This case is an example in which the employer ultimately prevailed (application dismissed) on the issue of “denial of employee status (service contract).” [Case Information] This case concerns an unfair dismissal relief application in which the key issue was whether the applicant, who had entered into a service contract rather than an employment contract, could be regarded as an employee under the Labor Standards Act. The Gyeonggi Regional Labor Relations Commission dismissed the application in favor of the employer. Adjudicating body: Gyeonggi Regional Labor Relations Commission, 2026Buhae1670 ○ ○ ○ Unfair Dismissal Relief Application Adjudication date: 2026-07-06 · Result: Dismissed Key issue summary: The decisive facts included that the final written agreement between the parties was a service contract, not an employment contract; that the contract appears to have been concluded without any separate recruitment process, based instead on the applicant’s experience and knowledge in the same line of business and the expectation of increased sales; that no concrete work instructions or supervision were found, and the employer appears only to have received ex post reports for confirmation on important matters such as sales; that, unlike other employees, the applicant’s attendance was not managed; and that the monthly payments appear to have been set as remuneration for overall business operation rather than as consideration for labor, among other points. 1. Legal Implications Ⅰ. Case Overview In this case, the applicant claimed to be an employee under the Labor Standards Act and argued that the termination constituted unfair dismissal, filing an application for relief with the Labor Relations Commission. However, the Gyeonggi Regional Labor Relations Commission dismissed the application. A key factual element was that the final written agreement between the employer and the applicant was a service contract, not an employment contract, and that the contract was structured so that the applicant was entrusted with the overall operation of the business. The Commission held that, considering the nature of the payments made to the applicant, the manner of directing and supervising work, the absence of attendance management, and the lack of enrollment in the four major social insurances, it was difficult to regard the applicant as an employee under the Labor Standards Act. Ⅱ. Issues The issue in this case was whether, in a contractual relationship documented as a service contract, the applicant qualified as an employee under the Labor Standards Act so as to be eligible to seek relief for unfair dismissal. More specifically, the central dispute was whether, in a contract concluded without any separate recruitment process and based on the applicant’s experience in the same line of business and the expectation of increased sales, there existed concrete work instructions and supervision from the employer, attendance management, and remuneration having the character of wages. Ⅲ. Summary of the Labor Relations Commission’s Reasoning The adjudicating panel noted that the final written agreement between the parties was a service contract rather than an employment contract; that the contract appears to have been concluded without any open recruitment or hiring process, based on the applicant’s experience and knowledge in the same line of business and the employer’s expectation of increased sales; and that no specific, individualized work instructions or supervision were identified, with the employer seemingly receiving only ex post reports for confirmation on important matters such as sales. In addition, unlike other employees, the applicant was not subject to attendance management such as recording arrival and departure times; the monthly payments appear to have been set as remuneration for the overall operation of the business rather than as consideration for the provision of labor; and, in terms of social insurance, including the four major insurances, the applicant was treated differently from ordinary employees. On this basis, the Commission concluded that it was difficult to regard the applicant as an employee under the Labor Standards Act who was subordinated to the employer. Under Supreme Court jurisprudence on determining employee status under the Labor Standards Act, the decisive criterion is not whether the formal contract is labeled as an employment contract or as a contract for work, mandate, or services, but whether, in substance, the individual provided work under the direction and supervision of the employer in a subordinate relationship for the purpose of receiving wages. In this case as well, the Commission comprehensively considered factors such as who determined the content of the work, the existence and degree of direction and supervision, whether working hours and place of work were designated, the nature of the remuneration, and how the four major insurances and tax matters were handled, and concluded that there was no substantive relationship of subordination to the employer. Ⅳ. Practical Points (From the Employee’s Perspective) Those who wish to contest an unfair dismissal in similar circumstances should prepare objective evidence showing that, in reality, they were employees subject to the employer’s concrete direction and supervision, that their attendance, working hours, and place of work were controlled, and that the payments they received had the character of “wages” without bearing business risks. Even if the contract is labeled as a “service contract” or “contract for work,” there is room for employee status to be recognized if, in practice, the company’s internal rules were applied, personnel and attendance were managed, the individual was enrolled in the four major social insurances, and wage income tax was withheld at source. It is therefore important to organize and document such circumstances in detail. Ⅴ. Practical Points (From the Employer/Company’s Perspective) Before implementing personnel measures such as redundancy dismissals or contract terminations, companies should first examine whether the individual concerned qualifies as an employee under the Labor Standards Act. Even where the relationship is structured in the form of service, outsourcing, or freelance work, employee status may still be recognized in substance. Accordingly, the method of directing and supervising work, attendance management, remuneration structure, and enrollment in the four major insurances should be managed consistently with the contractual form. In addition, by obtaining advice from a specialized labor law firm such as Labor Law Firm Law&, companies can review in advance the criteria for determining employee status and recent trends in decisions by the Labor Relations Commissions and the courts, and clearly design the allocation of roles, responsibilities, and risk in drafting contracts, thereby helping to prevent unfair dismissal disputes. 2. Matters Adjudicated a. Case Overview and Procedural History The final written agreement between the parties was a service contract, not an employment contract; the contract appears to have been concluded without any separate recruitment process, based on the applicant’s experience and knowledge in the same line of business and the expectation of increased sales; no concrete work instructions or supervision were identified, and the employer appears only to have received ex post reports for confirmation on important matters such as the business’s sales; unlike other employees, the applicant does not appear to have been subject to separate attendance management; the monthly payments appear to have been set as remuneration for the overall operation of the business rather than as consideration for labor; and with respect to the four major social insurances as well… 3. Summary of the Decision a. Summary of the Labor Relations Commission’s Reasoning The final written agreement between the parties was a service contract, not an employment contract; the contract appears to have been concluded without any separate recruitment process, based on the applicant’s experience and knowledge in the same line of business and the expectation of increased sales; no concrete work instructions or supervision were identified, and the employer appears only to have received ex post reports for confirmation on important matters such as the business’s sales; unlike other employees, the applicant does not appear to have been subject to separate attendance management; the monthly payments appear to have been set as remuneration for the overall operation of the business rather than as consideration for labor; and with respect to the four major social insurances as well… / [See More Related Decisions] - “‘Non-Formation of Hiring Decision (Absence of Offer Letter)’ Unfair Dismissal Case” – Adjudication date: - · Case number: Initial Decision Upheld - “‘Dismissal (Non-Appearance at Hearing)’ Unfair Dismissal Case” – Adjudication date: - · Case number: Dismissed - “‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’ Unfair Dismissal Case” [Tags] Unfair dismissal, denial of employee status (service 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, “‘Existence of Employment Relationship (Event Assistant Daily Worker)’ Unfair Dismissal Case,” in a new window. ※ A list of decisions related to denial of employee status (service contract) can be viewed together at “List of Decisions Related to Denial of Employee Status (Service Contract).” ※ Korean version of this case: Korean article