Corporate trends / Performance record
Unfair Dismissal Decision on “Employer Status (Multiple Workplaces)” (Unfair Dismissal 410)
- Date2026/04/28 04:15
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This case concerns a decision in which the employees partially prevailed on the issue of “employer status (multiple workplaces).”
[Case Information]
This case is a decision in which the employees partially prevailed on the issue of “employer status (multiple workplaces).”
Decision Committee: Busan Regional Labor Relations Commission 2025Buhae9210 ○ ○ ○ Application for Remedy of Unfair Dismissal
Decision date: 2026.02.11 · Result: Partially upheld
Key Issue Summary:
A. Standing of Employer 1 and Employer 2 as proper parties: Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
1. Legal Implications
Ⅰ. Case Overview
This case, heard by a Labor Relations Commission, concerned which party constitutes the true employer under the Labor Standards Act in a structure where multiple business owners exist, and whether that employer unfairly dismissed the employees. In a case where an application for a remedy for unfair dismissal and an application for a monetary compensation order were filed together, the Busan Regional Labor Relations Commission examined, in a consolidated manner, the standing of Employer 1 and Employer 2 as proper parties, the legitimacy of the dismissal, and the calculation of the monetary compensation.
The employees argued that Employer 1 and Employer 2 were in substance operated under a single management entity, and that their dismissal constituted unfair dismissal carried out without just cause or due process. The Labor Relations Commission ordered relief by accepting monetary compensation orders in lieu of reinstatement to the original positions.
Ⅱ. Issues
The issue in this case is: “In a situation where, in form, multiple corporations/business owners exist, which entity qualifies as the employer under the Labor Standards Act, and whether the termination of the employment relationship by that employer constitutes a ‘dismissal’ subject to remedy for unfair dismissal.”
Furthermore, where a dismissal is found, the questions arose as to whether a dismissal that fails to comply with statutory procedures under the Labor Standards Act, such as written notice, is automatically to be evaluated as an unfair dismissal, and to what extent monetary compensation can be calculated for employees who choose a monetary compensation order instead of reinstatement.
Ⅲ. Summary of the Labor Relations Commission’s Findings
The panel in this case found that Employer 1 was the substantive employer in the employment relationship, in light of the following: Employer 1 gave specific work instructions to the employees, paid their wages, directly filed reports confirming work details and made contributions to the retirement mutual aid scheme; Employer 1 and Employer 2 in substance shared office space, personnel, and accounting under the same management entity; and the employees worked in the same space and in the same manner as the employees belonging to Employer 2.
With respect to the termination of the employment relationship, the Commission held that the dismissal in this case constituted an unfair dismissal lacking just cause and due process under the Labor Standards Act, on the grounds that Employer 1 unilaterally terminated the employment relationship against the employees’ will, failed entirely to provide written notice of the reasons for dismissal and the timing of dismissal as required by Article 27 of the Labor Standards Act, and did not provide a reasonable explanation of the necessity and grounds for dismissal or prove just cause.
Furthermore, the Labor Relations Commission held that, once unfair dismissal is recognized, the monetary compensation order system under Article 28 of the Labor Standards Act and the Labor Relations Commission Rules could be applied. It found it appropriate to order Employer 1 to pay monetary compensation calculated, for each employee, on the basis of the amount of wages they would have received had they continued to work normally from the date of dismissal to the date of the decision, resulting in compensation amounts ranging from approximately KRW 18 million to KRW 24 million per employee.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, it is important to bear in mind that circumstances such as in whose name the company paying the salary is registered, and who in substance issues work instructions, manages attendance, and makes contributions to the retirement mutual aid scheme, are key criteria in determining the “real employer.” Even where multiple corporations or sole proprietorships are involved, the entity that in substance exercises direction and supervision and pays wages can be recognized as the employer under the Labor Standards Act, and a unilateral termination of the employment relationship without written notice by that employer can be challenged as an unfair dismissal before the Labor Relations Commission.
In addition, when filing an application for remedy of unfair dismissal, if reinstatement to the original position is realistically difficult or not desired, employees may separately apply to the Labor Relations Commission for a monetary compensation order. In such cases, it is highly beneficial for the calculation of compensation to prepare in advance wage calculation materials such as pay slips for the three months prior to dismissal, employment contracts, and records of wage transfers.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer/company’s perspective, even where multiple corporations or sole proprietorships are operated, there is a high risk that the Labor Relations Commission or the courts will evaluate them as a single employer if, in practice, personnel, labor, and accounting functions are commingled. If the entities responsible for direction and supervision, wage payment, and reporting for social insurance and retirement mutual aid are not clearly separated and managed, an unexpected corporation or business owner may be recognized as the employer and bear liability in an unfair dismissal dispute.
Furthermore, when terminating an employee’s employment relationship, regardless of whether the termination is labeled as resignation or mutual agreement, at a minimum the statutory written notice requirement under the Labor Standards Act (a written document stating the reasons for dismissal and the timing of dismissal) must be satisfied. Neglecting this may result in a finding of unfair dismissal solely on the basis of procedural defects, irrespective of whether just cause exists.
Because disputes involving employer status and unfair dismissal turn critically on the organization of the factual circumstances, it is advisable at an early stage to obtain advice from a specialized labor law firm such as Labor Law Firm Law&, to restructure the arrangements as needed and, where necessary, to establish a response strategy for proceedings before the Labor Relations Commission.
2. Matters Decided
A. Case Overview and Procedural History
A. Standing of Employer 1 and Employer 2 as Proper Parties
Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
B. Existence and Legitimacy of the Dismissal (Cause and Procedure)
Employer 1 terminated the employment relationship against the employees’ will and did not provide written notice of the reasons for dismissal and the timing of dismissal; therefore, the dismissal is unfair.
C. Acceptance of the Application for a Monetary Compensation Order
By accepting the employees’ applications for a monetary compensation order, the Commission found it appropriate to calculate the monetary compensation as follows: Employee 1: KRW 18,161,720; Employee 2: KRW 24,072,660; Employee 3: KRW 24,984,410; Employee 4: KRW 19,353,100; Employee 5: KRW 19,820,300; Employee 6: KRW 24,180,000.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Findings
A. Standing of Employer 1 and Employer 2 as Proper Parties
Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
B. Existence and Legitimacy of the Dismissal (Cause and Procedure)
Employer 1 terminated the employment relationship against the employees’ will and did not provide written notice of the reasons for dismissal and the timing of dismissal; therefore, the dismissal is unfair.
C. Acceptance of the Application for a Monetary Compensation Order
By accepting the employees’ applications for a monetary compensation order, the Commission found it appropriate to calculate the monetary compensation as follows: Employee 1: KRW 18,161,720; Employee 2: KRW 24,072,660; Employee 3: KRW 24,984,410; Employee 4: KRW 19,353,100; Employee 5: KRW 19,820,300; Employee 6: KRW 24,180,000. /
[Further Related Decisions]
- “‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’ – Related Unfair Dismissal Decision”
- “‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’ – Related Unfair Dismissal Decision” – Decision date: – Case number: First-instance decision upheld
- “‘Expression of Intent to Resign (Resignation Remark in Telephone Call)’ – Related Unfair Dismissal Decision”
[Tags]
Unfair dismissal, employer status (multiple workplaces), others, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm
※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “‘Number of Regular Employees (Excluding Employees of Overseas Subsidiaries)’ – Related Unfair Dismissal Decision,” in a new window.
※ A list of decisions related to employer status (multiple workplaces) can be viewed together at “List of Decisions Related to Employer Status (Multiple Workplaces).”
※ Korean version of this case: Korean article
[Case Information]
This case is a decision in which the employees partially prevailed on the issue of “employer status (multiple workplaces).”
Decision Committee: Busan Regional Labor Relations Commission 2025Buhae9210 ○ ○ ○ Application for Remedy of Unfair Dismissal
Decision date: 2026.02.11 · Result: Partially upheld
Key Issue Summary:
A. Standing of Employer 1 and Employer 2 as proper parties: Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
1. Legal Implications
Ⅰ. Case Overview
This case, heard by a Labor Relations Commission, concerned which party constitutes the true employer under the Labor Standards Act in a structure where multiple business owners exist, and whether that employer unfairly dismissed the employees. In a case where an application for a remedy for unfair dismissal and an application for a monetary compensation order were filed together, the Busan Regional Labor Relations Commission examined, in a consolidated manner, the standing of Employer 1 and Employer 2 as proper parties, the legitimacy of the dismissal, and the calculation of the monetary compensation.
The employees argued that Employer 1 and Employer 2 were in substance operated under a single management entity, and that their dismissal constituted unfair dismissal carried out without just cause or due process. The Labor Relations Commission ordered relief by accepting monetary compensation orders in lieu of reinstatement to the original positions.
Ⅱ. Issues
The issue in this case is: “In a situation where, in form, multiple corporations/business owners exist, which entity qualifies as the employer under the Labor Standards Act, and whether the termination of the employment relationship by that employer constitutes a ‘dismissal’ subject to remedy for unfair dismissal.”
Furthermore, where a dismissal is found, the questions arose as to whether a dismissal that fails to comply with statutory procedures under the Labor Standards Act, such as written notice, is automatically to be evaluated as an unfair dismissal, and to what extent monetary compensation can be calculated for employees who choose a monetary compensation order instead of reinstatement.
Ⅲ. Summary of the Labor Relations Commission’s Findings
The panel in this case found that Employer 1 was the substantive employer in the employment relationship, in light of the following: Employer 1 gave specific work instructions to the employees, paid their wages, directly filed reports confirming work details and made contributions to the retirement mutual aid scheme; Employer 1 and Employer 2 in substance shared office space, personnel, and accounting under the same management entity; and the employees worked in the same space and in the same manner as the employees belonging to Employer 2.
With respect to the termination of the employment relationship, the Commission held that the dismissal in this case constituted an unfair dismissal lacking just cause and due process under the Labor Standards Act, on the grounds that Employer 1 unilaterally terminated the employment relationship against the employees’ will, failed entirely to provide written notice of the reasons for dismissal and the timing of dismissal as required by Article 27 of the Labor Standards Act, and did not provide a reasonable explanation of the necessity and grounds for dismissal or prove just cause.
Furthermore, the Labor Relations Commission held that, once unfair dismissal is recognized, the monetary compensation order system under Article 28 of the Labor Standards Act and the Labor Relations Commission Rules could be applied. It found it appropriate to order Employer 1 to pay monetary compensation calculated, for each employee, on the basis of the amount of wages they would have received had they continued to work normally from the date of dismissal to the date of the decision, resulting in compensation amounts ranging from approximately KRW 18 million to KRW 24 million per employee.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, it is important to bear in mind that circumstances such as in whose name the company paying the salary is registered, and who in substance issues work instructions, manages attendance, and makes contributions to the retirement mutual aid scheme, are key criteria in determining the “real employer.” Even where multiple corporations or sole proprietorships are involved, the entity that in substance exercises direction and supervision and pays wages can be recognized as the employer under the Labor Standards Act, and a unilateral termination of the employment relationship without written notice by that employer can be challenged as an unfair dismissal before the Labor Relations Commission.
In addition, when filing an application for remedy of unfair dismissal, if reinstatement to the original position is realistically difficult or not desired, employees may separately apply to the Labor Relations Commission for a monetary compensation order. In such cases, it is highly beneficial for the calculation of compensation to prepare in advance wage calculation materials such as pay slips for the three months prior to dismissal, employment contracts, and records of wage transfers.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer/company’s perspective, even where multiple corporations or sole proprietorships are operated, there is a high risk that the Labor Relations Commission or the courts will evaluate them as a single employer if, in practice, personnel, labor, and accounting functions are commingled. If the entities responsible for direction and supervision, wage payment, and reporting for social insurance and retirement mutual aid are not clearly separated and managed, an unexpected corporation or business owner may be recognized as the employer and bear liability in an unfair dismissal dispute.
Furthermore, when terminating an employee’s employment relationship, regardless of whether the termination is labeled as resignation or mutual agreement, at a minimum the statutory written notice requirement under the Labor Standards Act (a written document stating the reasons for dismissal and the timing of dismissal) must be satisfied. Neglecting this may result in a finding of unfair dismissal solely on the basis of procedural defects, irrespective of whether just cause exists.
Because disputes involving employer status and unfair dismissal turn critically on the organization of the factual circumstances, it is advisable at an early stage to obtain advice from a specialized labor law firm such as Labor Law Firm Law&, to restructure the arrangements as needed and, where necessary, to establish a response strategy for proceedings before the Labor Relations Commission.
2. Matters Decided
A. Case Overview and Procedural History
A. Standing of Employer 1 and Employer 2 as Proper Parties
Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
B. Existence and Legitimacy of the Dismissal (Cause and Procedure)
Employer 1 terminated the employment relationship against the employees’ will and did not provide written notice of the reasons for dismissal and the timing of dismissal; therefore, the dismissal is unfair.
C. Acceptance of the Application for a Monetary Compensation Order
By accepting the employees’ applications for a monetary compensation order, the Commission found it appropriate to calculate the monetary compensation as follows: Employee 1: KRW 18,161,720; Employee 2: KRW 24,072,660; Employee 3: KRW 24,984,410; Employee 4: KRW 19,353,100; Employee 5: KRW 19,820,300; Employee 6: KRW 24,180,000.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Findings
A. Standing of Employer 1 and Employer 2 as Proper Parties
Employer 2 is difficult to regard as an independent employer, and since Employer 1 issued work instructions to the employees, paid their wages, filed reports confirming work details, and made contributions to the retirement mutual aid scheme, Employer 1 held the status of “employer” under the Labor Standards Act in relation to the employees.
B. Existence and Legitimacy of the Dismissal (Cause and Procedure)
Employer 1 terminated the employment relationship against the employees’ will and did not provide written notice of the reasons for dismissal and the timing of dismissal; therefore, the dismissal is unfair.
C. Acceptance of the Application for a Monetary Compensation Order
By accepting the employees’ applications for a monetary compensation order, the Commission found it appropriate to calculate the monetary compensation as follows: Employee 1: KRW 18,161,720; Employee 2: KRW 24,072,660; Employee 3: KRW 24,984,410; Employee 4: KRW 19,353,100; Employee 5: KRW 19,820,300; Employee 6: KRW 24,180,000. /
[Further Related Decisions]
- “‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’ – Related Unfair Dismissal Decision”
- “‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’ – Related Unfair Dismissal Decision” – Decision date: – Case number: First-instance decision upheld
- “‘Expression of Intent to Resign (Resignation Remark in Telephone Call)’ – Related Unfair Dismissal Decision”
[Tags]
Unfair dismissal, employer status (multiple workplaces), others, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm
※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “‘Number of Regular Employees (Excluding Employees of Overseas Subsidiaries)’ – Related Unfair Dismissal Decision,” in a new window.
※ A list of decisions related to employer status (multiple workplaces) can be viewed together at “List of Decisions Related to Employer Status (Multiple Workplaces).”
※ Korean version of this case: Korean article
