"Equal Treatment for Dispatched Workers Engaged in the Same Business"

"Illegal Dispatch Recognized for In-House Subcontracting...
Primary Contractor Liable for Damages to Subcontractor Employees"
Suwon District Court Rules After On-Site Inspection

[Judgment Result]

The Suwon District Court ruled in favor of a claim for damages equivalent to the wage difference filed by subcontractor employees against the primary contractor, recognizing it as an illegal dispatch within the company. The court held that as subcontractor workers engaged in the same or similar tasks alongside the primary contractor’s employees at the primary contractor’s factory under a worker dispatch arrangement, they effectively provided identical labor and thus had the right to receive the same wages and severance pay as the primary contractor’s employees.

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The Civil Division 17 of Suwon District Court (Presiding Judge Maeng Jun-young) on December 11 ruled in the lawsuit for damages (2022gahap18993) filed by 69 subcontractor employees, including Mr. A, who worked on assembling vehicle navigation parts at Company B’s factory, ordering "Company B to pay approximately 4.3 billion KRW, which is the difference between the wages and severance pay received by Company B’s skilled workers and the wages and severance pay actually paid to Mr. A and others by the subcontractor."

[Facts]

Company B, which manufactures and sells electronics, telecommunications, electrical, and mechanical equipment, proposed to an employee working at the company to establish an in-house subcontractor management company, and in 1993, established Company C Silup with him as the representative. Company C Silup initially provided subcontractor management services but changed its business to electronic parts manufacturing around March 1998 and produced vehicle DVDs commissioned by Company B. Since around 2012, Company B had contracted with Company C Silup to outsource the assembly of finished and semi-assembled vehicle navigation products. Employees of Company C Silup mainly performed assembly work for products delivered to finished vehicle manufacturers according to work manuals provided by Company B. In November 2020, Company C Silup signed an agreement to terminate the subcontract with Company B and closed down. The agreement included a clause that Company B would pay 620 million KRW by December 2 for idle labor costs and overtime costs incurred by Company C Silup.

Mr. A and others, who were employed by Company C Silup and worked at Company B’s factory before resigning, filed a lawsuit claiming that "since they provided direct labor under the specific supervision and control of Company B, the substance of the subcontract agreement corresponds to a worker dispatch contract," and demanded damages for the difference between the wages and severance pay they should have received based on Company B’s skilled workers and the wages and severance pay actually paid by Company C Silup.

[Court’s Judgment]

The court found that the substance of the subcontract agreement between Company B and Company C Silup corresponded to a worker dispatch contract under the Worker Dispatch Act, and after on-site verification, recognized the illegal dispatch and Company B’s liability for damages.

The court explained, "Company B gave specific instructions and orders regarding work performance through work manuals that conveyed product designs, assembly methods and sequences, and precautions to Mr. A and others. Since Mr. A and others handled preceding processes while Company B’s employees handled subsequent processes, the plaintiffs’ parts assembly work was organically linked with the work of Company B’s employees. Moreover, Mr. A and others worked in the same factory using the workplace, parts, and tools provided by Company B."

It added, "Company C Silup’s workforce planning was bound by the production plan set by Company B, and Company C Silup could not independently manage attendance such as clock-in and break times of its employees. The work of Mr. A and others was simply assembling parts according to the work manuals provided by Company B, requiring no special skills or expertise."

Furthermore, "Company C Silup received various production and auxiliary facilities and workplaces free of charge from Company B, did not have the personnel organization necessary to perform production tasks, and functioned essentially as a manpower agency providing dispatched labor to Company B. After the subcontract agreement with Company B ended, Company C Silup closed down. Considering these facts, the substance of the subcontract agreement between Company B and Company C Silup corresponds to a worker dispatch contract," the court ruled.

Reporter Su-yeon Park, Legal Newspaper

※This article is based on content supplied by Law Times.