Corporate trends / Performance record
Unfair Dismissal Case on the Existence of Dismissal (Fewer than 5 Employees · Refusal to Sign Fixed-Term Contract) (Unfair Dismissal 361)
- Date2026/04/09 04:13
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[Case Information]
This case is a Labor Relations Commission decision in which the employee prevailed in full on the issue of “existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract).”
Decision body: Seoul Regional Labor Relations Commission
2025Buhae10149 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.20 · Outcome: Fully upheld
Summary of key issues: ... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system; in light of all this, ○○ Trading and ○○ Energy were in fact operated simultaneously as one, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
1. Legal Implications
Ⅰ. Case Overview
This case concerns a small workplace where an employee believed they had joined as a regular (indefinite-term) employee, but the employer later demanded that the employee sign a three‑month fixed-term employment contract and then terminated the employment relationship when the employee refused to sign. The issue before the Labor Relations Commission was whether this constituted unfair dismissal.
The Seoul Regional Labor Relations Commission, after comprehensively examining the actual operational status of the two corporations ○○ Trading and ○○ Energy, as well as the recruitment notice and the circumstances surrounding the conclusion of the employment contract, fully upheld the application for remedy for unfair dismissal. Labor Law Firm Law& here summarizes the practical implications regarding the legal principles applied in such cases.
Ⅱ. Summary of Issues
The issues in this case are:
“In a company that is in substance operated as if it had fewer than 5 employees, (1) whether, by aggregating the headcount of affiliated/related corporations, the business falls within the scope of a workplace with 5 or more ordinary employees under the Labor Standards Act; (2) in circumstances where it is unclear at the time of hiring whether the position was regular or a three‑month fixed-term, whether the notice of termination of the employment relationship constitutes ‘expiration of a fixed term’ or ‘dismissal’; and (3) if it is deemed a dismissal, whether it constitutes unfair dismissal as a dismissal without just cause.”
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that the representative directors of ○○ Trading and ○○ Energy are father and son, that one company’s representative is registered as a director of the other company, that the two corporations share the same business type and address and are operated together in the same building, and that personnel, payroll, and ERP systems were in effect managed in an integrated manner, with a particular employee being utilized across the organizational charts of both companies.
In light of these circumstances, the panel determined that the two corporations were in substance operated together as a single business with a combined total of 5 or more ordinary employees.
Furthermore, although the employer claimed that the position was a three‑month fixed-term at the interview stage, the employer did not prepare or provide a written employment contract at the commencement of work; the recruitment notice specified “an employment contract with no fixed term”; and when the employer later presented a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee. Considering these factors together, the panel found that an employment contract with no fixed term had been concluded.
Accordingly, the employer’s act of terminating the employment relationship on the mere ground of “expiration of the contract period” in fact constituted a dismissal based solely on the employer’s unilateral intent. As the employer failed to present any just cause for dismissal, such as reasons attributable to the employee or managerial necessity, the dismissal was held to be a dismissal without just cause under Article 23(1) of the Labor Standards Act, and this dismissal was therefore determined to be unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
Employees should carefully retain records of the employment type stated in the recruitment notice, any oral promises made at the time of hiring, and the timing and contents of any written employment contract prepared and provided.
In particular, in the typical pattern where “the employee works under the belief that they are a regular employee, is later asked to sign a fixed-term contract, and upon refusing to sign is told that the contract has expired and is let go,” it is crucial in unfair dismissal remedy proceedings to secure evidence (recruitment notices, text messages/emails, recordings, etc.) showing that, in reality, the employment contract was without a fixed term and that the termination was a unilateral dismissal by the employer.
Even if the company claims to have fewer than 5 employees, where affiliated or related companies in substance integrate their representative directors, offices, and personnel/payroll systems, the number of ordinary employees may be aggregated. It is therefore important to collect materials that demonstrate the actual integrated operation, such as business cards, organizational charts, payroll ledgers, and ERP screenshots.
Ⅴ. Practical Points (From the Employer’s Perspective)
From the employer’s standpoint, if you intend to hire a fixed-term employee, you must clearly indicate the “fixed-term” nature of the position from the recruitment notice through to the written employment contract, and you must prepare and provide a written employment contract before work commences, clearly specifying the term, duties, wages, and other conditions.
If you advertise the position as if it were for a regular employee, allow work to commence without a written contract, and later, due to managerial or personnel needs, present a fixed-term contract and demand a signature, the Labor Relations Commission is highly likely to regard this as a dismissal. If there is no just cause, it will be difficult to avoid liability for unfair dismissal.
Moreover, even if you have been managing personnel on the assumption that your business has fewer than 5 employees, where family companies or affiliates in substance integrate their representative directors, offices, and personnel/payroll/ERP systems, the number of ordinary employees may be aggregated. In such cases, the dismissal restrictions and unfair dismissal remedy system under the Labor Standards Act may apply in full. Employers should therefore objectively review the overall HR and labor structure of their group.
To prevail in this type of case, it is essential to have an accurate understanding of the legal concepts of dismissal under the Labor Standards Act, the criteria for distinguishing fixed-term from indefinite-term contracts, and the rules for calculating the number of ordinary employees. From the recruitment stage onward, employers should systematically manage and be able to prove the relevant facts in line with these principles, and should maintain ongoing consultation and compliance reviews with a specialized organization such as Labor Law Firm Law&.
2. Matters Determined
a. Case Overview and Procedural History
... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system. Considering all of this, ○○ Trading and ○○ Energy were in fact operated simultaneously, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
b. Existence of Dismissal
(i) The employer claims that, at the interview, it was agreed that the employee would be hired on a three‑month fixed-term basis, after which a decision would be made on conversion to regular employment, but no written employment contract was prepared or provided at the commencement of work; (ii) when, on 2025. 9. 4., the employer demanded that the employee sign a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee; (iii) if there had in fact been an agreement between the parties at the time of hiring to conclude a fixed-term contract, it is unlikely that the demand for signature and the refusal on 2025. 9. 4. would have occurred; (iv) the recruitment notice also specified the employment type as “an employment contract with no fixed term.” In light of the foregoing, it is determined that an employment contract with no fixed term was concluded, and that the notice of termination of the employment relationship constitutes a dismissal.
c. Justifiability of the Dismissal
As the employer terminated the employment relationship solely on the ground of expiration of the term, without presenting any just cause, this violates Article 23(1) of the Labor Standards Act and is therefore unfair.
3. Summary of the Decision
a. Summary of the Labor Relations Commission’s Reasoning
... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system. Considering all of this, ○○ Trading and ○○ Energy were in fact operated simultaneously, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
b. Existence of Dismissal
(i) The employer claims that, at the interview, it was agreed that the employee would be hired on a three‑month fixed-term basis, after which a decision would be made on conversion to regular employment, but no written employment contract was prepared or provided at the commencement of work; (ii) when, on 2025. 9. 4., the employer demanded that the employee sign a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee; (iii) if there had in fact been an agreement between the parties at the time of hiring to conclude a fixed-term contract, it is unlikely that the demand for signature and the refusal on 2025. 9. 4. would have occurred; (iv) the recruitment notice also specified the employment type as “an employment contract with no fixed term.” In light of the foregoing, it is determined that an employment contract with no fixed term was concluded, and that the notice of termination of the employment relationship constitutes a dismissal.
c. Justifiability of the Dismissal
As the employer terminated the employment relationship solely on the ground of expiration of the term, without presenting any just cause, this violates Article 23(1) of the Labor Standards Act and is therefore unfair. /
[See More Related Decisions]
- ‘Unfair Dismissal Case on Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’
- ‘Unfair Dismissal Case on “Not a Transfer or Demotion (Manager → Staff)”’
- ‘Unfair Dismissal Case on “Expression of Intent to Resign (Resignation Remark in Telephone Call)”’
[Tags]
Unfair dismissal, existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract), 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series.
※ You can view the previous article, “Unfair Dismissal Case on ‘Lack of Business Necessity (Formal Transfer)’,” in a new window.
※ The list of decisions related to existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract) can be viewed together on the “Existence of Dismissal (Fewer than 5 Employees · Refusal to Sign Fixed-Term Contract) Related Decisions” page.
※ Korean version of this case: Korean article
This case is a Labor Relations Commission decision in which the employee prevailed in full on the issue of “existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract).”
Decision body: Seoul Regional Labor Relations Commission
2025Buhae10149 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.20 · Outcome: Fully upheld
Summary of key issues: ... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system; in light of all this, ○○ Trading and ○○ Energy were in fact operated simultaneously as one, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
1. Legal Implications
Ⅰ. Case Overview
This case concerns a small workplace where an employee believed they had joined as a regular (indefinite-term) employee, but the employer later demanded that the employee sign a three‑month fixed-term employment contract and then terminated the employment relationship when the employee refused to sign. The issue before the Labor Relations Commission was whether this constituted unfair dismissal.
The Seoul Regional Labor Relations Commission, after comprehensively examining the actual operational status of the two corporations ○○ Trading and ○○ Energy, as well as the recruitment notice and the circumstances surrounding the conclusion of the employment contract, fully upheld the application for remedy for unfair dismissal. Labor Law Firm Law& here summarizes the practical implications regarding the legal principles applied in such cases.
Ⅱ. Summary of Issues
The issues in this case are:
“In a company that is in substance operated as if it had fewer than 5 employees, (1) whether, by aggregating the headcount of affiliated/related corporations, the business falls within the scope of a workplace with 5 or more ordinary employees under the Labor Standards Act; (2) in circumstances where it is unclear at the time of hiring whether the position was regular or a three‑month fixed-term, whether the notice of termination of the employment relationship constitutes ‘expiration of a fixed term’ or ‘dismissal’; and (3) if it is deemed a dismissal, whether it constitutes unfair dismissal as a dismissal without just cause.”
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that the representative directors of ○○ Trading and ○○ Energy are father and son, that one company’s representative is registered as a director of the other company, that the two corporations share the same business type and address and are operated together in the same building, and that personnel, payroll, and ERP systems were in effect managed in an integrated manner, with a particular employee being utilized across the organizational charts of both companies.
In light of these circumstances, the panel determined that the two corporations were in substance operated together as a single business with a combined total of 5 or more ordinary employees.
Furthermore, although the employer claimed that the position was a three‑month fixed-term at the interview stage, the employer did not prepare or provide a written employment contract at the commencement of work; the recruitment notice specified “an employment contract with no fixed term”; and when the employer later presented a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee. Considering these factors together, the panel found that an employment contract with no fixed term had been concluded.
Accordingly, the employer’s act of terminating the employment relationship on the mere ground of “expiration of the contract period” in fact constituted a dismissal based solely on the employer’s unilateral intent. As the employer failed to present any just cause for dismissal, such as reasons attributable to the employee or managerial necessity, the dismissal was held to be a dismissal without just cause under Article 23(1) of the Labor Standards Act, and this dismissal was therefore determined to be unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
Employees should carefully retain records of the employment type stated in the recruitment notice, any oral promises made at the time of hiring, and the timing and contents of any written employment contract prepared and provided.
In particular, in the typical pattern where “the employee works under the belief that they are a regular employee, is later asked to sign a fixed-term contract, and upon refusing to sign is told that the contract has expired and is let go,” it is crucial in unfair dismissal remedy proceedings to secure evidence (recruitment notices, text messages/emails, recordings, etc.) showing that, in reality, the employment contract was without a fixed term and that the termination was a unilateral dismissal by the employer.
Even if the company claims to have fewer than 5 employees, where affiliated or related companies in substance integrate their representative directors, offices, and personnel/payroll systems, the number of ordinary employees may be aggregated. It is therefore important to collect materials that demonstrate the actual integrated operation, such as business cards, organizational charts, payroll ledgers, and ERP screenshots.
Ⅴ. Practical Points (From the Employer’s Perspective)
From the employer’s standpoint, if you intend to hire a fixed-term employee, you must clearly indicate the “fixed-term” nature of the position from the recruitment notice through to the written employment contract, and you must prepare and provide a written employment contract before work commences, clearly specifying the term, duties, wages, and other conditions.
If you advertise the position as if it were for a regular employee, allow work to commence without a written contract, and later, due to managerial or personnel needs, present a fixed-term contract and demand a signature, the Labor Relations Commission is highly likely to regard this as a dismissal. If there is no just cause, it will be difficult to avoid liability for unfair dismissal.
Moreover, even if you have been managing personnel on the assumption that your business has fewer than 5 employees, where family companies or affiliates in substance integrate their representative directors, offices, and personnel/payroll/ERP systems, the number of ordinary employees may be aggregated. In such cases, the dismissal restrictions and unfair dismissal remedy system under the Labor Standards Act may apply in full. Employers should therefore objectively review the overall HR and labor structure of their group.
To prevail in this type of case, it is essential to have an accurate understanding of the legal concepts of dismissal under the Labor Standards Act, the criteria for distinguishing fixed-term from indefinite-term contracts, and the rules for calculating the number of ordinary employees. From the recruitment stage onward, employers should systematically manage and be able to prove the relevant facts in line with these principles, and should maintain ongoing consultation and compliance reviews with a specialized organization such as Labor Law Firm Law&.
2. Matters Determined
a. Case Overview and Procedural History
... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system. Considering all of this, ○○ Trading and ○○ Energy were in fact operated simultaneously, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
b. Existence of Dismissal
(i) The employer claims that, at the interview, it was agreed that the employee would be hired on a three‑month fixed-term basis, after which a decision would be made on conversion to regular employment, but no written employment contract was prepared or provided at the commencement of work; (ii) when, on 2025. 9. 4., the employer demanded that the employee sign a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee; (iii) if there had in fact been an agreement between the parties at the time of hiring to conclude a fixed-term contract, it is unlikely that the demand for signature and the refusal on 2025. 9. 4. would have occurred; (iv) the recruitment notice also specified the employment type as “an employment contract with no fixed term.” In light of the foregoing, it is determined that an employment contract with no fixed term was concluded, and that the notice of termination of the employment relationship constitutes a dismissal.
c. Justifiability of the Dismissal
As the employer terminated the employment relationship solely on the ground of expiration of the term, without presenting any just cause, this violates Article 23(1) of the Labor Standards Act and is therefore unfair.
3. Summary of the Decision
a. Summary of the Labor Relations Commission’s Reasoning
... Whether the number of employees is 5 or more: (i) the representative of ○○ Trading and the representative of ○○ Energy are father and son, and the representative of ○○ Energy is registered as a director on the corporate registry of ○○ Trading; (ii) the two corporations are engaged in the same line of business, share the same address, and are located on the 5th and 3rd floors, respectively, of the same building; (iii) Manager Han ○○, whom the employer claims is an employee of ○○ Energy, is listed on ○○ Trading’s organizational chart, and the employer’s representative stated at the hearing that “Manager Han ○○ seems to have originally been an employee of ○○ Trading”; (iv) the employee prepared and managed the payroll ledgers for both corporations together, and both corporations were registered together in the ERP system. Considering all of this, ○○ Trading and ○○ Energy were in fact operated simultaneously, and as each corporation had 4 and 1 employees, respectively, the number of ordinary employees is determined to be 5.
b. Existence of Dismissal
(i) The employer claims that, at the interview, it was agreed that the employee would be hired on a three‑month fixed-term basis, after which a decision would be made on conversion to regular employment, but no written employment contract was prepared or provided at the commencement of work; (ii) when, on 2025. 9. 4., the employer demanded that the employee sign a fixed-term employment contract, the employee refused to sign, asserting that they had originally been hired as a regular employee; (iii) if there had in fact been an agreement between the parties at the time of hiring to conclude a fixed-term contract, it is unlikely that the demand for signature and the refusal on 2025. 9. 4. would have occurred; (iv) the recruitment notice also specified the employment type as “an employment contract with no fixed term.” In light of the foregoing, it is determined that an employment contract with no fixed term was concluded, and that the notice of termination of the employment relationship constitutes a dismissal.
c. Justifiability of the Dismissal
As the employer terminated the employment relationship solely on the ground of expiration of the term, without presenting any just cause, this violates Article 23(1) of the Labor Standards Act and is therefore unfair. /
[See More Related Decisions]
- ‘Unfair Dismissal Case on Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’
- ‘Unfair Dismissal Case on “Not a Transfer or Demotion (Manager → Staff)”’
- ‘Unfair Dismissal Case on “Expression of Intent to Resign (Resignation Remark in Telephone Call)”’
[Tags]
Unfair dismissal, existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract), 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series.
※ You can view the previous article, “Unfair Dismissal Case on ‘Lack of Business Necessity (Formal Transfer)’,” in a new window.
※ The list of decisions related to existence of dismissal (fewer than 5 employees · refusal to sign fixed-term contract) can be viewed together on the “Existence of Dismissal (Fewer than 5 Employees · Refusal to Sign Fixed-Term Contract) Related Decisions” page.
※ Korean version of this case: Korean article
