[1] Standard for determining whether an employee is a worker under the Labor Standards Act

[2] The case holding that in a case where Gap et al. operated Gap's store after concluding a consignment contract with Gap corporation, and sold Eul et al.'s goods constitutes workers under the Labor Standards Act, the case holding that Eul et al. cannot be deemed as workers under the Labor Standards Act in light of the subsidiary nature and exclusive nature of Eul et al.'s company Gap

[1] Determination of whether a worker is a worker under the Labor Standards Act shall be based on whether a contract form is an employment contract or a contract for employment, and whether a worker has a subordinate relationship with an employer for the purpose of earning wages at a business or workplace. Determination of whether a dependent relationship as mentioned above is based on the contents of work determined by the employer, and whether the employer has a considerable command and supervision during the performance of work, under the rules of employment or employment regulations, etc., the employer is bound by the employer, whether the employer is capable of operating his/her business on his/her own account, such as possessing equipment, raw materials, work tools, etc. or having a third party employ and act on behalf of the employer, whether the employer has a risk, such as the creation of profit and loss by providing labor, and whether the nature of remuneration is the subject of the work itself, the basic salary or fixed wage is determined, whether the continuousness of the provision of labor, the existence and degree of exclusive affiliation to the employer, and other economic and social conditions such as whether the social security system is recognized as an employee.

Meanwhile, the issue of whether a worker is a worker in an individual case where the worker is disputed is bound to vary depending on the specific facts, such as the type of work, and the degree of proof at the individual workplace. In a case where the circumstances where it is difficult to recognize the worker as a result of a fact-finding hearing, or where the party responsible for proving the worker status fails to submit evidence proving the specific facts during the litigation process, the worker

[2] In a case where the issue is whether Gap company Eul et al. operated Gap company's sales store after concluding a consignment contract with Gap company, and sold Gap company's goods constitutes workers under the Labor Standards Act, the case holding that Gap company's sales commission contract concluded with Eul et al., such as determining the kind and quantity of goods and selling only the goods supplied by Eul company's goods at the contract site, in principle, can affirm the worker's nature, but it cannot be viewed as an important matter to determine whether Eul et al. constitutes workers because Eul et al. was performed similarly to an independent individual entrepreneur's agent, and it is not an important matter to determine whether Eul et al. is a worker, and it is weak that Eul et al.'s subordinate and exclusive nature to Eul et al., such as Gap et al.'s sales commission contract without any upper or lower limit, and Eul et al.'s wages and operation expenses should be paid to Eul's sales salesperson's wages, part of sales store operation expenses, etc. for its own account, and it cannot be viewed as Gap's wages.

[1] Article 2 (1) 1 of the Labor Standards Act / [2] Article 2 (1) 1 of the Labor Standards Act

[1] Supreme Court Decision 2004Da29736 Decided December 7, 2006 (Gong2007Sang, 104) Supreme Court Decision 2015Da252891 Decided April 15, 2016, Supreme Court Decision 2015Da59146 Decided January 25, 2017 (Gong2017Sang, 455)

See Attached List of Plaintiffs (Attorneys O Dong-dong et al., Counsel for the plaintiff-appellant)

Samsung C&T Co., Ltd. (LLC, Attorneys Jeong Jin-ho et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2018Na205780 decided December 20, 2019

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. Whether a worker is a worker under the Labor Standards Act shall be determined by whether the form of a 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 a business or workplace. Whether the above subordinate relationship is determined by the employer and the employer shall be subject to the rules of employment or the rules of employment, the rules of employment or the rules of employment, etc., and whether the employer is subject to considerable direction and supervision during the performance of duties, whether the employer is bound by the employer, whether the employer is able to operate his/her business on his/her own account, such as the purchase of equipment, raw materials, work tools, etc., and the occurrence of profit and loss through the provision of labor, and whether the nature of remuneration, such as the nature of the work itself, whether the basic salary or fixed wage was determined, whether the continuousness of the provision of labor, the existence and degree of exclusive affiliation to the employer, and whether the social security system is recognized as an employee (see, e.g., Supreme Court Decision 2006Da3736, Apr. 27, 2006).

Meanwhile, the issue of whether a worker is a worker in an individual case disputing the worker nature ought to vary depending on the specific facts, such as the form of work, and the degree of proof at the individual workplace. In a case where the fact-finding hearing revealed the circumstances that are difficult to recognize the worker nature, or where the party responsible for proving the worker nature fails to submit evidence proving the specific facts during the litigation process, the worker nature may be denied (see Supreme Court Decision 2015Da252891, Apr. 15, 2016, etc.).

2. It can be seen that the Plaintiffs (the first instance court referred to as “sales manager,” while the lower court referred to as “entrusted store owner,” are mixed with the elements that can affirm the nature of workers in the consignment contract entered into with the Defendant.

A. The Defendant determines the type and quantity of the goods to be supplied by the Defendant, and the Plaintiffs, in principle, shall sell only the goods supplied by the Defendant at the contract site at the price determined by the Defendant. The Plaintiffs, in accordance with the Defendant’s guidelines, shall conduct advertising or display, etc. to promote the sale of the goods, shall cooperate in the Defendant’s sales and promotional events, and the Defendant may, if necessary, request the Plaintiffs to operate the store. The Plaintiffs shall keep the inventory details in detail as determined by the Defendant, and present them at the Defendant’s request, and the Defendant may conduct a inventory inspection, if necessary. Such matters are elements to affirm the employee status.

B. The Defendant shall pay to the Plaintiffs a certain ratio of the sales performance of goods each month as consignment sales commission. The Plaintiffs shall prepare a labor contract and bear the employer’s responsibility as prescribed by the Labor Relations Act, such as direct employment of the Plaintiffs and the incidental pay. Such matters are factors that can deny the nature of workers.

3. However, we examine the issue of whether the Plaintiffs are workers under the Labor Standards Act, as it is based on the substance of the provision of labor rather than the phrase of the consignment sale contract.

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

1) The Defendant concluded a sales contract with the department store operating companies in order to sell the original Defendant’s manufactured clothes products, and dispatched the Defendant’s regular employees to the department store in order to sell the goods. Since 1999, the Defendant concluded a sales contract with the Defendant’s stores in the department store and entered into a sales contract with the Defendant’s sale of the goods and entered into a sales contract with the Defendant’s sale of the goods. Therefore, unlike those who were employed as regular employees of the Defendant shop in the department store and were forced to enter into a sales contract by submitting a written resignation and concluding a sales contract, the Plaintiffs maintained only the status of the sales manager under the sales contract from the beginning.

2) The Defendant did not manage good-time by regularly checking the Plaintiffs’ attendance and retirement hours, and did not control leave, and did not exercise the right of disciplinary action against the Plaintiffs.

3) The Defendant entered into a consignment contract only with the Plaintiffs, and did not participate in the recruitment of the sales clerks or did not bear the payment of the sales clerks. The Plaintiffs paid the benefits while directly employing the necessary sales clerks according to the sales situation.

4) The Plaintiffs were able to have a salesperson work on behalf of him to a certain extent, and the Plaintiffs concluded a consignment sale contract with the Defendant and operated the store concurrently, such as operating the Defendant’s agency at the same time.

5) The Defendant paid only the fees calculated by applying the fee rate stipulated in the consignment sale contract to the Plaintiffs, and there is no upper or lower limit on the fee, and there is a reasonable difference between the Plaintiffs and the monthly fee amount of individual Plaintiff.

6) The Plaintiffs purchased or shared the remaining equipment necessary for the store operation, excluding the equipment that the Defendant had used without compensation.

7) The Defendant specifically instructed the method of display of goods in the store, prevented the Defendant from selling goods at a discounted price, and ordered the Defendant from selling goods at a discounted price. However, this management method is not significantly different from that of an agent as an individual entrepreneur.

B. In full view of the following circumstances revealed in the above facts, the Plaintiffs cannot be deemed as workers under the Labor Standards Act who provided labor to the Defendant in a subordinate relationship for the purpose of wages.

1) The elements to affirm the nature of workers indicated in the consignment sale contract entered into with the Defendant are similar to the agent owner who is an independent independent business entity by the Defendant, and thus, it cannot be deemed as an important factor to determine whether the Plaintiffs constitute workers.

2) The Defendant did not manage the Plaintiffs’ probation, and the Plaintiffs are not subordinate to and exclusive to the Defendant, such as that the Plaintiffs are able to have their salespersons work on behalf of themselves to a certain extent.

3) The Plaintiffs are obliged to receive fees that do not have a upper or lower limit depending on the sales performance and pay the sales salesperson’s salary or part of the sales outlet operating expenses. Therefore, it is difficult to deem the said fees to have been engaged in business on their own account to a certain extent.

C. To the same purport, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or by misapprehending the legal doctrine on criteria for determining workers, without failing to exhaust all necessary deliberations, contrary to what is alleged in the grounds of appeal.

4. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Attachment] List of Plaintiffs: Omitted

Justices Noh Tae-tae (Presiding Justice)