[1] Standard of determining whether an employee is a worker under the Labor Standards Act, and standard of determining who is an employer obligated to pay wages under the Labor Standards Act

[2] In a case where Gap corporation contracted reinforced concrete construction among new construction works such as kindergartens from Eul corporation, and subcontracted the portion of wages for wooden construction among them to Byung who was unregistered constructor Byung, but supplied workers at the construction site upon Byung's request, which operated human resources supply company, and the above workers performed wooden construction work under Byung's direction and order, the case holding that Gap corporation is deemed to be Byung's employer and is jointly and severally liable for the payment of wages to concurrently workers under Article 44-2 (1) of the Labor Standards Act, since Gap corporation is a subcontractor, a subcontractor, and is jointly and severally liable for the payment of wages to employees, the court below erred by misapprehending legal principles, etc.

[1] Article 2(1)1 and 2 of the Labor Standards Act / [2] Article 2(1)1 and 2, and Article 44-2(1) of the Labor Standards Act

[1] Supreme Court Decision 2004Da29736 Decided December 7, 2006 (Gong2007Sang, 104) Supreme Court Decision 2006Do300 Decided December 7, 2006 (Gong2007Sang, 157)

Plaintiff (Law Firm U&N, Attorneys Yu-soo et al., Counsel for the plaintiff-appellant)

Han Chang Construction Co., Ltd. (Attorney Lee Byung-ho et al., Counsel for the defendant-appellant)

Daegu District Court Decision 2018Na314309 Decided July 4, 2019

The judgment below is reversed, and the case is remanded to the Daegu District Court Panel Division.

The grounds of appeal are examined.

1. Article 44-2(1) of the Labor Standards Act provides that where a contract is made on two or more occasions in a construction business, if a subcontractor who is not a constructor under the Framework Act on the Construction Industry fails to pay wages to his/her employees, an immediate upper tier contractor of such subcontractor shall be jointly and severally liable with the subcontractor to pay wages to his/her employees;

On the other hand, whether a contract constitutes a worker under the Labor Standards Act shall be determined depending on whether the substance of the contract is an employment contract or a contract for employment, and whether a worker has a subordinate relationship with an employer for the purpose of wages at the business or workplace is determined by the employer, and shall be subject to the rules of employment or the rules of service, etc. of the employer, and shall be subject to considerable direction and supervision by the employer in the course of performing the work, whether the employer is subject to designation of working hours and working place, whether the employer is able to operate his/her business on his/her own account, whether the labor provider is able to own equipment, raw materials, work tools, etc. or have a third party employ and act on behalf of the employer, and whether the risks such as the creation of profit and the occurrence of losses through the provision of labor are the nature of the work itself, whether the basic wage or fixed wage was determined, and whether the wage tax was withheld from the employment income tax, and whether the employment relationship and the degree thereof are exclusive to the employer, and whether the status as an employee is recognized as a labor under the social security system should be determined comprehensively based on various factors such.

2. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On July 2016, the Defendant awarded a contract for reinforced concrete construction among Kimcheon Innovation City (mutual omitted) kindergarten construction and child-care center construction works, and subcontracted the part of the wooden Construction’s wage construction (hereinafter “instant construction”) to the Nonparty, who is the unregistered constructor.

B. The Plaintiff operating a human resources supplier supplied workers at the construction site of this case from September 2016 to October 201 of the same year at the request of the Nonparty. Workers performed the duties of wood construction under the direction and order of the Nonparty.

C. The Plaintiff was allowed to collect wages from workers after having first paid the amount of money obtained by deducting the brokerage commission that the workers should pay from the wages of workers after investigating the number of labor supply days, wages, etc. of workers employed at the construction site of the instant case.

3. Examining these facts in light of the legal principles as seen earlier, inasmuch as workers supplied by the Plaintiff performed their duties under the direction and order at the construction site of this case managed by the Nonparty, the workers may be deemed to have provided their labor to the Nonparty in a subordinate relationship, so the said workers’ employer should be deemed to be the Nonparty. Therefore, the Defendant is jointly and severally liable for the payment of wages to the Nonparty, a subcontractor, pursuant to Article 44-2(1) of the Labor Standards Act.

Nevertheless, the lower court rejected the Plaintiff’s claim pursuant to Article 44-2(1) of the Labor Standards Act on the ground that there is no evidence that the employees agreed with the Nonparty regarding the working conditions, and that the Plaintiff paid wages on behalf of the employees, etc., by deeming that they were not the Nonparty, and thus, they were not the Nonparty. In so doing, the lower court erred by misapprehending the legal doctrine on the employer under the Labor Standards Act, failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment by violating logical and empirical rules and exceeding the bounds of the principle of free evaluation of evidence.

4. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)