Section 1: Parties and Need for Remedy
Chapter 1: Employees
1. Overview
1.1 Criteria for Determining the Existence of Employee Status under the Labor Standards Act
| Supreme Court Decision on December 7, 2006, Case 2004da29736 | |||||
| * Plaintiff (Appellant): ○○○
* Defendant (Respondent): ΔΔΔ 1. Facts a. The plaintiffs were fulltime instructors at a private academy operated by the defendant, teaching 45 classes per day and 100110 hours per month from February to November (the month of the college entrance exam), earning about 3 million KRW per month. They did not teach or receive pay from after the exam until the classes resumed in February the following year. b. The plaintiffs arrived at the academy before their lectures started and left after their last class. During their free time, they worked on preparing teaching materials, making it practically impossible to teach elsewhere. The instructors in charge arrived at the academy by 08:00 to supervise students' morning self-study sessions, attended staff meetings at 08:30, supervised evening self studies, notified parents of students' absences, tardiness, early leaves, or outings, and conducted individual consultations as deemed necessary by the academy, for which they received an additional 300,000 KRW monthly. c. Initially, the plaintiffs did not sign any contract and paid income tax on their wages while being covered by workplace health insurance registered by the academy. Starting from early 1994, however, they were made to sign contracts named "Lecture Service Contracts," register as business entities, join a local medical insurance package, and paid withholding income tax. 2. Court Judgment a. Whether the fulltime instructors at the academy are employees: The determination of whether someone is an employee under the Labor Standards Act depends not on the form of the contract (whether it is an employment or subcontract) but on whether the worker provides labor to an employer in a dependent relationship with the intention of earning wages. This dependency is determined by factors such as ① whether the employer specifies the job duties and applies employment or service regulations; ② whether the employer designates work hours and location; ③ whether the worker owns or hires others to bring tools or materials necessary for the job; ④ whether the worker bears the risk of profit and loss from their labor; ⑤ the nature of the compensation; ⑥ whether there is a base or fixed salary and whether income tax is withheld; ⑦ the continuity and exclusivity of the employment relationship; and ⑧ whether the worker is recognized as an employee under social security laws. Even if basic or fixed wages are set or income tax is withheld, the employer's economically superior position may not allow these factors alone to negate the status of an employee. b. Given the instructors' designated start times, lecture schedules, and locations, their inability to work elsewhere, their additional duties beyond teaching, and their fixed hourly wages independent of student numbers, the plaintiffs provided labor in a dependent relationship aimed at earning wages and are considered employees. Even though they annually signed "Lecture Service Contracts" and were not subject to the academy's employment rules, and even though they registered as business entities and paid taxes under the Value Added Tax Law, these circumstances did not reflect the reality of their labor provision and were merely textual or arbitrarily set by the economically superior employer, thus not negating their employee status. c. Continuity of the plaintiffs' employment: When an employment contract expires and is renewed, or the same conditions are repeatedly agreed upon, these periods should be combined to determine the continuity of employment and duration of service. Even if there are gaps between renewed or repeated contracts, if these gaps are not long relative to the total period of employment, or if there are seasonal reasons or breaks for rest and recharging that justify not providing labor or paying wages during these periods, it is reasonable to consider the employment relationship continuous during these times. d. Whether refusing to renew an employment contract constitutes dismissal: When the specified period of an employment contract expires, the employment relationship typically ends without the need for dismissal or other action by the employer, unless there are special circumstances. However, if short term contracts are repeatedly renewed over a long period, making the specified duration merely formal, then the refusal to renew such contracts by the employer constitutes dismissal. Although the instructors formally signed annual contracts, this was merely procedural, and they were effectively in the position of employees without a specified term, so the defendant's refusal to renew their contract is considered a Case of dismissal. |
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