Corporate trends / Performance record
‘Employee Status (Conversion to Franchisee)’ Unfair Dismissal Decision (Unfair Dismissal 380)
- Date2026/04/18 04:04
- Read 182
[Case Information]
This case is a decision in which the employer prevailed (application dismissed) on the issue of “employee status (conversion to franchisee).”
Decision body: Gyeonggi Regional Labor Relations Commission 2025 Unfair Dismissal 9930 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.13 · Case outcome: Dismissed
Key issue summary: a.
1. Legal Implications
Ⅰ. Case Overview
This application for remedy for unfair dismissal was handled by the Gyeonggi Regional Labor Relations Commission. The issues were whether employee status under the Labor Standards Act continued to be recognized after the employer attempted to convert an existing employee into a franchisee, and whether an actual unfair dismissal had occurred. The employee applied to the Labor Relations Commission for a remedy for unfair dismissal, while the employer argued that the individual was no longer an employee and that the payments made were not wages but livelihood-support subsidies.
Ⅱ. Summary of Issues
The issues in this case are “whether, after conversion into a franchisee form, the individual still qualifies as an employee under the Labor Standards Act, and whether there exists an objective act of dismissal.”
Ⅲ. Summary of the Labor Relations Commission’s Findings
The panel in this case held that, notwithstanding the employer’s characterization of the relationship as a “conversion to franchisee,” the individual should be regarded as an employee under the Labor Standards Act, in light of the following: the franchise agreement contained no provisions whatsoever regarding livelihood-support subsidies; the individual remained enrolled in the four major social insurances under the employer’s name; and, in the course of performing work, the individual appeared to be subject to substantial direction and supervision by the employer.
However, with respect to the existence of a dismissal, the panel found it difficult to recognize a substantive dismissal, noting that there were no objective documents, explicit notifications, personnel measures, or other concrete circumstances confirming that the employer had dismissed the employee.
Ultimately, while employee status was recognized, the application for remedy for unfair dismissal was dismissed on the grounds that there was insufficient evidence of a unilateral manifestation of intent by the employer to terminate the employment relationship, i.e., a dismissal.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, regardless of whether the relationship is labeled “franchisee,” “consignment contract,” “contract for work,” or otherwise, employee status under the Labor Standards Act may still be recognized if, in reality, the individual works continuously under the employer’s direction and supervision, is enrolled in the four major social insurances under the employer’s name, and receives remuneration of a wage-like nature. However, to obtain a remedy for unfair dismissal, mere conflict or cessation of attendance is not enough. It is important to secure as much objective evidence as possible that the employer attempted to terminate the employment relationship, such as dismissal notices via text message or KakaoTalk, official personnel notices, or access-control measures.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s perspective, when converting to a franchise, consignment, or contract-for-work structure, it is essential to ensure that the contract terms, the party responsible for enrollment in the four major social insurances, the method of remuneration, and the structure of work direction and supervision are aligned with the actual operation. Otherwise, there is a high risk that the Labor Relations Commission or the courts will still find that the individual is an employee under the Labor Standards Act. In addition, if the employer intends to terminate the relationship, it must ensure that it is clearly evident whether the termination is by resignation, mutual agreement, or dismissal, and must have proper written notices and procedures in place. Failing this, the employer may later become embroiled in a preliminary dispute in an unfair dismissal case over “whether a dismissal exists at all.” It is therefore advisable to design procedures at the HR and labor-management stage with the advice of experts such as Labor Law Firm Law&.
2. Matters Decided
a. Case Overview and Procedural History
a. Whether the Individual Is an Employee Under the Labor Standards Act
(1) The employer argued that, from the time the individual became a franchisee, the individual was no longer an employee under the Labor Standards Act and that the amounts paid to the individual were not wages but livelihood-support subsidies. However, the franchise agreement contained no provisions regarding such subsidies.
(2) The individual was enrolled in the four major social insurances under the employer’s name.
(3) In the course of performing work, the individual appeared to be subject to substantial work-related direction and supervision by the employer.
In light of the above, the individual was found to be an employee under the Labor Standards Act.
b. Whether a Dismissal Exists
As no objective materials or concrete circumstances confirming that the employer had dismissed the individual were identified, it was determined that no dismissal existed.
3. Gist of the Decision
a. Summary of the Labor Relations Commission’s Findings
a. Whether the Individual Is an Employee Under the Labor Standards Act
(1) The employer argued that, from the time the individual became a franchisee, the individual was no longer an employee under the Labor Standards Act and that the amounts paid to the individual were not wages but livelihood-support subsidies. However, the franchise agreement contained no provisions regarding such subsidies.
(2) The individual was enrolled in the four major social insurances under the employer’s name.
(3) In the course of performing work, the individual appeared to be subject to substantial work-related direction and supervision by the employer.
In light of the above, the individual was found to be an employee under the Labor Standards Act.
b. Whether a Dismissal Exists
As no objective materials or concrete circumstances confirming that the employer had dismissed the individual were identified, it was determined that no dismissal existed.
/
[Related Decisions]
- ‘Expression of Intent to Resign (Resignation Remark During Telephone Call)’ Unfair Dismissal Decision
- ‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’ Unfair Dismissal Decision – Decision date: – Case number: First-instance decision upheld
- ‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’ Unfair Dismissal Decision
[Tags]
Unfair dismissal, employee status (conversion to franchisee), 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.
※ The previous article, “‘Disciplinary Sanction Level (Provincial Symphony Orchestra Concurrent Position·Media Interview)’ Unfair Dismissal Decision,” can be viewed in a new window.
※ A list of decisions related to employee status (conversion to franchisee) can be found in the “List of Decisions Related to Employee Status (Conversion to Franchisee).”
※ 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 (conversion to franchisee).”
Decision body: Gyeonggi Regional Labor Relations Commission 2025 Unfair Dismissal 9930 ○ ○ ○ Application for Remedy for Unfair Dismissal
2026.02.13 · Case outcome: Dismissed
Key issue summary: a.
1. Legal Implications
Ⅰ. Case Overview
This application for remedy for unfair dismissal was handled by the Gyeonggi Regional Labor Relations Commission. The issues were whether employee status under the Labor Standards Act continued to be recognized after the employer attempted to convert an existing employee into a franchisee, and whether an actual unfair dismissal had occurred. The employee applied to the Labor Relations Commission for a remedy for unfair dismissal, while the employer argued that the individual was no longer an employee and that the payments made were not wages but livelihood-support subsidies.
Ⅱ. Summary of Issues
The issues in this case are “whether, after conversion into a franchisee form, the individual still qualifies as an employee under the Labor Standards Act, and whether there exists an objective act of dismissal.”
Ⅲ. Summary of the Labor Relations Commission’s Findings
The panel in this case held that, notwithstanding the employer’s characterization of the relationship as a “conversion to franchisee,” the individual should be regarded as an employee under the Labor Standards Act, in light of the following: the franchise agreement contained no provisions whatsoever regarding livelihood-support subsidies; the individual remained enrolled in the four major social insurances under the employer’s name; and, in the course of performing work, the individual appeared to be subject to substantial direction and supervision by the employer.
However, with respect to the existence of a dismissal, the panel found it difficult to recognize a substantive dismissal, noting that there were no objective documents, explicit notifications, personnel measures, or other concrete circumstances confirming that the employer had dismissed the employee.
Ultimately, while employee status was recognized, the application for remedy for unfair dismissal was dismissed on the grounds that there was insufficient evidence of a unilateral manifestation of intent by the employer to terminate the employment relationship, i.e., a dismissal.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, regardless of whether the relationship is labeled “franchisee,” “consignment contract,” “contract for work,” or otherwise, employee status under the Labor Standards Act may still be recognized if, in reality, the individual works continuously under the employer’s direction and supervision, is enrolled in the four major social insurances under the employer’s name, and receives remuneration of a wage-like nature. However, to obtain a remedy for unfair dismissal, mere conflict or cessation of attendance is not enough. It is important to secure as much objective evidence as possible that the employer attempted to terminate the employment relationship, such as dismissal notices via text message or KakaoTalk, official personnel notices, or access-control measures.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s perspective, when converting to a franchise, consignment, or contract-for-work structure, it is essential to ensure that the contract terms, the party responsible for enrollment in the four major social insurances, the method of remuneration, and the structure of work direction and supervision are aligned with the actual operation. Otherwise, there is a high risk that the Labor Relations Commission or the courts will still find that the individual is an employee under the Labor Standards Act. In addition, if the employer intends to terminate the relationship, it must ensure that it is clearly evident whether the termination is by resignation, mutual agreement, or dismissal, and must have proper written notices and procedures in place. Failing this, the employer may later become embroiled in a preliminary dispute in an unfair dismissal case over “whether a dismissal exists at all.” It is therefore advisable to design procedures at the HR and labor-management stage with the advice of experts such as Labor Law Firm Law&.
2. Matters Decided
a. Case Overview and Procedural History
a. Whether the Individual Is an Employee Under the Labor Standards Act
(1) The employer argued that, from the time the individual became a franchisee, the individual was no longer an employee under the Labor Standards Act and that the amounts paid to the individual were not wages but livelihood-support subsidies. However, the franchise agreement contained no provisions regarding such subsidies.
(2) The individual was enrolled in the four major social insurances under the employer’s name.
(3) In the course of performing work, the individual appeared to be subject to substantial work-related direction and supervision by the employer.
In light of the above, the individual was found to be an employee under the Labor Standards Act.
b. Whether a Dismissal Exists
As no objective materials or concrete circumstances confirming that the employer had dismissed the individual were identified, it was determined that no dismissal existed.
3. Gist of the Decision
a. Summary of the Labor Relations Commission’s Findings
a. Whether the Individual Is an Employee Under the Labor Standards Act
(1) The employer argued that, from the time the individual became a franchisee, the individual was no longer an employee under the Labor Standards Act and that the amounts paid to the individual were not wages but livelihood-support subsidies. However, the franchise agreement contained no provisions regarding such subsidies.
(2) The individual was enrolled in the four major social insurances under the employer’s name.
(3) In the course of performing work, the individual appeared to be subject to substantial work-related direction and supervision by the employer.
In light of the above, the individual was found to be an employee under the Labor Standards Act.
b. Whether a Dismissal Exists
As no objective materials or concrete circumstances confirming that the employer had dismissed the individual were identified, it was determined that no dismissal existed.
/
[Related Decisions]
- ‘Expression of Intent to Resign (Resignation Remark During Telephone Call)’ Unfair Dismissal Decision
- ‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’ Unfair Dismissal Decision – Decision date: – Case number: First-instance decision upheld
- ‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’ Unfair Dismissal Decision
[Tags]
Unfair dismissal, employee status (conversion to franchisee), 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.
※ The previous article, “‘Disciplinary Sanction Level (Provincial Symphony Orchestra Concurrent Position·Media Interview)’ Unfair Dismissal Decision,” can be viewed in a new window.
※ A list of decisions related to employee status (conversion to franchisee) can be found in the “List of Decisions Related to Employee Status (Conversion to Franchisee).”
※ Korean version of this case: Korean article
