Corporate trends / Performance record
‘Employee Status and Transfer Orders (Transition to Direct Hospital Management)’ Unfair Dismissal Decision (Unfair Dismissal 86)
- Date2026/01/12 04:04
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[Case Information]
- Case Name: Unfair dismissal decision concerning “employee status and transfer orders (transition to direct hospital management)”
- Date of Decision:
- Case Number: Fully upheld
- Decision-Making Body: Incheon Regional Labor Relations Commission 2025Buhae697 ○ ○ ○ Unfair Dismissal Relief Application
19 November 2025
- Summary of Outcome:
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
1. Legal Implications
Ⅰ. Case Overview
This case concerns an unfair dismissal and personnel action relief application that arose after a hospital declared “direct management” as of 7 February 2025 and then exercised personnel and disciplinary authority over existing staff. The Incheon Regional Labor Relations Commission examined all of the following: whether the workers qualify as employees under the Labor Standards Act, the legitimacy of the wage reduction (pay cut) and transfer (change of workplace and assignment of new duties), and whether the final dismissal and wage reduction were justified. The Commission rendered a decision fully upholding the workers’ claims.
This article, from the perspective of Labor Law Firm Law&, organizes the key practical points that employees and companies should consider in similar cases, focusing on the structure of the Labor Relations Commission’s reasoning.
Ⅱ. Key Issues
The key issues in this case are:
“In a situation where, after the transition to direct hospital management, the existing personnel were subject to substantial direction and supervision and were paid wages, can they be regarded as employees under the Labor Standards Act, and did the wage reduction, transfer, and dismissal satisfy the requirements of legitimacy under Articles 23 and 95 of the Labor Standards Act?”
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The decision panel found that, after the employer declared direct management of the hospital, the employer designated the workers’ working hours and workplaces, exercised substantial direction and supervision while paying wages, and exercised personnel and disciplinary authority pursuant to the rules of employment and personnel regulations. In light of these factors demonstrating a subordinate relationship, the panel held that the workers qualify as employees under the Labor Standards Act.
With respect to Wage Reduction Disposition 1 imposed on Worker 1, the panel noted that under Article 95 of the Labor Standards Act, a wage reduction may not exceed “one day’s average wage on any one occasion and one-tenth of the total wages payable,” and found that Wage Reduction Disposition 1 exceeded this statutory ceiling and therefore violated the Labor Standards Act, rendering it unjust.
Regarding Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, the panel relied on established case law that, for a transfer or reassignment to be legitimate, the following must be comprehensively considered: (i) the objective necessity of the change in personnel allocation; (ii) the rationality of the selection of the affected employees; (iii) whether the measure contributes to the efficiency and rationality of business operations; (iv) whether the resulting disadvantages in the employees’ daily lives markedly exceed the range ordinarily tolerable; and (v) whether procedures required under the principle of good faith, such as consultation in the personnel process, were followed.
The panel held that the personnel orders in this case lacked business necessity, that the disadvantages to the workers’ daily lives resulting from the change of workplace and assignment of new duties were so significant as to exceed what workers are ordinarily expected to endure, and that there were no other circumstances justifying the measures. Accordingly, the orders constituted an abuse of rights and amounted to unjust transfer and unjust change of duties.
In addition, the alleged misconduct by the workers asserted by the employer was not substantiated when considered against the objective materials and statements. The dismissal of Worker 1 and Wage Reduction Disposition 2 imposed on Worker 2 and Worker 3 were therefore found to have been carried out in the absence of any disciplinary cause.
Because the disciplinary grounds themselves were not established and there was no fault on the part of the workers to justify Wage Reduction Disposition 2, the panel concluded that the dismissal in this case was unjust without even reaching the stage of examining whether the disciplinary measure fell within the permissible range of disciplinary discretion.
Ⅳ. Practical Points (From the Employee’s Perspective)
First, even if the written contract is styled as a contract for work, outsourcing, or freelance services, if in reality you have continuously provided labor for the purpose of wages at fixed times and places under the employer’s direction and supervision, the Labor Relations Commission may recognize you as an employee under the Labor Standards Act. Even where you have signed a contract labeled “outsourcing” or “consignment” in hospitals, private institutes, call centers, and similar settings, it is important to collect materials focusing on the actual working patterns and the state of direction and supervision.
Second, a wage reduction (pay cut) may appear to be a “light” disciplinary measure, but if it exceeds the ceiling set by Article 95 of the Labor Standards Act, it is unlawful and unjust in itself. You should therefore always check the calculation details of the reduced amount and the method used to compute your average wage.
Third, when a transfer, change of workplace, or assignment of new duties occurs, the legal assessment will differ significantly depending on whether it is a simple personnel move or in substance a disciplinary or retaliatory measure. To effectively challenge such actions as unjust transfer or unjust personnel measures before the Labor Relations Commission, you should specifically organize: the company’s circumstances immediately before and after the personnel order, the criteria used to select the personnel subject to the measure, and the extent of the disadvantages in your daily life (commuting distance, family care responsibilities, health conditions, etc.).
Fourth, if you believe that the misconduct alleged by the employer does not actually exist or has been exaggerated, you should actively collect objective evidence such as emails, messenger records, CCTV footage, and internal reports, and adopt a strategy of proving that “no disciplinary cause exists.” When filing an unfair dismissal relief application, it is crucial to carefully identify discrepancies between the reasons stated in the dismissal notice and the actual facts.
Ⅴ. Practical Points (From the Employer’s Perspective)
First, in processes where the business structure changes, such as a transition to direct hospital management, if the legal status of existing personnel is left ambiguous, there is a very high risk that all subsequent personnel and disciplinary measures will become disputes intertwined with “employee status” issues. If you are in fact exercising direction and supervision and paying wages, it is safer to design your personnel and disciplinary procedures on the premise that such individuals are employees under the Labor Standards Act, regardless of the title of the contract.
Second, because Article 95 of the Labor Standards Act strictly limits the permissible extent of wage reduction, you must reflect the statutory ceiling of “no more than one day’s average wage on any one occasion and no more than one-tenth of the total wages” when designing wage reduction rates in your rules of employment and disciplinary regulations. When actually imposing a wage reduction, you should retain documentation of the average wage calculation sheet and the basis for calculating the reduced amount so that issues of illegality do not arise during review by the Labor Relations Commission.
Third, when reallocating personnel through transfers, changes of workplace, or assignment of new duties, you must clearly establish: (i) the objective necessity for the change in personnel allocation (organizational restructuring, changes in patient volume or operation of departments, etc.); (ii) the rationality of the criteria for selecting affected employees (evaluations, qualifications, experience, etc.); (iii) supplementary measures to minimize disadvantages in daily life (commuting support, training and adaptation periods, etc.); and (iv) prior consultation and explanation procedures. Only when these processes are documented through written records and minutes will it be easier to have the measures recognized as legitimate exercises of personnel authority rather than being suspected as disciplinary or retaliatory personnel actions.
Fourth, when pursuing disciplinary measures such as wage reduction or dismissal on grounds of misconduct, you must conduct fact-finding and disciplinary committee procedures rigorously, sufficiently collect and organize relevant evidence, and then examine the appropriateness of the level of discipline. If the disciplinary grounds are not objectively substantiated, both the wage reduction and dismissal may be revoked as unfair dismissal or unfair discipline, and you may incur additional legal liabilities on ancillary issues such as annual leave, severance pay, and wages.
In this type of case, both employees and companies should accurately understand in advance the key legal principles—criteria for determining employee status, statutory limits on wage reduction, and standards for the legitimacy of transfers and reassignments—and systematically prepare facts and evidence consistent with those principles. This is the starting point for both preventing and responding to disputes.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
B. Whether Wage Reduction Disposition 1 violated Article 95 of the Labor Standards Act
Because Wage Reduction Disposition 1 imposed on Worker 1 exceeded the statutory ceiling on the extent of wage reduction under the Labor Standards Act, it violated the Act and is unjust.
C. Whether the June 2025 personnel orders were legitimate
Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, lacked business necessity and imposed significant disadvantages on the workers’ daily lives. They were therefore found to be unjust.
D. Whether Wage Reduction Disposition 2 and the dismissal were legitimate
Because the alleged misconduct by the workers asserted by the employer did not exist, the dismissal of Worker 1 and Wage Reduction Disposition 2, which reduced the wages of Worker 2 and Worker 3, were found to be unjust.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
B. Whether Wage Reduction Disposition 1 violated Article 95 of the Labor Standards Act
Because Wage Reduction Disposition 1 imposed on Worker 1 exceeded the statutory ceiling on the extent of wage reduction under the Labor Standards Act, it violated the Act and is unjust.
C. Whether the June 2025 personnel orders were legitimate
Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, lacked business necessity and imposed significant disadvantages on the workers’ daily lives. They were therefore found to be unjust.
D. Whether Wage Reduction Disposition 2 and the dismissal were legitimate
Because the alleged misconduct by the workers asserted by the employer did not exist, the dismissal of Worker 1 and Wage Reduction Disposition 2, which reduced the wages of Worker 2 and Worker 3, were found to be unjust.
/
[See More Related Decisions]
- ‘Unfair Dismissal Decision Concerning “Failure to Meet Requirements for Redundancy Dismissal (Workout Company)”’
- ‘Unfair Dismissal Decision Concerning “Non-Formation of Hiring Commitment (Absence of Offer Letter)”’ – Date of Decision: – Case Number: First-instance decision upheld
- ‘Unfair Dismissal Decision Concerning “Expression of Intent to Resign (Resignation Remark in Telephone Call)”’
[Tags]
Unfair dismissal, employee status and transfer orders (transition to direct hospital management), disciplinary dismissal, personnel order and transfer, recognition of employee status, violation of company policy and non-compliance with work instructions, 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, “Unfair Dismissal Decision Concerning ‘Non-Existence of Expectation of Renewal (Request for Staff Reduction by Residents’ Representative Council)’,” in a new window.
※ The list of decisions related to employee status and transfer orders (transition to direct hospital management) can be viewed together on the “Employee Status and Transfer Orders (Transition to Direct Hospital Management) Related Decisions” page.
※ Korean version of this case: Korean article
- Case Name: Unfair dismissal decision concerning “employee status and transfer orders (transition to direct hospital management)”
- Date of Decision:
- Case Number: Fully upheld
- Decision-Making Body: Incheon Regional Labor Relations Commission 2025Buhae697 ○ ○ ○ Unfair Dismissal Relief Application
19 November 2025
- Summary of Outcome:
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
1. Legal Implications
Ⅰ. Case Overview
This case concerns an unfair dismissal and personnel action relief application that arose after a hospital declared “direct management” as of 7 February 2025 and then exercised personnel and disciplinary authority over existing staff. The Incheon Regional Labor Relations Commission examined all of the following: whether the workers qualify as employees under the Labor Standards Act, the legitimacy of the wage reduction (pay cut) and transfer (change of workplace and assignment of new duties), and whether the final dismissal and wage reduction were justified. The Commission rendered a decision fully upholding the workers’ claims.
This article, from the perspective of Labor Law Firm Law&, organizes the key practical points that employees and companies should consider in similar cases, focusing on the structure of the Labor Relations Commission’s reasoning.
Ⅱ. Key Issues
The key issues in this case are:
“In a situation where, after the transition to direct hospital management, the existing personnel were subject to substantial direction and supervision and were paid wages, can they be regarded as employees under the Labor Standards Act, and did the wage reduction, transfer, and dismissal satisfy the requirements of legitimacy under Articles 23 and 95 of the Labor Standards Act?”
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The decision panel found that, after the employer declared direct management of the hospital, the employer designated the workers’ working hours and workplaces, exercised substantial direction and supervision while paying wages, and exercised personnel and disciplinary authority pursuant to the rules of employment and personnel regulations. In light of these factors demonstrating a subordinate relationship, the panel held that the workers qualify as employees under the Labor Standards Act.
With respect to Wage Reduction Disposition 1 imposed on Worker 1, the panel noted that under Article 95 of the Labor Standards Act, a wage reduction may not exceed “one day’s average wage on any one occasion and one-tenth of the total wages payable,” and found that Wage Reduction Disposition 1 exceeded this statutory ceiling and therefore violated the Labor Standards Act, rendering it unjust.
Regarding Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, the panel relied on established case law that, for a transfer or reassignment to be legitimate, the following must be comprehensively considered: (i) the objective necessity of the change in personnel allocation; (ii) the rationality of the selection of the affected employees; (iii) whether the measure contributes to the efficiency and rationality of business operations; (iv) whether the resulting disadvantages in the employees’ daily lives markedly exceed the range ordinarily tolerable; and (v) whether procedures required under the principle of good faith, such as consultation in the personnel process, were followed.
The panel held that the personnel orders in this case lacked business necessity, that the disadvantages to the workers’ daily lives resulting from the change of workplace and assignment of new duties were so significant as to exceed what workers are ordinarily expected to endure, and that there were no other circumstances justifying the measures. Accordingly, the orders constituted an abuse of rights and amounted to unjust transfer and unjust change of duties.
In addition, the alleged misconduct by the workers asserted by the employer was not substantiated when considered against the objective materials and statements. The dismissal of Worker 1 and Wage Reduction Disposition 2 imposed on Worker 2 and Worker 3 were therefore found to have been carried out in the absence of any disciplinary cause.
Because the disciplinary grounds themselves were not established and there was no fault on the part of the workers to justify Wage Reduction Disposition 2, the panel concluded that the dismissal in this case was unjust without even reaching the stage of examining whether the disciplinary measure fell within the permissible range of disciplinary discretion.
Ⅳ. Practical Points (From the Employee’s Perspective)
First, even if the written contract is styled as a contract for work, outsourcing, or freelance services, if in reality you have continuously provided labor for the purpose of wages at fixed times and places under the employer’s direction and supervision, the Labor Relations Commission may recognize you as an employee under the Labor Standards Act. Even where you have signed a contract labeled “outsourcing” or “consignment” in hospitals, private institutes, call centers, and similar settings, it is important to collect materials focusing on the actual working patterns and the state of direction and supervision.
Second, a wage reduction (pay cut) may appear to be a “light” disciplinary measure, but if it exceeds the ceiling set by Article 95 of the Labor Standards Act, it is unlawful and unjust in itself. You should therefore always check the calculation details of the reduced amount and the method used to compute your average wage.
Third, when a transfer, change of workplace, or assignment of new duties occurs, the legal assessment will differ significantly depending on whether it is a simple personnel move or in substance a disciplinary or retaliatory measure. To effectively challenge such actions as unjust transfer or unjust personnel measures before the Labor Relations Commission, you should specifically organize: the company’s circumstances immediately before and after the personnel order, the criteria used to select the personnel subject to the measure, and the extent of the disadvantages in your daily life (commuting distance, family care responsibilities, health conditions, etc.).
Fourth, if you believe that the misconduct alleged by the employer does not actually exist or has been exaggerated, you should actively collect objective evidence such as emails, messenger records, CCTV footage, and internal reports, and adopt a strategy of proving that “no disciplinary cause exists.” When filing an unfair dismissal relief application, it is crucial to carefully identify discrepancies between the reasons stated in the dismissal notice and the actual facts.
Ⅴ. Practical Points (From the Employer’s Perspective)
First, in processes where the business structure changes, such as a transition to direct hospital management, if the legal status of existing personnel is left ambiguous, there is a very high risk that all subsequent personnel and disciplinary measures will become disputes intertwined with “employee status” issues. If you are in fact exercising direction and supervision and paying wages, it is safer to design your personnel and disciplinary procedures on the premise that such individuals are employees under the Labor Standards Act, regardless of the title of the contract.
Second, because Article 95 of the Labor Standards Act strictly limits the permissible extent of wage reduction, you must reflect the statutory ceiling of “no more than one day’s average wage on any one occasion and no more than one-tenth of the total wages” when designing wage reduction rates in your rules of employment and disciplinary regulations. When actually imposing a wage reduction, you should retain documentation of the average wage calculation sheet and the basis for calculating the reduced amount so that issues of illegality do not arise during review by the Labor Relations Commission.
Third, when reallocating personnel through transfers, changes of workplace, or assignment of new duties, you must clearly establish: (i) the objective necessity for the change in personnel allocation (organizational restructuring, changes in patient volume or operation of departments, etc.); (ii) the rationality of the criteria for selecting affected employees (evaluations, qualifications, experience, etc.); (iii) supplementary measures to minimize disadvantages in daily life (commuting support, training and adaptation periods, etc.); and (iv) prior consultation and explanation procedures. Only when these processes are documented through written records and minutes will it be easier to have the measures recognized as legitimate exercises of personnel authority rather than being suspected as disciplinary or retaliatory personnel actions.
Fourth, when pursuing disciplinary measures such as wage reduction or dismissal on grounds of misconduct, you must conduct fact-finding and disciplinary committee procedures rigorously, sufficiently collect and organize relevant evidence, and then examine the appropriateness of the level of discipline. If the disciplinary grounds are not objectively substantiated, both the wage reduction and dismissal may be revoked as unfair dismissal or unfair discipline, and you may incur additional legal liabilities on ancillary issues such as annual leave, severance pay, and wages.
In this type of case, both employees and companies should accurately understand in advance the key legal principles—criteria for determining employee status, statutory limits on wage reduction, and standards for the legitimacy of transfers and reassignments—and systematically prepare facts and evidence consistent with those principles. This is the starting point for both preventing and responding to disputes.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
B. Whether Wage Reduction Disposition 1 violated Article 95 of the Labor Standards Act
Because Wage Reduction Disposition 1 imposed on Worker 1 exceeded the statutory ceiling on the extent of wage reduction under the Labor Standards Act, it violated the Act and is unjust.
C. Whether the June 2025 personnel orders were legitimate
Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, lacked business necessity and imposed significant disadvantages on the workers’ daily lives. They were therefore found to be unjust.
D. Whether Wage Reduction Disposition 2 and the dismissal were legitimate
Because the alleged misconduct by the workers asserted by the employer did not exist, the dismissal of Worker 1 and Wage Reduction Disposition 2, which reduced the wages of Worker 2 and Worker 3, were found to be unjust.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the workers fall under the definition of “employee” under the Labor Standards Act
It was held that, after the employer declared direct management of the hospital on 7 February 2025, the workers in this case provided labor for the purpose of wages under substantial direction and supervision by the employer, and therefore qualify as employees under the Labor Standards Act.
B. Whether Wage Reduction Disposition 1 violated Article 95 of the Labor Standards Act
Because Wage Reduction Disposition 1 imposed on Worker 1 exceeded the statutory ceiling on the extent of wage reduction under the Labor Standards Act, it violated the Act and is unjust.
C. Whether the June 2025 personnel orders were legitimate
Personnel Order 1, which changed the workers’ workplaces, and Personnel Order 2, which assigned new duties to Worker 1 and Worker 3, lacked business necessity and imposed significant disadvantages on the workers’ daily lives. They were therefore found to be unjust.
D. Whether Wage Reduction Disposition 2 and the dismissal were legitimate
Because the alleged misconduct by the workers asserted by the employer did not exist, the dismissal of Worker 1 and Wage Reduction Disposition 2, which reduced the wages of Worker 2 and Worker 3, were found to be unjust.
/
[See More Related Decisions]
- ‘Unfair Dismissal Decision Concerning “Failure to Meet Requirements for Redundancy Dismissal (Workout Company)”’
- ‘Unfair Dismissal Decision Concerning “Non-Formation of Hiring Commitment (Absence of Offer Letter)”’ – Date of Decision: – Case Number: First-instance decision upheld
- ‘Unfair Dismissal Decision Concerning “Expression of Intent to Resign (Resignation Remark in Telephone Call)”’
[Tags]
Unfair dismissal, employee status and transfer orders (transition to direct hospital management), disciplinary dismissal, personnel order and transfer, recognition of employee status, violation of company policy and non-compliance with work instructions, 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, “Unfair Dismissal Decision Concerning ‘Non-Existence of Expectation of Renewal (Request for Staff Reduction by Residents’ Representative Council)’,” in a new window.
※ The list of decisions related to employee status and transfer orders (transition to direct hospital management) can be viewed together on the “Employee Status and Transfer Orders (Transition to Direct Hospital Management) Related Decisions” page.
※ Korean version of this case: Korean article
