Supreme Court: "Freelancers Are 'Workers' If They Receive Work Direction and Supervision"

Supreme Court in Seocho-dong, Seoul. Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that if a company directly supervises and controls work, working hours, and location, the individual should be considered an employee under the Labor Standards Act, even if the contract was made as a freelancer.

On the 21st, the Supreme Court's Third Division (Presiding Justice Min Yusook) announced that it upheld the lower court's ruling, which sentenced the CEO of a wedding company, Mr. A, to a fine of 10 million won in the appeal trial for charges including violation of the Labor Standards Act.

Mr. A, who operated a wedding company, was prosecuted for failing to pay severance pay of about 56 million won to seven wedding planners who worked at the company for about six years from July 2012 until their resignation. He was also charged with paying wages below the minimum wage and not providing annual leave allowances.

In response, Mr. A argued that the wedding planners were special employment workers or freelancers who signed service contracts, so they could not be considered employees. He also claimed that since they were not enrolled in the four major social insurances, the Labor Standards Act, the Act on the Guarantee of Employees' Retirement Benefits, and the Minimum Wage Act did not apply.

The first trial sentenced Mr. A to 10 months in prison with a two-year probation. The trial court stated, "The affected workers commuted at fixed times daily and reported regularly even when working outside the office," and "Mr. A managed their attendance through a computer network." It also added, "The company was fully responsible for tax management, and the affected workers did not have the status of individual business owners," and "Having additional income such as promotion fees besides the base salary is not grounds to deny employee status."

Regarding the contracts signed by the affected workers stating that the Labor Standards Act did not apply, the court pointed out, "Mr. A used his superior economic position to have them drafted."

The second trial also recognized Mr. A's charges but accepted the argument of excessive sentencing and reduced the penalty to a fine of 10 million won.

The Supreme Court agreed with this judgment. The court dismissed Mr. A's appeal, stating, "The lower court did not err in the legal principles regarding the determination of employee status in charges of violating the Labor Standards Act, the Act on the Guarantee of Employees' Retirement Benefits, and the Minimum Wage Act."

This content was produced with the assistance of AI translation services.