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Illegal Dispatch Litigation | A Supreme Court Judgment Recognizing a ‘Dispatch Relationship’ for Outsourced Safety-Patrol Workers of the Korea Expressway Corporation

In this illegal dispatch litigation, the Supreme Court upheld the lower court's determination on the establishment of a worker dispatch relationship and the arising of a direct employment obligation, while reversing and remanding part of the determination concerning the calculation of damages. (Supreme Court, Decision of December 11, 2025, 2021 Da 248053)

Author: 김국일

CONTENTS

1. Facts of the Illegal Dispatch Litigation
- - The Lower Court's Determination
2. The Supreme Court's Determination in the Illegal Dispatch Litigation
- - Whether a Worker Dispatch Relationship Was Established
- - Whether the Working Conditions Applicable Upon Direct Employment (the Regulations at Issue, etc.) Apply
- - Grounds for Reversal Concerning the Calculation of Damages
3. Significance of the Judgment in the Illegal Dispatch Litigation
- - Daeryun's Strategy

1. Facts of the Illegal Dispatch Litigation

The plaintiffs who filed this illegal dispatch litigation were workers who belonged to outsourcing companies that had entered into service contracts with the Korea Expressway Corporation and had been entrusted with tasks such as highway safety patrol, yet in practice performed safety-patrol duties at the Korea Expressway Corporation's worksites.

The plaintiffs, on the premise that an obligation to directly employ them had arisen for the Korea Expressway Corporation under Article 6-2(1) of the former Dispatch Act in force from 2007 or the Dispatch Act as amended in 2012 (collectively referred to below as the ‘Dispatch Act’), sought a declaration of intent to employ against the Korea Expressway Corporation.

In addition, on the ground of the failure to perform the direct employment obligation, they claimed damages equal to the difference remaining after deducting the amounts received from the outsourcing companies from the amounts of wages, allowances, welfare benefits, and severance pay owed under the Korea Expressway Corporation's employment rules and the like.

Specifically, they structured their claim around ① ‘base wages,’ including basic pay, bonuses, hazard allowances, duty allowances, and various allowances; ② ‘welfare benefits,’ including respect-for-elders payments, family allowances, welfare points, and childbirth incentives; ③ ‘statutory allowances,’ including overtime, night, and holiday work allowances and unused annual leave allowances (excluding Plaintiff 21); and ④ severance pay (excluding some plaintiffs).

The Lower Court's Determination

The lower court determined that the plaintiffs received substantial direction and orders from the Korea Expressway Corporation and therefore fell within a dispatched-worker relationship under the Dispatch Act, and that an obligation to directly employ the plaintiffs had accordingly arisen for the Korea Expressway Corporation.

However, for the plaintiffs whom the Korea Expressway Corporation had already directly employed as of January 1, 2019, the lower court dismissed the claim for a declaration of intent to employ, and it upheld the claim for the remaining plaintiffs.

In addition, in calculating damages, the lower court found that, before the outsourcing was completed (until April 2013), on-site safety patrol officers belonging to the Korea Expressway Corporation had performed work of the same or a similar kind as the plaintiffs, and so applied those working conditions; and that, even after the outsourcing was completed, it determined the working conditions the plaintiffs would have been subject to had they been directly employed, on the basis of the ‘Regulations on the Management of On-Site (Operational) Employees’ (the Regulations at issue in this case) and the related employment rules, and calculated the damages accordingly.

Main types of illegal dispatch, resulting punishment and obligations

2. The Supreme Court's Determination in the Illegal Dispatch Litigation

The Supreme Court divided its analysis broadly into the following sub-issues: (1) the establishment of a worker dispatch relationship and the direct employment obligation, (2) the working conditions applicable upon direct employment, and (3) the calculation of damages for failure to perform the direct employment obligation.

Whether a Worker Dispatch Relationship Was Established

The Supreme Court upheld the lower court's view that the plaintiffs received substantial direction and orders from the defendant (the Korea Expressway Corporation) and were therefore in a dispatched-worker relationship as defined by the Dispatch Act.

In other words, the establishment of the worker dispatch relationship itself, which is the starting point of this illegal dispatch litigation, was recognized by the Supreme Court as it stood.

Whether the Working Conditions Applicable Upon Direct Employment (the Regulations at Issue, etc.) Apply

On the premise of the framework of Article 6-2(3) of the Dispatch Act, the Supreme Court confirmed that, as a matter of principle, where there are workers performing work of the same or a similar kind, the employment rules and other working conditions applicable to those workers are to be followed, and where there are no such workers, the conditions are to be formed autonomously within a range that does not fall below the existing working conditions.

The Supreme Court then, having premised that, where autonomous formation is difficult because the using employer denies the dispatch relationship or for similar reasons, a court may apply the working conditions that would reasonably have been set by comprehensively considering, on a case-by-case basis, the content and value of the work, the using employer's system of working conditions, the legislative purpose, and notions of fairness, accepted the lower court's conclusion of calculating the damages on the basis of the Regulations at issue in this case and the like.

Grounds for Reversal Concerning the Calculation of Damages

As to the monetary claim (damages), the Supreme Court reversed and remanded part of the lower court's determination for the following reasons.

① Limiting the liability owed to the employment-severed plaintiffs (to 80%) is improper

The lower court limited the defendant's liability to 80% on the ground that the damage had expanded as the employment-severed plaintiffs left and replacement personnel were brought in. The Supreme Court, however, held that the expansion of the damage was essentially the result of the defendant's choice of an unlawful staffing method (the continuation of a state in violation of the Dispatch Act), and that limiting liability on that ground was markedly unreasonable in light of the principle of equity.

This part accordingly became subject to reversal.

② Damages equivalent to severance pay: dismissal on the sole basis that “the employment relationship had not terminated” is improper

The lower court dismissed the claim on the view that, for the plaintiffs directly employed as of January 1, 2019, the employment relationship had not terminated and so severance-pay damage had not been fixed. The Supreme Court, however, pointed out that, considering the structure of the ‘agreement on conversion to regular employment’ and the January 1, 2019 hiring (including the assertion of new hiring), there is room to view the plaintiffs as having waived their right to claim direct employment going forward and having accepted new hiring.

If so, the period from the date the direct employment obligation arose until December 31, 2018 may not be included in the period of continuous service for future severance-pay calculation, so there is a possibility that the severance-pay equivalent for that period may be fixed as damage. The Supreme Court therefore held that the lower court's dismissal without further examination was unlawful.

③ Overtime, night, and holiday work allowances for the Type 6 plaintiffs: insufficient examination of ‘provision of work’ for part of the period

For the Type 6 plaintiffs, for whom materials such as wage ledgers are lacking, the damage should be recognized only after examining, for part of the period, the fact of the provision of work (or whether the non-provision of work was due to the failure to perform the direct employment obligation). The Supreme Court held that the lower court erred in applying the calculation formula and upholding the claim without examining this sufficiently.

④ Unused annual leave allowances: insufficient examination of the actual operation of the annual leave use promotion system

The lower court recognized as damage the amount equivalent to the number of days of annual leave that accrued, on grounds such as the defendant's failure to prove the plaintiffs' ‘number of days used.’

The Supreme Court, however, held that the lower court should have examined whether, had the annual leave use promotion system under Article 61 of the Labor Standards Act actually been operated at the defendant's worksite, it was clear that the plaintiffs would have received use promotion had they been directly employed, and whether it was clear that they would nonetheless voluntarily not have used the leave, yet the lower court did not do so.

⑤ Deduction of statutory allowances (offsetting of gains): even where “only some items are claimed,” the amounts paid by the outsourcing companies are in principle to be deducted

The lower court took the view that, for periods in which the plaintiffs did not claim statutory allowances, the statutory allowances paid by the outsourcing companies were not to be deducted.

The Supreme Court, however, held that the benefit the plaintiffs obtained from the failure to perform the direct employment obligation is the full amount of the wages and the like received from the dispatch employer, and that the scope of deduction cannot be limited by the circumstance that a plaintiff claimed only some items.

It pointed out, however, that on remand, in calculating the deduction, the court should offset gains against the “total damage” for the same period, and should also determine fairly how to handle cases where the remaining balance exceeds the amount claimed.

3. Significance of the Judgment in the Illegal Dispatch Litigation

This judgment is significant in that, going beyond the establishment of the dispatch relationship itself in illegal dispatch litigation, it set out, on multiple levels, precise standards for the calculation of damages, which is central to the monetary claim arising from the failure to perform the direct employment obligation.

First, it made clear that where illegal dispatch is recognized, the offsetting of gains (deduction) in calculating damages should, as a matter of principle, be approached on the basis of the “full amount of the wages and the like received from the dispatch employer,” regardless of the selection of the items claimed.

Second, it emphasized that an unused annual leave allowance is not to be fixed as damage based solely on the number of days that accrued, but requires careful examination of the factual matter of the actual operation of the annual leave use promotion system at the using worksite.

Third, in a case where it is unclear whether the conversion to regular employment was ‘performance of direct employment’ or ‘new hiring,’ it set out the standard that severance-pay equivalent damage is difficult to dismiss on the formal logic alone that “the employment relationship has not yet terminated,” and that whether the right was waived and the employment relationship was reset must be examined in substance.

Fourth, it made clear that a limitation of liability toward employment-severed plaintiffs should not be readily recognized when it is connected to the using employer's unlawful staffing structure.

Daeryun's Strategy

This judgment shows that, in practice, illegal dispatch litigation may be won or lost in the calculation and proof of monetary amounts after “illegal dispatch is recognized.”

Daeryun assists with related cases in the following ways.

▶ Precise analysis of the facts

We give dimension, as a matter of fact, to the points that determine whether the plaintiff's actual work is subcontracting or dispatch (direction and orders, the organization of work, involvement in evaluation and discipline, the independence of the work, and so on), and we organize along a timeline the point at which the direct employment obligation arose (the enforcement and term of the law, whether permission was granted, and the form of use), thereby first establishing the baseline of the issues.

▶ Structuring the system of working conditions and the ‘same or similar work’ comparison

On the premise of applying Article 6-2(3) of the Dispatch Act, we structure, in the form of a comparison table, whether workers performing work of the same or a similar kind exist within the using employer's internal rules (regulations, employment rules, and wage systems) and, if so, which job category and wage table serve as the standard, thereby clarifying “which working conditions should be applied.”

▶ Securing ‘evidentiary materials’ for the calculation of damages (the difference) in advance

Where there are gaps in the materials, as in this case with omissions in wage ledgers, work-performance records, and ordinary wage entries, we reinforce the fact of the provision of work with alternative evidence such as salary transfer records, shift-work schedules, attendance records, and on-site operation logs, and we first verify, period by period, whether a claim for damages is possible (the attribution of the provision or non-provision of work).

▶ Responding to risks regarding unused annual leave allowances and the annual leave use promotion system

Where an annual leave use promotion system has been operated at the using worksite, we identify as fact its scope of application, period of operation, the actual method of notice and use promotion, and the practice of leave use, in order to argue precisely “whether it is clear that use promotion would have been received had the worker been directly employed.”

Conversely, where there are circumstances showing that the promotion was nominal or had no practical effect, we design the structure for recognizing damage around those circumstances.

If you are in a situation that calls for legal assistance regarding illegal dispatch or dispatched work, you are welcome to make a 🔗legal consultation reservation at any time.

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