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I am at risk of punishment for illegal worker dispatch. How should I respond?

Our company is a mid-sized enterprise engaged in manufacturing, and we entrust part of our production process to an outside contractor under a subcontracting arrangement. Workers belonging to the outside contractor work at our worksite, and we had believed that work instructions were given through the outside contractor's managers. However, we recently received a request from the Ministry of Employment and Labor to submit materials related to illegal dispatch, and we were told that the fact that our managers were involved in the work schedule or methods in some processes could be a problem. I would like to have this reviewed to determine whether it is a matter that could result in punishment for illegal worker dispatch.

Punishment for illegal worker dispatch

Answer to Related Inquiry

Author: 김국일

Hello. This is a corporate attorney at Daeryun Law LLC.

When it appears that you are at risk of punishment for illegal worker dispatch, the most important thing is not 'an approach that merely tries to explain the current situation' but 'accurately examining the legal structure first.'

Illegal dispatch can be recognized where, even if a subcontracting or service contract has been concluded in form, the using employer is in substance directly directing and commanding the workers.

The Ministry of Employment and Labor and the courts review the following factors comprehensively.

- Who directly gives work instructions to the workers belonging to the outside contractor

- Who determines the content, order, and method of the work

- Whether the using employer is involved in attendance management and work evaluation

- Whether the outside contractor functions as an independent business entity

Therefore, if the using employer's management and direction were involved in even some of the processes, there is room for the matter to be treated as illegal dispatch.

If the fact of illegal dispatch is recognized, the company may be exposed to the following combined risks.

- The arising of an obligation to directly employ the workers

- The possibility of civil disputes, such as a lawsuit to confirm the status of a worker

- Criminal punishment or an administrative fine for a violation of the Act on the Protection of Dispatched Workers and the Labor Standards Act

- The need to re-examine the existing subcontracting and outsourcing contracts as a whole

In particular, where the operation has run under the same structure for a long period rather than being a short-term violation, the risk can expand even further.

At the stage where an investigation related to illegal dispatch has begun, the submission of materials and statements are key factors that can determine whether punishment follows.

It is advisable for a company at risk of punishment for illegal worker dispatch to respond in the following order.

1. A legal review of the current outsourcing and subcontracting structure

2. Distinguishing the processes that may be problematic from those that are not

3. Organizing whether there is a substantive relationship of direction and command

4. Reviewing alternative scenarios, such as future direct employment or structural improvement

If you are at risk of punishment for illegal worker dispatch, we recommend that, from the early stage of the investigation, you prepare a response strategy in the direction that places the least burden on the company through professional legal advice.

Our firm provides advice on corporate labor matters as a whole, including punishment for illegal worker dispatch and the amendment of the Yellow Envelope Act.