This case concerns an unfair dismissal remedy application involving the issue of “denial of employee status (daycare center director),” which concluded with a decision in favor of the employer (dismissal of the application). Decision date: 2026-08-05 · Decision body: Seoul Regional Labor Relations Commission · Case No.: 2026Buhae1923 Key issues summarized: (i) The duties specified in the employment contract consisted of overall management of infant and child care services and comprehensive operation of the daycare center, including recruitment, appointment, and management of childcare staff; (ii) there was no evidence that the employer set the details of the work or gave related instructions; (iii) the worker drafted and amended the work rules in her own name and implemented them, and executed written agreements with the employees’ representative, thereby handling affairs in the capacity of an employer; (iv) the worker, as director of the daycare center, exercised authority over leave and attendance management, disciplinary measures, and final approval of her own attendance, etc.; (v) she independently determined matters relating to the daycare center’s operating plan, recruitment and appointment/dismissal of childcare teachers, budgeting and settlement reporting, and reported directly to the competent district office; (vi) she unilaterally determined the pay structure, including holiday bonuses and performance bonuses for childcare teachers, at her own discretion. In light of these facts, it was held that she could not be regarded as a worker under the Labor Standards Act who provides labor to an employer in a subordinate relationship for the purpose of receiving wages, but rather as operating the business from an independent position closer to that of an employer. 1. Legal Implications This case is an unfair dismissal remedy application filed with the Seoul Regional Labor Relations Commission, in which the Commission dismissed the application on the ground that the applicant did not qualify as a “worker” under the Labor Standards Act. In particular, although the daycare center director claimed unfair dismissal and contested the matter before the Labor Relations Commission, the Commission found that employee status could not be recognized and therefore denied the status of “worker,” which is a prerequisite for the unfair dismissal remedy procedure. In doing so, it faithfully applied the legal principles governing the determination of employee status. Where, in an unfair dismissal case, the Labor Relations Commission denies employee status itself, the case effectively ends at the threshold. For this reason, Labor Law Firm Law& consistently emphasizes how crucial the determination of employee status is in this type of dispute. Ⅰ. Case Overview The applicant in this case worked as the director of a daycare center entrusted by a local government and filed an unfair dismissal remedy application with the Labor Relations Commission, alleging that she had been unfairly dismissed by the employer. During the Commission’s hearing, however, the preliminary issue arose as to whether the applicant in fact qualified as a “worker” under the Labor Standards Act, that is, whether there existed a subordinate labor-providing relationship with the employer. Focusing on the nature of the duties performed by the applicant, her authority over personnel and labor management, and the decision-making structure for the overall operation of the daycare center, the Labor Relations Commission examined the facts and ultimately denied employee status, thereby rejecting the unfair dismissal remedy application. Ⅱ. Issue Summary The issue in this case is whether a daycare center director who oversees the overall operation of the daycare center and independently carries out personnel and labor management, budgeting and settlement, and the enactment and amendment of work rules can nonetheless be regarded as a “worker” under the Labor Standards Act in relation to the employer. Ⅲ. Summary of the Labor Relations Commission’s Decision The panel held that the employer had comprehensively delegated to the applicant not only infant and child care–related duties but also the overall operation of the daycare center, including recruitment, appointment, and management of childcare staff; that there was no evidence that the employer set specific or individual work details or issued instructions; that the applicant herself enacted and amended the work rules and entered into written agreements with the employees’ representative and implemented them, thereby handling affairs in the capacity of an employer; that she exercised authority over personnel and labor management, including managing leave and attendance of childcare teachers, exercising disciplinary authority, and acting as the final approving authority for her own attendance; that she independently determined the daycare center’s operating plan, recruitment and appointment/dismissal of childcare teachers, budgeting and settlement reporting, and reported directly to the competent district office; and that she determined the pay structure, including holiday bonuses and performance bonuses, at her own discretion. In light of these circumstances, the panel found it difficult to regard the applicant as a “worker” under the Labor Standards Act who provides labor to an employer in a subordinate relationship for the purpose of receiving wages, and instead determined that she operated the business from an independent position closer to that of an employer. Accordingly, the dismissal at issue in this case was held not to constitute an unfair dismissal of a worker under the Labor Standards Act. Ⅳ. Practical Points (From the Worker’s Perspective) Employee status under the Labor Standards Act is determined not by the title of the contract or position, but by a comprehensive assessment of whether the person is in fact subject to the employer’s direction and supervision, whether the work rules apply, and the extent to which the person participates in key decision-making regarding personnel, labor, and budgeting. In particular, unlike cases where daycare center directors, store managers, branch managers, and others in nominal “managerial” positions are in substance paid wages under the company’s direction and supervision, in a case such as this where the person exercises broad authority over the enactment and amendment of work rules, personnel, and budgeting, there is a high likelihood that employee status will be denied. Therefore, if you are considering filing an unfair dismissal remedy application, you should first organize the details of your duties, your decision-making authority, and the degree of direction and supervision you receive from the employer, and then carefully review, together with an expert, the likelihood that your employee status will be recognized before proceeding. Ⅴ. Practical Points (From the Employer/Company’s Perspective) From the employer’s perspective, it is important to recognize that the applicable laws and the scope of dispute risk differ significantly depending on whether the legal status of a director, store manager, center head, or other manager is that of a worker, or closer to that of an entrusted operator or business owner. If, in substance, independent authority over management, personnel, and labor is granted, but the relationship is formally framed only by an employment contract, there is a risk that employee status will be recognized and that unexpected disputes may arise, such as unfair dismissal claims or claims for wages and retirement benefits. Accordingly, you should design entrusted operation agreements, employment contracts, work rules, and the scope of granted personnel and budget authority in a consistent manner, and align actual operating practices with these arrangements so that whether the relationship is one of subordinate employment or independent entrusted/operating status is consistent in both form and substance. 2. Matters Decided A. Case Overview and Procedural History A case in which it was held that the individual could not be regarded as a worker under the Labor Standards Act providing labor in a subordinate relationship to the employer. 3. Gist of the Decision A. Summary of the Labor Relations Commission’s Reasoning In light of the following: (i) the duties specified in the employment contract consisted of overall management of infant and child care services and comprehensive operation of the daycare center, including recruitment, appointment, and management of childcare staff; (ii) there was no evidence that the employer set the details of the work or gave related instructions; (iii) the worker drafted and amended the work rules in her own name and implemented them, and executed written agreements with the employees’ representative, thereby handling affairs in the capacity of an employer; (iv) the worker performed personnel and labor management duties such as managing leave and attendance and exercising disciplinary authority over the daycare center’s childcare teachers, and, as the final approving authority, managed matters related to her own leave and attendance; (v) she independently determined matters relating to the daycare center’s operating plan, recruitment and appointment/dismissal of childcare teachers, budgeting and settlement reporting, and reported directly to the Songpa-gu Office; and (vi) she exercised independent personnel and labor management authority by, at her own discretion, determining holiday bonuses and performance bonuses for childcare teachers, as well as her own performance bonuses and allowances, it was concluded that the worker could not be regarded as a worker under the Labor Standards Act who provides labor to an employer in a subordinate relationship. [See More Related Decisions] - “Expectation of Employment Succession (Logistics Center Competitive Bidding)” Unfair Dismissal Decision - “Business Necessity (Reassignment of Cleaning Staff)” Unfair Dismissal Decision - “Remedial Interest and Refusal to Rehire (Post-Retirement Fixed-Term Employment)” Unfair Dismissal Decision [Tags] Unfair dismissal, denial of employee status (daycare center director), 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, “User Standing (Regional Self-Sufficiency Center Operating Corporation) in Unfair Dismissal Decision,” in a new window. ※ A list of decisions related to denial of employee status (daycare center director) can be found under “List of Decisions on Denial of Employee Status (Daycare Center Director).” ※ Korean version of this case: Korean article