[Seocho-dong Legal Story] A Native Speaker Instructor's 6-Year Struggle for Severance Pay

"Why Should a Sole Proprietor Receive Severance Pay?"
Language Academy's Response Leads to 2015 Lawsuit
1st Trial Recognized Worker Status, 180 Million Won Judgment
Reversed in 2018 2nd Trial
Supreme Court Rules "1st Trial Was Correct," Remands Case
Central District Court Orders Payment on 16th

Mr. A, a U.S. citizen, first visited our court in September 2015. He was a native English instructor at a language academy. He had worked for over eight years at a well-known language institute that everyone recognized by name. However, he did not receive a single penny in severance pay. The academy claimed, "What severance pay could there be for an individual business owner?" Mr. A knocked on the court's door to appeal that this was unfair and that he should receive severance pay. His fellow instructors joined him. At that time, no one knew this legal battle would last six years...

The court where Mr. A and his colleagues filed the complaint was the Seoul Central District Court, the court with the most judges nationwide. They were fortunate to have a good judge assigned. Judge Oh Sang-yong, currently the Chief Judge of the Seoul Southern District Court, was assigned as the presiding judge. He is well-known within the judiciary for his legal expertise. The trial was conducted meticulously. The academy's defense was not easy either. They argued, "Mr. A and others did not report their enrollment in the four major social insurances and were subject to withholding tax as business income." The trial took one year and seven months to conclude.

In May 2017, the first trial verdict was delivered. Chief Judge Oh recognized Mr. A and others as workers, not individual business owners. He ordered the academy to pay 186.6 million KRW in severance pay and other amounts. To help the parties understand, the judgment included detailed reasons. It described the nature of the contract as an employment contract and that the instructors were under the academy's direction and supervision, spanning 30 pages of A4 paper.

Mr. A and his fellow instructors thought, "We will receive severance pay," but that was not the case. The academy filed an appeal. Mr. A and his colleagues reluctantly filed a counter-appeal. The renewed legal battle took over another year. The same arguments as in the first trial were exchanged in court. However, the appellate court reached the exact opposite conclusion. "It is difficult to consider Mr. A and others as workers, and therefore, the claim for severance pay based on this premise need not be further examined." This was in September 2018. This lower court ruling overturned the Supreme Court precedent from 2015 that recognized native English instructors as workers.

Seoul Central District Court / Photo by Honam Moon munonam@

This time, Mr. A and his fellow instructors filed an appeal to the Supreme Court first. The academy, having won the trial, had no reason to appeal and did not file an appeal. Once again, frustrating time passed. Ten seasons changed. Finally, in April this year, the Supreme Court delivered its verdict. It had been two years and six months since the appeal was filed. The result changed. The Supreme Court upheld the first trial ruling that recognized Mr. A and others as workers. In the judgment, the Supreme Court pointed out that the appellate court's ruling "misunderstood the legal principles regarding the recognition of worker status under the Labor Standards Act, violated the rules of logic and experience, exceeded the limits of free evaluation of evidence, and thus affected the judgment erroneously."

The case, remanded with the plaintiff's victory, returned to the Seoul Central District Court in May. After one round of hearings, the judgment was delivered on the 16th of this month. The conclusion followed the Supreme Court's ruling. The remand trial division, Civil Division 6-3 (Presiding Judge Choi Jung-in), ordered the academy to pay 186.6 million KRW to Mr. A and others. The only difference from the first trial was a 1% increase in the delayed interest rate. It was the result after going through four years and four months since the first trial ruling.

The academy had not filed a retrial appeal as of the morning of the 29th. Under the Civil Procedure Act, appeals must be filed within 14 days from the day after the official delivery of the judgment. The judgment was delivered to the academy on the 17th. Even if the academy submits a retrial appeal within the remaining appeal period, the outcome is unlikely to change. Since the remand trial division delivered the judgment following the Supreme Court's ruling, it is safe to say there is virtually no chance of it being overturned again. Once this judgment is finalized, the academy will have to pay severance pay and delayed interest under the Labor Standards Act. The delayed interest rate is 6% per annum until September 16 of this year, and 20% per annum from the following day.