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Unfair Dismissal Decision on “Employer Status (Contract Employees of Subcontractors)” (Unfair Dismissal 253)
- Date2026/03/03 04:14
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[Case Information]
This case is a decision in which the employer prevailed (application dismissed) on the issue of “employer status (contract employees of subcontractors).”
Decision body: Seoul Regional Labor Relations Commission 2025 Unfair Dismissal 9721 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.01.19 · Case result: Dismissed
Key issue summary: (a)
1. Legal Implications
Ⅰ. Case Overview
This case concerns a fixed-term employee belonging to a subcontractor who expected renewal of her employment contract, but whose contract was not renewed upon expiry. She claimed unfair dismissal and filed an application for remedy with the Labor Relations Commission. The Seoul Regional Labor Relations Commission focused its review on which business entity had employer status and whether the employee had a legitimate expectation of renewal of her fixed-term employment contract, ultimately ruling in favor of the employer.
In this article, Labor Law Firm Law& will summarize, from its own perspective, the Commission’s reasoning and practical implications, focusing on the legal doctrines of “employer status” and “expectation of contract renewal,” which frequently arise in unfair dismissal disputes.
Ⅱ. Summary of Issues
The issues in this case are: “In a subcontractor–principal contractor structure, who is the proper respondent in an application for remedy for unfair dismissal, and whether an employee has a legitimate expectation of renewal of a fixed-term employment contract where a one-year contract was renewed only once for an additional six months.”
Ⅲ. Summary of the Labor Relations Commission’s Decision
The decision panel in this case found that Subcontractor A (Employer 1) had directly entered into an employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative.
Accordingly, employer status was found to lie with Employer 1, the subcontractor, and not with the principal contractor.
In addition, Employer 1 initially concluded the contract for a fixed term of one year and, upon expiry, expressed its intention to terminate the employment relationship. However, in response to the employee’s objection, Employer 1 renewed the contract only once for an additional six months, clearly stating the condition that “no further renewal will be made,” and the employee recognized and accepted this condition.
There were no provisions or established practices in the employment contract, work rules, etc., guaranteeing renewal upon satisfaction of certain conditions.
Under the Act on the Protection, Etc. of Fixed-Term and Part-Time Employees and Supreme Court precedents, an expectation of renewal is recognized only where a relationship of trust has been formed that the contract will be renewed upon satisfaction of certain conditions. In this case, there was no evidence of repeated renewals, evaluation criteria, or actual operational practices that would support such trust.
Taking all of this into account, the Commission held that it was difficult to recognize an expectation of renewal on the part of the employee and, therefore, that termination upon expiry of the contract term did not constitute unfair dismissal.
Ⅳ. Practical Points (From the Employee’s Perspective)
For a fixed-term employee to successfully claim unfair dismissal, it is first necessary to prove that an “expectation of renewal” has been formed, for example, by showing that the employment contract has been repeatedly renewed in practice, that there are established criteria or procedures for renewal, or that employees in comparable positions are ordinarily renewed.
In particular, where, as in this case, the employee is clearly presented with and accepts a condition such as “there will be no further renewal after this six-month period,” it becomes very difficult to later assert a legitimate expectation that the contract would be renewed again.
Furthermore, for those working in a principal–subcontractor structure, it is helpful to organize in advance who actually entered into the employment contract, who paid wages, who enrolled the employee in the four major social insurance schemes, and from whom the employee received direction and supervision. This will assist in identifying the proper employer when filing an application for remedy with the Labor Relations Commission.
Ⅴ. Practical Points (From the Employer’s/Company’s Perspective)
Both subcontractors and principal contractors should recognize that the core of the “employer status” determination is who in substance recruits, directs, and supervises the employee and pays wages. The mere formal designation of a party in a written contract is not sufficient. Since the substantive relationship—such as enrollment in the four major social insurance schemes, the entity actually paying wages, and the on-site chain of command—is crucial, aligning the contractual structure with actual HR and payroll practices will help prevent disputes.
When managing fixed-term employment contracts, if criteria for renewal, evaluation procedures, and renewal practices are allowed to develop indiscriminately, an expectation of renewal may arise. It is therefore advisable to clearly stipulate in the contract that the employment relationship automatically terminates upon expiry of the term and, even where an unavoidable additional renewal is made, to clearly notify and agree in writing that “the employment contract will terminate upon this renewal.”
Conversely, if the company has a practice of consistently renewing contracts upon satisfaction of certain conditions, a blanket refusal to renew without establishing a necessity comparable to that required for collective redundancies and without fair selection criteria and procedures may be found to constitute unfair dismissal. Employers should therefore design their strategies for managing fixed-term personnel from a medium- to long-term perspective.
2. Matters Decided
(a) Case Overview and Procedural History
(a) Whether employer status lies with a particular entity
Since Subcontractor A (Employer 1) appears to have entered into the employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative, employer status is deemed to lie with Employer 1.
(b) Whether there exists an expectation of renewal of the employment contract
Employer 1 intended to terminate the employment contract upon expiry of the employee’s one-year fixed-term contract. However, in response to the employee’s objection, Employer 1 renewed the term once for six months, proposing that no further renewal would be made, and the employee recognized and accepted this. It is therefore difficult to find that a relationship of trust was formed that the contract would be renewed, and the Commission held that no expectation of renewal could be recognized.
3. Summary of the Decision
(a) Summary of the Labor Relations Commission’s Reasoning
(a) Whether employer status lies with a particular entity
Since Subcontractor A (Employer 1) appears to have entered into the employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative, employer status is deemed to lie with Employer 1.
(b) Whether there exists an expectation of renewal of the employment contract
Employer 1 intended to terminate the employment contract upon expiry of the employee’s one-year fixed-term contract. However, in response to the employee’s objection, Employer 1 renewed the term once for six months, proposing that no further renewal would be made, and the employee recognized and accepted this. It is therefore difficult to find that a relationship of trust was formed that the contract would be renewed, and the Commission held that no expectation of renewal could be recognized. /
[See More Related Decisions]
- “Unfair Dismissal Decision on ‘Extinction of Interest in Remedy (Repeated Reinstatement Orders)’”
- “Unfair Dismissal Decision on ‘Expectation of Conversion to Indefinite-Term Contract (Introduction of Multi-Faceted Evaluation)’”
- “Unfair Dismissal Decision on ‘Expression of Intent to Resign (Resignation Remarks Made by Telephone)’”
[Tags]
Unfair dismissal, employer status (contract employees of subcontractors), refusal to renew fixed-term contract, 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series.
※ The previous article, “Unfair Dismissal Decision on ‘Expectation of Conversion to Indefinite-Term Contract (Introduction of Multi-Faceted Evaluation)’,” can be viewed in a new window.
※ A list of decisions related to employer status (contract employees of subcontractors) can be viewed under “List of Decisions Related to Employer Status (Contract Employees of Subcontractors).”
※ Korean version of this case: Korean article
This case is a decision in which the employer prevailed (application dismissed) on the issue of “employer status (contract employees of subcontractors).”
Decision body: Seoul Regional Labor Relations Commission 2025 Unfair Dismissal 9721 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.01.19 · Case result: Dismissed
Key issue summary: (a)
1. Legal Implications
Ⅰ. Case Overview
This case concerns a fixed-term employee belonging to a subcontractor who expected renewal of her employment contract, but whose contract was not renewed upon expiry. She claimed unfair dismissal and filed an application for remedy with the Labor Relations Commission. The Seoul Regional Labor Relations Commission focused its review on which business entity had employer status and whether the employee had a legitimate expectation of renewal of her fixed-term employment contract, ultimately ruling in favor of the employer.
In this article, Labor Law Firm Law& will summarize, from its own perspective, the Commission’s reasoning and practical implications, focusing on the legal doctrines of “employer status” and “expectation of contract renewal,” which frequently arise in unfair dismissal disputes.
Ⅱ. Summary of Issues
The issues in this case are: “In a subcontractor–principal contractor structure, who is the proper respondent in an application for remedy for unfair dismissal, and whether an employee has a legitimate expectation of renewal of a fixed-term employment contract where a one-year contract was renewed only once for an additional six months.”
Ⅲ. Summary of the Labor Relations Commission’s Decision
The decision panel in this case found that Subcontractor A (Employer 1) had directly entered into an employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative.
Accordingly, employer status was found to lie with Employer 1, the subcontractor, and not with the principal contractor.
In addition, Employer 1 initially concluded the contract for a fixed term of one year and, upon expiry, expressed its intention to terminate the employment relationship. However, in response to the employee’s objection, Employer 1 renewed the contract only once for an additional six months, clearly stating the condition that “no further renewal will be made,” and the employee recognized and accepted this condition.
There were no provisions or established practices in the employment contract, work rules, etc., guaranteeing renewal upon satisfaction of certain conditions.
Under the Act on the Protection, Etc. of Fixed-Term and Part-Time Employees and Supreme Court precedents, an expectation of renewal is recognized only where a relationship of trust has been formed that the contract will be renewed upon satisfaction of certain conditions. In this case, there was no evidence of repeated renewals, evaluation criteria, or actual operational practices that would support such trust.
Taking all of this into account, the Commission held that it was difficult to recognize an expectation of renewal on the part of the employee and, therefore, that termination upon expiry of the contract term did not constitute unfair dismissal.
Ⅳ. Practical Points (From the Employee’s Perspective)
For a fixed-term employee to successfully claim unfair dismissal, it is first necessary to prove that an “expectation of renewal” has been formed, for example, by showing that the employment contract has been repeatedly renewed in practice, that there are established criteria or procedures for renewal, or that employees in comparable positions are ordinarily renewed.
In particular, where, as in this case, the employee is clearly presented with and accepts a condition such as “there will be no further renewal after this six-month period,” it becomes very difficult to later assert a legitimate expectation that the contract would be renewed again.
Furthermore, for those working in a principal–subcontractor structure, it is helpful to organize in advance who actually entered into the employment contract, who paid wages, who enrolled the employee in the four major social insurance schemes, and from whom the employee received direction and supervision. This will assist in identifying the proper employer when filing an application for remedy with the Labor Relations Commission.
Ⅴ. Practical Points (From the Employer’s/Company’s Perspective)
Both subcontractors and principal contractors should recognize that the core of the “employer status” determination is who in substance recruits, directs, and supervises the employee and pays wages. The mere formal designation of a party in a written contract is not sufficient. Since the substantive relationship—such as enrollment in the four major social insurance schemes, the entity actually paying wages, and the on-site chain of command—is crucial, aligning the contractual structure with actual HR and payroll practices will help prevent disputes.
When managing fixed-term employment contracts, if criteria for renewal, evaluation procedures, and renewal practices are allowed to develop indiscriminately, an expectation of renewal may arise. It is therefore advisable to clearly stipulate in the contract that the employment relationship automatically terminates upon expiry of the term and, even where an unavoidable additional renewal is made, to clearly notify and agree in writing that “the employment contract will terminate upon this renewal.”
Conversely, if the company has a practice of consistently renewing contracts upon satisfaction of certain conditions, a blanket refusal to renew without establishing a necessity comparable to that required for collective redundancies and without fair selection criteria and procedures may be found to constitute unfair dismissal. Employers should therefore design their strategies for managing fixed-term personnel from a medium- to long-term perspective.
2. Matters Decided
(a) Case Overview and Procedural History
(a) Whether employer status lies with a particular entity
Since Subcontractor A (Employer 1) appears to have entered into the employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative, employer status is deemed to lie with Employer 1.
(b) Whether there exists an expectation of renewal of the employment contract
Employer 1 intended to terminate the employment contract upon expiry of the employee’s one-year fixed-term contract. However, in response to the employee’s objection, Employer 1 renewed the term once for six months, proposing that no further renewal would be made, and the employee recognized and accepted this. It is therefore difficult to find that a relationship of trust was formed that the contract would be renewed, and the Commission held that no expectation of renewal could be recognized.
3. Summary of the Decision
(a) Summary of the Labor Relations Commission’s Reasoning
(a) Whether employer status lies with a particular entity
Since Subcontractor A (Employer 1) appears to have entered into the employment contract with the employee, paid her wages, enrolled her in the four major social insurance schemes, and issued work instructions through an on-site representative, employer status is deemed to lie with Employer 1.
(b) Whether there exists an expectation of renewal of the employment contract
Employer 1 intended to terminate the employment contract upon expiry of the employee’s one-year fixed-term contract. However, in response to the employee’s objection, Employer 1 renewed the term once for six months, proposing that no further renewal would be made, and the employee recognized and accepted this. It is therefore difficult to find that a relationship of trust was formed that the contract would be renewed, and the Commission held that no expectation of renewal could be recognized. /
[See More Related Decisions]
- “Unfair Dismissal Decision on ‘Extinction of Interest in Remedy (Repeated Reinstatement Orders)’”
- “Unfair Dismissal Decision on ‘Expectation of Conversion to Indefinite-Term Contract (Introduction of Multi-Faceted Evaluation)’”
- “Unfair Dismissal Decision on ‘Expression of Intent to Resign (Resignation Remarks Made by Telephone)’”
[Tags]
Unfair dismissal, employer status (contract employees of subcontractors), refusal to renew fixed-term contract, 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series.
※ The previous article, “Unfair Dismissal Decision on ‘Expectation of Conversion to Indefinite-Term Contract (Introduction of Multi-Faceted Evaluation)’,” can be viewed in a new window.
※ A list of decisions related to employer status (contract employees of subcontractors) can be viewed under “List of Decisions Related to Employer Status (Contract Employees of Subcontractors).”
※ Korean version of this case: Korean article
