Section 1: Parties and Need for Remedy
Chapter 1: Employees
2. Determination of the Existence of Executive's and Internal Subcontractor[so-sa-jang]'s Employee Status under the Labor Standards Act
2.4 Internal Subcontractors[so-sa-jang]
| Supreme Court Decision on May 26,2016, Case 2014da12141 (Recognition of Employee Status of Internal Subcontractors) | |||||
| * Appellant: Defendant
* Defendant: A 1. Facts: a. The defendant encouraged employees G and H, who had been working as production workers at company M (changed to the current company on February 2,2004), to register as internal subcontractors after explaining the differences in salary and the pros and cons compared to working as regular employees. b. G and H signed subcontracting agreements with the defendant around October 29,2002, and June 1,2000, respectively, under which they would receive materials and tools from the defendant at no cost, manufacture parts, supply them back to the defendant, and be paid at a rate of 8,000 won per hour. The defendant also paid them severance payments corresponding to the period they had worked as regular employees. c. G and H did not enroll in the so-called four major insurances (pension, employment insurance, industrial accident compensation insurance, health insurance) related to this company. Moreover, during this period, the defendant paid the value-added tax and comprehensive income tax on behalf of G and H, who were registered as business owners. d. Regarding their work arrangement as internal subcontractors, G and H testified in court that: "① They received work instructions from the manager, department head, and factory manager. When instructed by the manager, the department head would provide the drawings. ② They filled out time cards and received safety training from the manager or person in charge. ③ They received overtime pay calculated on an hourly basis when working overtime. ④ Even when they could not work on weekends, the defendant forcibly demanded they come to work. They went on business trips when told and received medical expenses from the defendant when injured during work.⑤ There was no difference in the form of work between working as internal subcontractors and regular employees.⑥ They had no transactions with external companies other than this company.“ e. Employee I, who transitioned from working as an internal subcontractor to a regular employee within this company, stated in court that:"① The choice to become an internal subcontractor was made freely according to personal will, and the monthly salary was about 400,000 to 500,000 won higher than that of regular employees. Overtime pay was calculated based on overtime hours.② Managers and department heads directed the manufacturing of goods. Fixed work hours were established, and they had to notify the company when leaving during work hours. Vacation was set from late July to early August.③ They had never received orders for part manufacturing from other companies.④ The work arrangement was no different from that of regular employees.“ 2. Court Judgment: a. If a former employee, while appearing to be a business entity, forms a subcontracting relationship with the parent company to provide labor similar to or the same as before (taking the form of internal subcontractors), it is necessary to consider whether the individual has truly terminated their previous employment relationship and retired, or whether they were coercively or nominally made to take on the form of an internal subcontractor. Other factors such as autonomy in business planning, profit and loss responsibility, the extent of the parent company's intervention or interference in task performance or labor management, changes in the method and amount of compensation, and differences compared to employees of the parent company doing similar work should also be considered. b. Considering that G and H, as internal subcontractors, received their hourly wages on the 15th of every month and also received overtime pay calculated based on work hours, needed company permission or consent for outings, had set working hours, were required to fill out time cards, could only use their vacation during a set period, and had the defendant handle their tax filings, it is reasonable to view that despite the contractual form with this company, G and H were in fact providing labor in a subordinate relationship aimed at earning wages, and thus qualify as employees. The fact that they registered as business owners during their tenure as internal subcontractors or did not enroll in the aforementioned four major insurances does not alter this view. |
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| Download : 대법 2014도12141.pdf | |||||
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