2015Da62456 Retirement Allowance, etc.

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Bosene Co., Ltd.

Seoul High Court Decision 2014Na48820 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 (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Determination as to whether a labor provider constitutes a worker under the Labor Standards Act ought to be based on whether the form of a contract is an employment contract or a contract for work, and whether a labor provider provided labor in a subordinate relationship with an employer for the purpose of wages at a business or workplace. Determination of whether a labor provider is a subordinate relationship ought to be made based on whether the employer determines the details of work and is subject to the rules of employment or service regulations, and the employer is bound by the employer, whether the employer is able to run his/her business on his/her own account, such as the designation of working hours and working place, whether the employer is bound by the employer, 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 loss through the provision of labor, whether the nature of remuneration is the nature of work itself, whether the basic salary or fixed wage was determined, whether the continuousness and degree of the provision of labor relations were exclusive to the employer, and whether the social security system is recognized as an employee.

2. A. According to the reasoning of the lower judgment and the record, the following circumstances are revealed. (1) The Defendant: (a) was a company engaged in the business of manufacturing and selling KONEX, R2C, and BM bags; and (b) was established and operated by entering into a contract with the company operating the department store to purchase on credit goods manufactured by the Defendant and sell them to the Defendant, and pay the Defendant a balance after deducting the commission from the sales revenue. (2) The Defendant initially employed sales clerks engaged in sales in the Defendant’s stores in each department store as full-time employees in the department store; (c) submitted a written resignation from them around the end of August 2005, and (d) concluded a sales service agreement with each sales salesperson on September 1, 2005, which provides that the sales commission shall be deducted from the sales revenue; and (d) concluded a sales service agreement with each sales salesperson in the form of a sales service agreement, not a sales commission agreement.

On the other hand, Plaintiff A entered into a sales services contract with the Defendant around February 1, 2010; Plaintiff B around November 1, 2010; Plaintiff C entered into the sales services contract with the Defendant around September 1, 201; Plaintiff A entered into the Ulsan E department store Ferble disease store. Plaintiff B is manager in the Ulsan E department store.

As a result, Plaintiff B, as a manager, performed the sales business as a master, Plaintiff C entered into a sales service contract with the Defendant on March 2009 and performed the sales business as a manager in Busan G department store H department disease.

3) Each sales salesperson has worked for two or five persons within the number of personnel set by the Defendant for each sales outlet. If a vacancy occurs due to the retirement of a sales salesperson from a specific sales outlet, the Defendant obtained the recommendation of the sales salesperson or placed a direct job offer advertisement. The sales salesperson, in accordance with the business hours of the department store (from 10:30 to 20:00 on a replacement) fixed-scale sales store, was allowed to sell the Defendant’s specific brand products at the price determined by the Defendant, and it is not allowed to sell other products or adjust the price at his/her discretion.

The events, discount events, etc. conducted at each store were conducted in accordance with the department store or the defendant's plan.

4) Under the sales services contract, the Defendant calculated the monthly fee rate by multiplying the sales revenue of the relevant store by “store fee rate” and “individual fee rate”. “Personal fee rate” was set differently depending on the status of the store in question, namely, (1), (2), and (3) the status of the store in question. However, in the year 2005, the Defendant introduced the sales services contract, the amount increased by approximately 24.45% of the existing annual salary, as the base annual salary, was set at 85% or 120% of the base annual salary, and the Defendant subsequently changed the sales service contract to receive more than 85% or 130% of the standard annual salary from September 1, 2006 to September 1, 2007, and the Defendant did not receive more than 20% of the annual salary from the 20th anniversary of the previous sales services contract. In principle, the Defendant did not receive more than 10% of the annual salary from the 20th anniversary of the previous sales services contract.

On the other hand, the plaintiff A and D received fixed fees during the contract period or sales based on basic fees.

In addition to other fees that seem to have been increased or decreased, Plaintiff B and C received regardless of their sales amount during the contract period. Plaintiff B and C received commission regardless of their sales amount during the contract period. The Defendant sold the brand product at approximately 75 stores opened in approximately 2 to 3 75 copies per unit nationwide, and there have been approximately 400 sales clerks in each store. The Defendant grasped the current status of sales and inventory of each store through the computer network linked to each store in real time. The Defendant visited employees of the head office of the Defendant visiting each store at approximately one week to check the current status of sales environment and sales, and thereby identified the status of sales clerks of each store. The Defendant terminated the sales services contract with the sales clerks who committed the act of embezzlement of gift certificates, and also terminated the sales services contract with the sales clerks.

6) Even after the introduction of a sales service contract, the Defendant also delivered various official announcements related to the work to the salespersons in each store via the business-based computer network at any time. Representatively, there were ① the attendance time of each individual and ② the notice to register the worker’s “(on the spot) time” on a hourly basis; ② the notice to promptly submit the repair service status table; ② the notice to promptly submit the repair service status table; ④ the notice to the goods’ law, return, price, discount event, etc.; ⑤ the notice to the inventory office; ⑤ the notice to the inventory office; ⑤ the notice to the sales office; ② the notice to the sales office; and ② the notice to the sales office; and ⑤ the product DP volume survey (the direction of the president). It does not seem to have been a temporary measure for the Defendant to manage the sales’s work status through the computer network and deliver instructions related to the work.

7) The sales clerks did not prepare and submit a “work bonus” when they do not attend the store on the grounds of leave, sick leave, etc., but did not submit a monthly work status list, etc., and reported to the Defendant in advance or ex post facto to the Defendant. The sales clerks continued to work on the business day of the department store except where they are on the summer leave season in August, 7, and 8. Accordingly, the sales clerks were difficult to find any additional income by performing other duties.

In the event that female salespersons are unable to work for a long time due to childbirth, childcare, etc., they could employ part-time workers and have them act on behalf of them. However, it does not seem that the salesperson could have worked on his/her own discretion by utilizing part-time workers, etc. for a long time, even though there is no such reason.

8) At the head office, the Defendant held two times a year’s presentation on goods to explain new products to the sales clerks or educate them about the sales guidelines, as necessary, and did not conduct special job training other than design education, etc.., and instead, the department stores with stores provided preliminary education to the sales clerks. The same applies to the Defendant prior to the introduction of sales services contracts.

19) The Defendant spent all expenses incurred in the operation of each store by providing the equipment, subsidiary materials, etc. used in each store free of charge. The Defendant sent the head office interior manager to each store and changed the interior or the condition of goods display, etc. as necessary.

In preparation for the loss, damage, theft, or loss of goods caused by a cause attributable to the salesperson, the defendant set aside an amount equivalent to 5% of the base monthly salary from the monthly sales commission as a sales deposit, and paid to the salesperson if a certain amount is he/she he/she stockpiled.

In the event of shortage of daily loss due to the execution of discount events, etc. in each store, the salesperson employed a part-time employee and used it as a staff member assisting the sales of the part-time employee. Each salesman reported monthly to the Defendant the employment and current status of the part-time employee, etc., and the Defendant paid the part-time employee by transferring the benefits for part-time employee to a part-time salesperson or directly remitting them to a part-time employee.

10) The sales clerks seem to have worked for a relatively long period. 11) Unlike employees at the head office, the Defendant did not apply personnel regulations or rules of employment to the sales clerks, and withheld business income tax instead of earned income tax, and ordered sales clerks.

The so-called 4th insurance was not subscribed.

B. We examine these circumstances in light of the legal principles as seen earlier. (1) Since the Defendant’s sales and profit size depends on the size of each store, the sales duties of the salespersons are core and important parts of the Defendant’s business. Moreover, the Defendant’s attitude of the salesperson directly responding to customers in the Defendant’s store not only affect sales but also may have a significant impact on the Defendant’s external image. As such, the Defendant has a large incentive to direct and supervise the salesperson’s business to ensure the proper performance of duties. In fact, the Defendant had the employees of the headquarters visit the store periodically to check the status of the salesperson’s work by allowing the employees to visit the store, check the status of the salesperson’s work, and even after receiving monthly reports on the status of the salesperson’s work, he managed and supervised the salesperson’s work performance by allowing the employees to frequently attend the store and register daily work hours on the computer network. It is quite different from the Defendant’s exercise of authority to take disciplinary measures, such as cancelling sales service contracts with the salesperson or cancelling sales contracts with poor sales.

2) After entering into a sales services contract, the sales salesperson received fees that are linked to the sales of each store, but the upper limit of fees was set and thus, even if a large number of customers are invited, the size of revenues could not be increased to a certain level. On the other hand, the sales of the store was paid remuneration higher than a certain level even if the sales of the store was low, and the Defendant was fully responsible for all the expenses incurred in the sales operation, such as the payment of part-time fee, etc., so the sales salesperson did not support the risk of loss due to the sales.

In particular, Plaintiff B and C received a fee set regardless of the amount of sales. In light of these circumstances, even if the salesperson receives a fee linked to the amount of sales, it cannot be said that the Plaintiff B and C have the nature of an entrepreneur who creates profits and bears risks of losses by independently running his/her business on its own account.

3) Even if a salesperson received fees that are linked to the sales of each sales outlet, it appears that the sales salesperson actually received the lower limit of fees, and is merely a form of additionally receiving bonus for performance of each month. Moreover, the period during which the Defendant changed the remuneration system to pay a fixed fee to all salespersons is considerably more than three years. As long as the salesperson provided labor for not less than a certain number of hours every day in accordance with the hours of operation of the department store at the Defendant’s specific sales outlet and received a certain amount of remuneration as remuneration, it may be reasonable to view that the salesperson’s remuneration has the nature of the salesperson’s remuneration for labor. Furthermore, even if the Defendant unilaterally changed or adjusted the remuneration system to the salesperson in the middle of the sales store, the circumstance that the salesperson was subordinate to the Defendant, even though having unilaterally changed or adjusted the remuneration system to the salesperson, shows that the salesperson was not in a position of providing labor exclusively to the Defendant, except for the sale of the Defendant’s products. Furthermore, it is also difficult for the Defendant to arbitrarily determine the amount of wage and salary income tax on behalf of the salesperson.

C. Comprehensively taking account of these circumstances, sales clerks, including the Plaintiffs, enter into a sales service contract with the Defendant and enter into such contract as a delegation contract, but its substance constitutes workers under the Labor Standards Act that provide the Defendant with labor in subordinate relationship for the purpose of wages.

There are many room for them.

Nevertheless, based on the circumstances indicated in its reasoning, the lower court determined to the effect that the Plaintiffs’ provision of labor to the Defendant in a subordinate relationship for the purpose of wages does not constitute workers. In so determining, the lower court erred by misapprehending the legal doctrine on workers under the Labor Standards Act, which led to failure to exhaust all necessary deliberations

3. 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 Lee Ki-taik

Justices Kim Yong-deok

Jeju High Court Decision 201Na1548

Justices Kim Gin-young