Corporate trends / Performance record
‘Employee Status (Unregistered Director)’ Unfair Dismissal Decision (Unfair Dismissal 354)
- Date2026/04/07 04:09
- Read 184
[Case Information]
This case is a decision in which the employer prevailed (application dismissed) on the issue of “employee status (unregistered director).”
Decision Committee: Gyeonggi Regional Labor Relations Commission 2025Buhae10042 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.20 · Case result: Dismissed
Summary of key issues: Although the title was “Director,” the individual worked as an unregistered executive without any separate executive appointment procedure; it could not be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees did not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into account, …
1. Legal Implications
Ⅰ. Case Overview
This unfair dismissal case concerns an HR/general affairs manager whose title was “Director” but who worked as an unregistered executive. After being dismissed, he filed an application for remedy for unfair dismissal with the Labor Relations Commission. The Gyeonggi Regional Labor Relations Commission recognized the applicant’s status as an employee under the Labor Standards Act, but nonetheless found both the grounds for dismissal and the lawfulness of the dismissal procedure to be valid, and thus ruled in favor of the employer.
Ⅱ. Issues in Dispute
The issues in this case are whether an unregistered executive whose title is Director constitutes an employee under the Labor Standards Act, and whether an ordinary dismissal based on serious lack of competence in performing key HR and finance duties is justified.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that, although the applicant’s title was Director, there had been no separate executive appointment procedure; there was no evidence of a salary markedly higher than that of other employees or of executive-level decision-making authority or independent participation in management; and there were specific work instructions from the representative director. In light of these factors, the panel held that the applicant qualified as an employee under the Labor Standards Act.
The panel also found that the following circumstances, taken together, established grounds for dismissal due to lack of work performance capability: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying progress payments that should have been paid from bank loan proceeds using corporate funds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing organizational confusion by, despite being in charge of HR, instructing each department to directly handle job postings, interviews, and salary negotiations for new hires instead of doing so himself; and overpaying overtime allowances to production workers.
The dismissal in this case was found to be justified because the notice of dismissal was delivered in writing, thereby complying with the written notice requirement for dismissal under Article 27 of the Labor Standards Act, and because, in light of the seriousness of the above misconduct and lack of competence, and the extent of the damage and risks caused to the company, the employment relationship had reached a point where it was difficult to maintain under generally accepted social norms.
Ⅳ. Practical Points (From the Employee’s Perspective)
Even if your title is Director, Head of Division, Team Leader, or another managerial position, you should be aware that you may still be recognized as an employee under the Labor Standards Act depending on factors such as whether there was an executive appointment procedure, whether you have decision-making authority, your level of remuneration, and whether you are subject to the representative director’s direction and supervision. However, even if employee status is recognized, you should bear in mind that if repeated and serious negligence occurs in core tasks such as contract execution, fund disbursement, and external reporting, and the company suffers actual damage or risks, the justification for ordinary dismissal may be acknowledged.
In particular, those working in management departments such as HR, general affairs, and finance should be aware that neglecting procedural compliance, internal consultation, and external reporting obligations may be evaluated not as mere mistakes but as “lack of work performance capability” or “serious neglect of duty.” You should therefore confirm and implement relevant rules and procedures in writing.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s perspective, it is necessary to recognize that individuals with nominal executive titles such as unregistered director, office head, or division head may in fact be recognized as employees. Accordingly, job duties, reporting lines, and remuneration structures should be clearly distinguished, and the HR system should be organized to clarify whether a person is an executive or an employee.
In addition, when considering dismissal on the grounds of lack of work performance capability, you must go beyond mere poor performance and document specific individual grounds—such as erroneous contracts, improper fund disbursement, failure to make required reports, organizational confusion, and erroneous payment of money—together with the timing, background, and impact of each incident, so that you can prove that dismissal was unavoidable under generally accepted social norms.
Furthermore, when carrying out a dismissal, you should, with the advice of experts such as Labor Law Firm Law&, prepare a written notice that specifically identifies the grounds for dismissal. Even in cases of ordinary dismissal (as opposed to redundancy-based dismissal), you should, similar to disciplinary sanctioning, carefully and in a balanced manner examine the seriousness and frequency of the grounds, the possibility of improvement, and the degree of harm to the company, and design the structure in advance so that the dismissal can be recognized as justified by the Labor Relations Commission.
2. Matters Decided
a. Case Overview and Procedural History
Although the title was Director, the individual worked as an unregistered executive without going through a separate executive appointment procedure; it cannot be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees does not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into comprehensive consideration, his status as an employee under the Labor Standards Act is recognized. However, there were grounds for dismissal due to lack of work performance capability, including: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying, with corporate funds, progress payments that should have been paid from bank loan proceeds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing internal confusion by, despite being in charge of HR, instructing the relevant department personnel to directly carry out job postings, interviews, and salary negotiations for new hires; and overpaying overtime allowances to production workers. Since the dismissal notice was communicated in writing, the dismissal procedure was followed, and the dismissal is therefore justified.
3. Summary of the Decision
a. Summary of the Labor Relations Commission’s Reasoning
Although the title was Director, the individual worked as an unregistered executive without going through a separate executive appointment procedure; it cannot be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees does not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into comprehensive consideration, his status as an employee under the Labor Standards Act is recognized. However, there were grounds for dismissal due to lack of work performance capability, including: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying, with corporate funds, progress payments that should have been paid from bank loan proceeds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing internal confusion by, despite being in charge of HR, instructing the relevant department personnel to directly carry out job postings, interviews, and salary negotiations for new hires; and overpaying overtime allowances to production workers. Since the dismissal notice was communicated in writing, the dismissal procedure was followed, and the dismissal is therefore justified. /
[See More Related Decisions]
- ‘Unfair Dismissal Decision on “Employer Status·Succession of Employment (Transition to Self-Management in Apartment Complexes)”’
- ‘Unfair Dismissal Decision on “Non-Formation of Hiring Commitment (Absence of Offer Letter)”’ – Decision date: – Case number: First-instance decision upheld
- ‘Unfair Dismissal Decision on “Failure to Meet Requirements for Redundancy Dismissal (Workout Company)”’
[Tags]
Unfair dismissal, employee status (unregistered director), performance evaluation·poor performance, violation of company policy·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 on ‘Employer Status·Succession of Employment (Transition to Self-Management in Apartment Complexes)’,” in a new window.
※ A list of decisions related to employee status (unregistered director) can be found at “List of Decisions Related to Employee Status (Unregistered Director).”
※ Korean version of this case: Korean article
This case is a decision in which the employer prevailed (application dismissed) on the issue of “employee status (unregistered director).”
Decision Committee: Gyeonggi Regional Labor Relations Commission 2025Buhae10042 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.20 · Case result: Dismissed
Summary of key issues: Although the title was “Director,” the individual worked as an unregistered executive without any separate executive appointment procedure; it could not be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees did not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into account, …
1. Legal Implications
Ⅰ. Case Overview
This unfair dismissal case concerns an HR/general affairs manager whose title was “Director” but who worked as an unregistered executive. After being dismissed, he filed an application for remedy for unfair dismissal with the Labor Relations Commission. The Gyeonggi Regional Labor Relations Commission recognized the applicant’s status as an employee under the Labor Standards Act, but nonetheless found both the grounds for dismissal and the lawfulness of the dismissal procedure to be valid, and thus ruled in favor of the employer.
Ⅱ. Issues in Dispute
The issues in this case are whether an unregistered executive whose title is Director constitutes an employee under the Labor Standards Act, and whether an ordinary dismissal based on serious lack of competence in performing key HR and finance duties is justified.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that, although the applicant’s title was Director, there had been no separate executive appointment procedure; there was no evidence of a salary markedly higher than that of other employees or of executive-level decision-making authority or independent participation in management; and there were specific work instructions from the representative director. In light of these factors, the panel held that the applicant qualified as an employee under the Labor Standards Act.
The panel also found that the following circumstances, taken together, established grounds for dismissal due to lack of work performance capability: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying progress payments that should have been paid from bank loan proceeds using corporate funds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing organizational confusion by, despite being in charge of HR, instructing each department to directly handle job postings, interviews, and salary negotiations for new hires instead of doing so himself; and overpaying overtime allowances to production workers.
The dismissal in this case was found to be justified because the notice of dismissal was delivered in writing, thereby complying with the written notice requirement for dismissal under Article 27 of the Labor Standards Act, and because, in light of the seriousness of the above misconduct and lack of competence, and the extent of the damage and risks caused to the company, the employment relationship had reached a point where it was difficult to maintain under generally accepted social norms.
Ⅳ. Practical Points (From the Employee’s Perspective)
Even if your title is Director, Head of Division, Team Leader, or another managerial position, you should be aware that you may still be recognized as an employee under the Labor Standards Act depending on factors such as whether there was an executive appointment procedure, whether you have decision-making authority, your level of remuneration, and whether you are subject to the representative director’s direction and supervision. However, even if employee status is recognized, you should bear in mind that if repeated and serious negligence occurs in core tasks such as contract execution, fund disbursement, and external reporting, and the company suffers actual damage or risks, the justification for ordinary dismissal may be acknowledged.
In particular, those working in management departments such as HR, general affairs, and finance should be aware that neglecting procedural compliance, internal consultation, and external reporting obligations may be evaluated not as mere mistakes but as “lack of work performance capability” or “serious neglect of duty.” You should therefore confirm and implement relevant rules and procedures in writing.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s perspective, it is necessary to recognize that individuals with nominal executive titles such as unregistered director, office head, or division head may in fact be recognized as employees. Accordingly, job duties, reporting lines, and remuneration structures should be clearly distinguished, and the HR system should be organized to clarify whether a person is an executive or an employee.
In addition, when considering dismissal on the grounds of lack of work performance capability, you must go beyond mere poor performance and document specific individual grounds—such as erroneous contracts, improper fund disbursement, failure to make required reports, organizational confusion, and erroneous payment of money—together with the timing, background, and impact of each incident, so that you can prove that dismissal was unavoidable under generally accepted social norms.
Furthermore, when carrying out a dismissal, you should, with the advice of experts such as Labor Law Firm Law&, prepare a written notice that specifically identifies the grounds for dismissal. Even in cases of ordinary dismissal (as opposed to redundancy-based dismissal), you should, similar to disciplinary sanctioning, carefully and in a balanced manner examine the seriousness and frequency of the grounds, the possibility of improvement, and the degree of harm to the company, and design the structure in advance so that the dismissal can be recognized as justified by the Labor Relations Commission.
2. Matters Decided
a. Case Overview and Procedural History
Although the title was Director, the individual worked as an unregistered executive without going through a separate executive appointment procedure; it cannot be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees does not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into comprehensive consideration, his status as an employee under the Labor Standards Act is recognized. However, there were grounds for dismissal due to lack of work performance capability, including: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying, with corporate funds, progress payments that should have been paid from bank loan proceeds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing internal confusion by, despite being in charge of HR, instructing the relevant department personnel to directly carry out job postings, interviews, and salary negotiations for new hires; and overpaying overtime allowances to production workers. Since the dismissal notice was communicated in writing, the dismissal procedure was followed, and the dismissal is therefore justified.
3. Summary of the Decision
a. Summary of the Labor Relations Commission’s Reasoning
Although the title was Director, the individual worked as an unregistered executive without going through a separate executive appointment procedure; it cannot be viewed that he received a significantly higher salary than other employees; stock options were not limited to executives; specific work instructions from the representative director were confirmed; drafting employment contracts for officers and employees does not appear to be an executive’s duty; and there were no circumstances confirming that he had been granted executive-level decision-making authority. Taking all of these into comprehensive consideration, his status as an employee under the Labor Standards Act is recognized. However, there were grounds for dismissal due to lack of work performance capability, including: entering into contracts without external consultation; aggravating the company’s financial situation by prepaying, with corporate funds, progress payments that should have been paid from bank loan proceeds; failing to report the grant of new share subscription rights to the competent registry office and the Korea Venture Business Association from the date of the shareholders’ meeting resolution, thereby exposing the company to fines and tax risks; causing internal confusion by, despite being in charge of HR, instructing the relevant department personnel to directly carry out job postings, interviews, and salary negotiations for new hires; and overpaying overtime allowances to production workers. Since the dismissal notice was communicated in writing, the dismissal procedure was followed, and the dismissal is therefore justified. /
[See More Related Decisions]
- ‘Unfair Dismissal Decision on “Employer Status·Succession of Employment (Transition to Self-Management in Apartment Complexes)”’
- ‘Unfair Dismissal Decision on “Non-Formation of Hiring Commitment (Absence of Offer Letter)”’ – Decision date: – Case number: First-instance decision upheld
- ‘Unfair Dismissal Decision on “Failure to Meet Requirements for Redundancy Dismissal (Workout Company)”’
[Tags]
Unfair dismissal, employee status (unregistered director), performance evaluation·poor performance, violation of company policy·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 on ‘Employer Status·Succession of Employment (Transition to Self-Management in Apartment Complexes)’,” in a new window.
※ A list of decisions related to employee status (unregistered director) can be found at “List of Decisions Related to Employee Status (Unregistered Director).”
※ Korean version of this case: Korean article
