Section 1: Parties and Need for Remedy
Chapter 1: Employee
1. General
1.1 Criteria for Determining the Existence of Employee Status under the Labor Standards Act
| The Supreme Court Decision dated December 7, 2006, Case No. 2004다29736. | |||||
| * Plaintiff (appellant): ○○○ * Defendant (appellee): ΔΔΔ 1. Facts a. The plaintiffs worked as instructors for the comprehensive classes operated by the defendant's academy, delivering 4-5 classes per day from February to November, totaling 100-110 hours per month, and received approximately 3 million won per month as instructor fees. They did not teach or receive fees from November until the following February before the start of the new academic year. b. Prior to commencing their classes, the plaintiffs reported to the academy and left after their last class. During non-teaching hours, they spent time preparing teaching materials for upcoming classes, making it practically impossible for them to work elsewhere. The head instructor arrived at the academy by 8:00 am to oversee morning self-study sessions for students until 8:30 am, attended staff meetings, supervised evening self-study sessions, notified parents of absenteeism, lateness, early leave, and conducted individual consultations as deemed necessary by the academy, for which they received a monthly supervisor allowance of 300,000 won. c. Initially, when the plaintiffs began working as instructors, no contracts were drawn up. They paid income tax and enrolled in workplace medical insurance provided by the academy. However, from early 1994, contracts titled "lecturer service provision agreements" were introduced, requiring instructors to register as self-employed individuals, enroll in local medical insurance, and subject their earnings to withholding tax as business income. 2. Judgment a. Whether the plaintiffs, as instructors for the academy's comprehensive classes, are considered employees Determining whether someone qualifies as an employee under labor standards law depends not only on whether the contract is an employment contract or a subcontract but also on whether the individual, in substance, provided labor to the employer in a relationship of dependency with the aim of receiving wages. Factors indicating dependency include 1) the employer dictating work content and exercising significant supervision during task execution, 2) specifying work hours and location, 3) the inability of the labor provider to independently carry out the work, 4) bearing the risks of profit and loss, 5) the remuneration nature aligning with labor itself, 6) fixed salary and withholding of income tax, 7) continuity of labor provision and exclusivity to the employer, and 8) whether the individual is recognized as an employee under social security laws. However, factors such as fixed salary, income tax withholding, and social security recognition should not alone lead to the denial of employee status, as employers may exploit their economic dominance to dictate such terms. b. The plaintiffs, as instructors for the comprehensive classes of the university entrance exam preparation academy, were subject to the designated arrival time, teaching hours, and location set by the defendant, practically limiting the possibility of providing labor elsewhere. They performed additional tasks besides teaching and received a fixed hourly compensation regardless of the number of students, indicating they provided labor to the defendant in a dependent capacity for the purpose of wages. Although they annually signed contracts titled "lecturer service provision agreements," were not subject to employee regulations applicable to regular staff, received no fixed salary, registered as self-employed under the Value Added Tax Act, had business income tax withheld instead of income tax, and enrolled in local medical insurance, these circumstances merely pertained to contract language and the employer's economic dominance rather than reflecting the actual provision of labor, thus not warranting the denial of employee status for these instructors. c. Continuity of employment for the plaintiffs When a labor contract expires, and a new one is signed or the same contract is repeatedly renewed under identical conditions, the continuity of employment and service length should be assessed by aggregating the renewal or repeated contract periods. Even if there are gaps between renewed or repeatedly concluded labor contracts, as long as the period is not significantly longer than the entire labor contract period and there are substantial reasons such as seasonal factors or vacation periods inherent to the nature of the work for not providing labor or paying wages during that time, the continuity of the employment relationship is likely maintained during such periods. d. Whether the refusal to renew the employment contract constitutes dismissal In cases where a fixed-term labor contract is in place, the employment relationship between the parties terminates upon the expiry of the contract period, without requiring the employer to take any separate action such as dismissal unless there are special circumstances. However, if short-term labor contracts are repeatedly renewed over an extended period, rendering the designated period merely formal, employees effectively become no different from those without a designated period, and the refusal by the employer to renew the labor contract constitutes dismissal. Even if the instructors annually entered into labor contracts, this was merely a formality, as they were effectively in a position without a designated period, hence the defendant's refusal to renew the employment contract for the plaintiffs constitutes dismissal. |
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