Corporate trends / Performance record
Denial of Employee Status (Standing Director Management Contract) in Unfair Dismissal Relief Case (Unfair Dismissal 405)
- Date2026/04/26 04:08
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[Case Information]
This case is a decision in which the initial decision was upheld on the issue of “denial of employee status (standing director management contract).”
Decision body: Central Labor Relations Commission
Case: 2025Buhae1668 ○ ○ ○ Unfair Dismissal Relief Re‑review Application
Decision date: 2026.02.11 · Result: Initial decision upheld
Key issue summary:
① Under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office;
② Under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees;
…
1. Legal Implications
Ⅰ. Case Overview
In this case, a person who had been appointed as a standing director and entered into a management contract was removed from office and then applied to the Labor Relations Commission for relief, claiming that the removal constituted unfair dismissal.
In the unfair dismissal relief re‑review before the Central Labor Relations Commission, the preliminary issue was whether this standing director qualified as a “worker” under the Labor Standards Act. Depending on that determination, the standing director’s standing to file an application for unfair dismissal relief was decided.
Ⅱ. Issues
The issue in this case is whether a person who has entered into a management contract as a standing director and bears responsibility for management performance qualifies as a worker under the Labor Standards Act in relation to the employer, thereby enabling that person to apply to the Labor Relations Commission for relief from unfair dismissal.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel held that, in light of (i) the fact that the standing director management contract provides that the standing director shall oversee the company’s substantive management activities and bear responsibility for management performance, (ii) the fact that the Organization Regulations and Articles of Incorporation clearly distinguish the duties, terms of office, and treatment of officers, including the standing director, from those of ordinary employees, and (iii) the fact that, based solely on the materials submitted by the worker, it is difficult to find that the worker provided labor in a subordinate relationship under the employer’s specific and individual direction and supervision,
even when assessed against the Supreme Court’s criteria that one must comprehensively consider whether the individual provided labor to the employer in a subordinate relationship for the purpose of receiving wages in a business or workplace, it is difficult to regard this standing director as a worker under the Labor Standards Act.
The panel therefore found that, because the prerequisite “employee status” requirement for an unfair dismissal relief application was not satisfied, the dismissal in this case could not be the subject of an unfair dismissal relief order, and the applicant’s claim was unlikely to be upheld.
Ⅳ. Practical Points (From the Worker’s Perspective)
Even if you hold an executive title such as standing director or senior managing director, employee status may still be recognized if, in substance, you provide certain labor under the direction and supervision of the representative director and receive wages in return.
Conversely, in a structure such as in this case—where the executive bears responsibility for management performance and enters into a management contract under which term of office, remuneration, and authority are clearly distinguished from those of employees—it is difficult to have employee status recognized by the Labor Relations Commission. Accordingly, before preparing an application for unfair dismissal relief, you should carefully examine the likelihood of proving employee status.
Ⅴ. Practical Points (From the Employer/Company Perspective)
From the company’s perspective, it is important to clearly distinguish the status, authority, and remuneration systems of officers and employees in the Articles of Incorporation, Organization Regulations, management contracts, and similar documents.
However, even if a person is nominally an officer, employee status may be recognized if, in practice, a relationship of subordination similar to that of ordinary employees exists in terms of personnel management, working hours, and work direction. Companies should therefore regularly check whether the way officers are managed and the contents of their contracts are consistent with the actual operation of work.
On the premise that, in cases of this kind, the Labor Relations Commission and the courts place more weight on the substantive existence of a relationship of subordination than on the formal structure of the contract, employers are advised to consult experts such as Labor Law Firm Law& in order to manage unfair dismissal and redundancy dismissal risks in advance.
2. Matters Decided
A. Case Overview and Procedural History
In light of the following: (i) under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office; (ii) under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees; and (iii) based solely on the arguments and materials submitted by the worker, it is insufficient to find that the worker provided labor in a subordinate relationship under the employer’s direction and supervision;
it is difficult to regard the applicant as a worker under the Labor Standards Act.
3. Gist of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
In light of the following: (i) under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office; (ii) under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees; and (iii) based solely on the arguments and materials submitted by the worker, it is insufficient to find that the worker provided labor in a subordinate relationship under the employer’s direction and supervision;
it is difficult to regard the applicant as a worker under the Labor Standards Act.
[See More Related Decisions]
- “Unfair Dismissal Decision on ‘Non‑Formation of Hiring Commitment (Absence of Offer Letter)’” – Decision date: – Result: Initial decision upheld
- “Unfair Dismissal Decision on ‘Absence of Consent to Transfer (Dispatch to Affiliate)’”
- “Unfair Dismissal Decision on ‘Dismissal of Application (Non‑appearance at Hearing)’” – Decision date: – Result: Dismissal of application
[Tags]
Unfair dismissal, denial of employee status (standing director management 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 the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ The previous article, “Unfair Dismissal Decision on ‘Absence of Consent to Transfer (Dispatch to Affiliate)’,” can be viewed in a new window.
※ A list of decisions related to denial of employee status (standing director management contract) can be viewed under “List of Decisions Related to Denial of Employee Status (Standing Director Management Contract).”
※ Korean version of this case: Korean article
This case is a decision in which the initial decision was upheld on the issue of “denial of employee status (standing director management contract).”
Decision body: Central Labor Relations Commission
Case: 2025Buhae1668 ○ ○ ○ Unfair Dismissal Relief Re‑review Application
Decision date: 2026.02.11 · Result: Initial decision upheld
Key issue summary:
① Under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office;
② Under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees;
…
1. Legal Implications
Ⅰ. Case Overview
In this case, a person who had been appointed as a standing director and entered into a management contract was removed from office and then applied to the Labor Relations Commission for relief, claiming that the removal constituted unfair dismissal.
In the unfair dismissal relief re‑review before the Central Labor Relations Commission, the preliminary issue was whether this standing director qualified as a “worker” under the Labor Standards Act. Depending on that determination, the standing director’s standing to file an application for unfair dismissal relief was decided.
Ⅱ. Issues
The issue in this case is whether a person who has entered into a management contract as a standing director and bears responsibility for management performance qualifies as a worker under the Labor Standards Act in relation to the employer, thereby enabling that person to apply to the Labor Relations Commission for relief from unfair dismissal.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel held that, in light of (i) the fact that the standing director management contract provides that the standing director shall oversee the company’s substantive management activities and bear responsibility for management performance, (ii) the fact that the Organization Regulations and Articles of Incorporation clearly distinguish the duties, terms of office, and treatment of officers, including the standing director, from those of ordinary employees, and (iii) the fact that, based solely on the materials submitted by the worker, it is difficult to find that the worker provided labor in a subordinate relationship under the employer’s specific and individual direction and supervision,
even when assessed against the Supreme Court’s criteria that one must comprehensively consider whether the individual provided labor to the employer in a subordinate relationship for the purpose of receiving wages in a business or workplace, it is difficult to regard this standing director as a worker under the Labor Standards Act.
The panel therefore found that, because the prerequisite “employee status” requirement for an unfair dismissal relief application was not satisfied, the dismissal in this case could not be the subject of an unfair dismissal relief order, and the applicant’s claim was unlikely to be upheld.
Ⅳ. Practical Points (From the Worker’s Perspective)
Even if you hold an executive title such as standing director or senior managing director, employee status may still be recognized if, in substance, you provide certain labor under the direction and supervision of the representative director and receive wages in return.
Conversely, in a structure such as in this case—where the executive bears responsibility for management performance and enters into a management contract under which term of office, remuneration, and authority are clearly distinguished from those of employees—it is difficult to have employee status recognized by the Labor Relations Commission. Accordingly, before preparing an application for unfair dismissal relief, you should carefully examine the likelihood of proving employee status.
Ⅴ. Practical Points (From the Employer/Company Perspective)
From the company’s perspective, it is important to clearly distinguish the status, authority, and remuneration systems of officers and employees in the Articles of Incorporation, Organization Regulations, management contracts, and similar documents.
However, even if a person is nominally an officer, employee status may be recognized if, in practice, a relationship of subordination similar to that of ordinary employees exists in terms of personnel management, working hours, and work direction. Companies should therefore regularly check whether the way officers are managed and the contents of their contracts are consistent with the actual operation of work.
On the premise that, in cases of this kind, the Labor Relations Commission and the courts place more weight on the substantive existence of a relationship of subordination than on the formal structure of the contract, employers are advised to consult experts such as Labor Law Firm Law& in order to manage unfair dismissal and redundancy dismissal risks in advance.
2. Matters Decided
A. Case Overview and Procedural History
In light of the following: (i) under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office; (ii) under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees; and (iii) based solely on the arguments and materials submitted by the worker, it is insufficient to find that the worker provided labor in a subordinate relationship under the employer’s direction and supervision;
it is difficult to regard the applicant as a worker under the Labor Standards Act.
3. Gist of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
In light of the following: (i) under the standing director management contract concluded between the worker and the employer, the standing director is expressly responsible for overseeing the company’s substantive management activities and for its management performance, and the contract specifically sets out performance targets to be achieved, performance reporting, and performance evaluation, and further provides that, depending on the result of the standing director’s performance evaluation, a recommendation for dismissal may be made even during the term of office; (ii) under Article 4 (Members) of the company’s Organization Regulations and Article 7 (Types and Number of Officers) of its Articles of Incorporation, the members of the company are divided into officers and employees, and with respect to officers including the standing director, their duties, terms of office, and treatment are clearly distinguished from those of employees; and (iii) based solely on the arguments and materials submitted by the worker, it is insufficient to find that the worker provided labor in a subordinate relationship under the employer’s direction and supervision;
it is difficult to regard the applicant as a worker under the Labor Standards Act.
[See More Related Decisions]
- “Unfair Dismissal Decision on ‘Non‑Formation of Hiring Commitment (Absence of Offer Letter)’” – Decision date: – Result: Initial decision upheld
- “Unfair Dismissal Decision on ‘Absence of Consent to Transfer (Dispatch to Affiliate)’”
- “Unfair Dismissal Decision on ‘Dismissal of Application (Non‑appearance at Hearing)’” – Decision date: – Result: Dismissal of application
[Tags]
Unfair dismissal, denial of employee status (standing director management 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 the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ The previous article, “Unfair Dismissal Decision on ‘Absence of Consent to Transfer (Dispatch to Affiliate)’,” can be viewed in a new window.
※ A list of decisions related to denial of employee status (standing director management contract) can be viewed under “List of Decisions Related to Denial of Employee Status (Standing Director Management Contract).”
※ Korean version of this case: Korean article
