CONTENTS
- 1. Labor Standards Act Litigation, the Persons and Companies Involved
- - Labor Standards Act Litigation, the Plaintiff's Arguments
- 2. Labor Standards Act Litigation, the Court's Determination
- 3. Labor Standards Act Litigation, the Relevant Statutes
- 4. Labor Standards Act Litigation, Daeryun's Strategy
1. Labor Standards Act Litigation, the Persons and Companies Involved
A: the employee
B: an advertising planning and production company that entered into an employment contract with A
C: a polling consultancy firm that entered into various service contracts with Company B and received fees
D: the representative director of Company C
Labor Standards Act Litigation, the Plaintiff's Arguments
The plaintiff in this litigation was A, an employee, who entered into an employment contract with Company B, which performs advertising planning work.
Company B maintained a very close relationship with Company C, a polling consultancy firm.
Company B paid sales agency fees to Company C and received various services from it, and the two companies also shared an office.
That was not all. Companies B and C held business meetings together and jointly prepared weekly work logs.
Having joined the company under these circumstances, A received notice of contract termination by telephone from Company B less than a month after signing on.
This was, in effect, a notice of "dismissal," and behind this situation lay a conflict between A and D (the representative director of Company C).
Shortly after joining, A was subjected to shouting and verbal abuse by D and demanded an apology, but the demand was not accepted.
A then filed a request for remedy with the Seoul Regional Labor Relations Commission, asserting that A had been unfairly dismissed for having demanded an apology.
The Labor Relations Commission, however, declined to grant the request, reasoning that Company B was a "workplace with fewer than five employees" and that the provisions on requests for remedy against unfair dismissal under the Labor Standards Act did not apply.
The National Labor Relations Commission, which handled the reexamination, likewise issued a decision of dismissal for the same reason, and A ultimately filed administrative litigation.
2. Labor Standards Act Litigation, the Court's Determination
The court determined that it was reasonable to regard Companies B and C as a "single workplace" within the meaning of the Labor Standards Act.
Although the two companies outwardly took the form of independent corporations, on examination they were ultimately one company.
The court stated that D gave specific and unilateral work instructions to Company B's employees, and that such instructions were given on a regular basis.
It further explained that D should be regarded as having, in substance, overseen the operations as a whole from the position of manager.
The court added that, because the dismissal of A was unilaterally communicated by telephone and the detailed grounds and timing were not notified in writing, the "unfair dismissal" was recognized.
3. Labor Standards Act Litigation, the Relevant Statutes
Article 11 of the Labor Standards Act (Scope of Application)
(1) This Act shall apply to all businesses or workplaces that ordinarily employ five or more employees. Provided, that this Act shall not apply to a business or workplace that employs only relatives living together, or to domestic workers.
(2) With respect to a business or workplace that ordinarily employs four or fewer employees, some provisions of this Act may apply as prescribed by Presidential Decree.
Provisions of the Act That Do Not Apply to Workplaces with Four or Fewer Employees
Restrictions on dismissal and requests for remedy against unfair dismissal (Article 23(1), Article 28), working hours (Article 50), allowances for extended, nighttime, and holiday work (Article 56), annual paid leave (Article 60), and prohibition of workplace harassment (Article 76-2)
4. Labor Standards Act Litigation, Daeryun's Strategy
Through this judgment, the court made clear that even where companies are "formally" separated, if they were "substantively" managed together, they must be treated as a single workplace.
This judgment is significant for employees and for employers alike.
In particular, employers who operate several workplaces each with fewer than five employees may need to thoroughly reexamine the way they run their companies.
As a partner to both businesses and employees, Daeryun Law Firm LLP provides legal services drawing on a wide range of practical experience accumulated over many years.
In addition, the firm works closely as one team with experts across various fields, including not only labor attorneys but also accountants, tax accountants, and patent attorneys.
If you need related consultation or advice, you are welcome to reach out to Daeryun Law Firm LLP at any time.
