Supreme Court, Seocho-gu, Seoul. Photo by Mun Ho-nam munonam@
[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that engineers who worked as 'independent contractors' under a contract with water purifier manufacturer Cheongho Nice should be regarded as workers under the Labor Standards Act.
On the 23rd, the Supreme Court's First Division (Presiding Justice Park Jeonghwa) announced that it overturned the lower court's ruling, which dismissed the appeal in the severance pay lawsuit filed by former Cheongho Nice engineers Mr. A and Mr. B against the company, and remanded the case to the Seoul Central District Court.
Previously, they had terminated their service outsourcing contracts in 2016 and claimed severance pay from Cheongho Nice as workers exclusively dedicated to the company, demanding severance payments of 31.83 million KRW and 18.57 million KRW respectively.
They argued that they received wages by providing labor to the company and receiving commissions. The service outsourcing contracts signed between 2008 and 2009 stated that engineers were not in an employment relationship with the company but were independent contractors conducting their own businesses at their discretion, and thus could not claim severance pay from the principal regardless of contract duration.
The first and second trials ruled against Mr. A and others, stating they could not be considered workers. This was based on the fact that Mr. A and others had business registrations and were not subject to the company’s employment rules, service, and personnel regulations. It was also pointed out that they were not under specific supervision or control by the company.
However, the Supreme Court ordered a retrial and reconsideration of the case. It noted that Cheongho Nice set appropriate sales targets for each team and continuously monitored their achievement, and that Mr. A and others had worked as engineers for a long period through repeated contract renewals or extensions, thus recognizing the continuity of their work.
The court stated, "The defendant withheld business income tax, not earned income tax, from the commissions paid to the plaintiffs and other engineers. Although the engineers were not enrolled in employment insurance as insured persons, these circumstances are merely matters that the employer defendant could arbitrarily determine due to its economically superior position, and do not hinder the recognition of the plaintiffs as workers under the Labor Standards Act."
It added, "The lower court erred in misunderstanding the legal standards for determining worker status under the Labor Standards Act and failed to conduct necessary hearings, which affected the judgment."
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