which was divided between the Employer and the instructor based on the number of students enrolled in the academy. Specifically, factors such as ownership of equipment and work tools, whether the company handles expenses incurred during work, whether the worker can act on behalf of third parties or engage in other work, whether they can generate profits and engage in individual profit-making businesses, whether they engage in other independent businesses while working for the company, whether they bear business risks, whether their compensation is considered as payment for labor, whether the work allows for long-term employment, and whether they are prohibited from working for other companies while performing their duties are taken into consideration.
Third, the dual judgment factor refers to factors related to compensation such as whether a basic or fixed salary has been established, whether income tax on labor is collected at source, and whether the worker is recognized as having the status of a worker under social security laws (enrolled in the four major insurance programs), etc.

■ Application examples of criteria for determining worker status
❍ Case of determining worker status of a native English teacher
On February 22, 2011, 17 plaintiffs (native English teachers) filed a lawsuit claiming that the defendant (C language academy) failed to pay them severance pay and other payments. The Ministry of Labor concluded after a year and six months of investigation that the plaintiffs were freelancers and not workers, and closed the case. The plaintiffs then filed a civil lawsuit, and on October 17, 2013, the Seoul Central District Court ruled that the plaintiffs were workers under the Labor Standards Act, and the defendant appealed the decision. The High Court upheld the original decision, and on June 11, 2015, the Supreme Court recognized that the native English teachers at C language academy were workers, not freelancers, and ordered the defendant to pay severance pay, annual shutdown allowance, and holiday pay to the plaintiffs as workers. Supreme Court ruling 2015. 6. 11. 2014Da88161 Decision

It should be noted that the facts recognized by the Supreme Court are as follows: ① The defendant entered into a contract to provide foreign language teaching services with foreign language teachers. ② The plaintiffs use the teaching materials designated by the defendant and receive compensation for participating in the production of teaching materials if necessary. ③ The plaintiffs also perform additional duties such as counseling parents, and receive compensation for such duties. ④ There are no separate employment rules or personnel regulations applicable to the plaintiffs, but they must comply with the teaching duties regulations written by the defendant. ⑤ CCTV cameras are installed in the classroom to monitor the content of the lectures and to evaluate and improve the quality of the lectures, to decide whether to renew the contract, and to resolve claims made by students. ⑥ The defendant employs a chief teacher to guide and educate the plaintiffs on their teaching methods and skills. ⑦ The plaintiffs teach in the classroom provided by the defendant during the designated teaching hours, but the specific teaching time and location are determined by agreement between the defendant and the plaintiffs. ⑧ The plaintiffs do not own the tools and materials necessary for teaching, and use those provided by the defendant. They cannot delegate the teaching to a third party on their behalf. ⑨ The plaintiffs receive an hourly wage of KRW 30,000 or more, depending on the teaching hours, and there is no performance-based payment system for the number of students. ⑩ The teaching service contract between the defendant and the plaintiffs is renewed annually. ⑪ The plaintiffs, as holders of E-2 visas, are free to work at other language academies outside of the teaching hours.

❍ Case of Determining Worker Status of Foreign Company Representative Director
A representative director of a foreign company, who represents the company externally and has the final decision-making power for internal personnel, operations, and finances, cannot be considered a worker as they hold a position of ultimate decision-making authority. However, if the representative director is actually employed as a Employer and performs their duties under significant supervision and direction from the employer, even if they are formally registered as the representative director for external activities, they may be recognized as a worker under the Labor Standards Act and entitled to legal protection.
In particular, in the case of multinational companies establishing foreign companies in Korea, it is common to appoint a local employee as a representative director for efficient operation of the business. In such cases, the Korean representative director or branch manager often lacks actual employer authority regardless of registration status, leading to disputes regarding worker status.
Whether or not someone falls under the category of "worker" under the Labor Standards Act should be determined based on whether they have provided labor to the employer in a dependent relationship for the purpose of receiving wages, rather than based on whether they are registered as an executive in the corporate registry. A representative director of a stock corporation has the authority to represent the company externally and execute the company's internal affairs, and therefore, unless there are special circumstances, they do not fall under the category of worker. However, even if someone is registered as a representative director of a stock corporation, if their status as representative director is only formal and nominal and they lack the authority to execute the company's internal affairs, and if they receive compensation not based on business performance or job performance, but simply as a target of labor, they can be considered a worker who receives wages under the direction and supervision of the actual manager who holds decision-making power for external affairs.