2015Da63299 Retirement Allowance, etc.

As shown in the List of Plaintiffs in the attached Table.

Bosene Co., Ltd.

Seoul High Court Decision 2014449250 Decided September 23, 2015

January 25, 2017

The judgment below is reversed, and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Determination as to whether a worker is a worker under the Labor Standards Act ought to be made depending on whether a labor provider provided labor in a subordinate relationship with an employer for the purpose of wages in a business or workplace, rather than whether a contract is an employment contract or a delegation contract. Whether a labor provider is subordinate relationship should be determined by determining the content of work, and whether an employer is subject to rules of employment or service regulations, and an employer is subject to considerable direction and supervision during the performance of work, and whether an employer designates working hours and working places and is detained by an employer, whether a labor provider is able to operate his/her business on its own account, such as holding equipment, raw materials or tools, or having a third party employ a third party and act on behalf of him/her, and whether the risks such as the creation of profit and loss through the provision of work, whether the nature of remuneration is the object of work, the basic wage or fixed wage was determined, the existence and degree of exclusive employment to the employer, and whether the status of an employee is recognized as an employee under the Act on Social Security System, etc.

2. The lower court, based on its stated reasoning, determined that it is difficult for the Plaintiffs to regard the Plaintiffs as workers under the Labor Standards Act who provide labor for the purpose of wages in subordinate relations with the Defendant.

3. However, in light of the above legal principles, it is difficult to accept the above judgment of the court below for the following reasons.

A. According to the reasoning of the lower judgment and the record, the following facts and circumstances are revealed. (1) The Defendant, who runs the business of importing, manufacturing, and selling, such as KON, Scarf (s) and bags, concluded a purchase transaction agreement on a department store, which provides that companies operating department stores, such as GON, and new global department stores, and each department store operating companies shall purchase and sell on credit imported and manufactured goods from the Defendant’s department stores, sell them, and pay the remainder after deducting fees from the sales revenue to the Defendant, while entering into a sales contract under a special agreement on a department store. The Defendant agreed to dispatch the manpower engaged in sales within each department store.

(2) At first, the Defendant employed the department store sales clerks including the Plaintiffs (hereinafter referred to as “sales clerks” simply, including the Plaintiffs) as full-time employees belonging to the department department. Around August 2005, the Defendant paid retirement allowances at the end of 2005 after receiving written resignations from the department store sales clerks en bloc, and entered into sales services contracts with the above department sales clerks, and subsequently recruited the department store sales clerks by entering into sales services contracts, rather than employment contracts. However, it seems that the details of the duties of the department department sales clerks do not vary before and after the conclusion of sales services contracts.

(3) The sales services contract entered into between the sales clerks and the Defendant includes the term of contract (one year), ② the place of work, ③ the sales brand, and ④ the sales services fee. The sales services contract for some of the sales clerks included neither the fee nor the annual salary that is not the fee. It seems that the contract is renewed every one year, even if the contract is renewed.

(4) In concluding a sales service contract with the Defendant, the sales clerks have been selling only goods designated during the business hours of the department store (the goods supplied to the department store by the Defendant) at the designated place (mainly the department store) (the goods supplied to the department store). According to the “standard purchase transaction contract entered into with the commission store company among the department stores,” etc., the dispatched employees, etc. shall perform duties related to the sales of the goods supplied by the Defendant and the sales promotion activities such as display, storage, and management of the goods, to the extent that they comply with the guidelines for the sales management of the department stores (Article 13(3)), and the Defendant is obligated to maintain the quality of services above the level expected that the dispatched employees would normally receive from the department store (Article 14(1)), and the dispatched employees, etc., are not capable of providing training to improve customer services at the department store’s place of business (Article 14(2)), and if the employees, etc. are not in compliance with the guidelines for the management of the sales store in question, they do not appear to meet the standards for the Defendant’s sales clerks (3).

(5) The Defendant was able to real-time grasp the inventory status of each store through the electronic computer system. The employees of the Defendant’s head office visited stores at approximately one week at intervals to verify the current sales status, etc., and did not provide separate education in relation to the performance of their duties except for the presentation of goods related to the introduction of new products twice a year. This appears to have no significant difference between the sales clerks before and after entering into the sales services contract with the Defendant. (6) After entering into the sales services contract, the Defendant was able to make various public announcements related to the business with the sales clerks through the internal computer network, but the Defendant was represented by: (a) after entering into the sales services contract, there was a lot of public announcements in relation to the business with the sales clerks; (b) the submission of the registration time and time of attendance to the sales clerks; (c) the announcement related to the repair room; (d) the publication related to the sales room; (vi) the announcement related to the inventory room, the announcement related to the inventory room, and (vii) the announcement related to the quantity survey related to the goods.

(7) After entering into a sales services contract, the sales clerks appear to have not obtained prior approval from the Defendant’s head office in the form of “the leave period employed by the Defendant’s head office,” but they appear to have reported to the Defendant in advance or ex post, on the use of the leave period, sick leave, etc., and the Defendant was also deemed to have prepared and kept the list of the current status of part-time work and the long-term workers’ working conditions, etc., and the Defendant prepared and kept the list of the current status of sick leave and childbirth leave. (8) There may be a number of sales clerks in each department store. Each sales clerks entered into a sales services contract with the Defendant respectively (i) and each sales clerks were named as the Defendant’s head office (ii) in terms of experience and age, etc. (iii) and (iii) the sales clerks were replaced with each other, but the Defendant appears to have temporarily lost the sales clerks’ fee, etc., and the Defendant appears to have not been able to bear the expenses incurred by each sales store in preparation for their respective reasons.

(10) After entering into a sales service contract with the Defendant, until September 2008, sales clerks were paid within the upper limit of the commission fee calculated according to the rate of commission set in the sales service contract for each store (120% or 130% of the existing annual salary), the lower limit (85% of the previous annual salary, and the lower limit refer to the fixed rate of the existing annual salary, not the specific ratio of the amount of sales, but the actual fixed rate of the existing annual salary). However, it is unclear whether the Defendant set the commission rate in consultation with the sales clerks in light of the fact that the sales service contract for some of the sales clerks does not newly enter into a sales service contract even if the commission rate has been changed upon the termination of the contract period.

In addition, from September 2008 to the end of 2011, the sales clerks received fixed wages, such as before entering into sales services contracts, and from 2012, it appears that they received fees again from 2012. However, the detailed status of payment of fees after 2012 is unclear (in 2012 and 2013, there are some sales clerks who received fixed wages).

However, while the remuneration system changes as above, there was no reason to conclude a new contract between the sales clerks and the Defendant, or to newly prepare the previous sales services contract. The Defendant appears to have not obtained the consent of the sales clerks, and there was no change in the duties of the sales clerks. Moreover, some of the Plaintiffs were employed at the time when the Defendant pays fixed pay as above. (11) The Defendant also paid regular payments to all the sales clerks on a specified date, such as name saving and Workers’ Day.

(12) On August 13, 2012, the Defendant exercised the authority to take disciplinary action against some of the sales clerks on the grounds of embezzlement due to false demand for wages of temporary employees, and false demand for meal expenses, etc. In certain cases, it appears that the sales clerks were subject to the Defendant’s employment rules, and paid business income tax not earned income tax, and were not recognized as workers in social security systems such as the fourth insurance. However, as seen earlier, there is room to view that the Defendant changed the method of dispatching the sales clerks to each department store, while entering into a sales service contract after receiving a written resignation from each department store and entering into a sales service contract with the sales clerks, the sales clerks were voluntarily determined by taking advantage of economic superior status.

B. In light of the above facts and circumstances in light of the legal principles as seen earlier, although the sales clerks including the Plaintiffs enter into a sales service contract with the Defendant and the forms of the contract are the same as the delegation contract, it is reasonable to view that the substance of the contract is a labor contract that provides the Defendant with labor in subordinate relationship for the purpose of wages.

C. Nevertheless, the court below held that it is difficult for the plaintiffs to be deemed workers under the Labor Standards Act, based on the circumstances stated in its reasoning, to make a decision by misapprehending the legal principles on the criteria for determining workers' gender under the Labor Standards Act.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Shin-chul

Justices Kim Yong-deok

Justices Kim Gin-young

Justices Lee Ki-taik

A person shall be appointed.