[Case Information] This case is a decision in which the employer prevailed (application dismissed) on the issues of “low performance ordinary dismissal (outsourced HR · standing to be sued as employer).” Decision date: 2026-07-31 · Decision body: Seoul Regional Labor Relations Commission · Case No.: 2026부해1874 Key issues summary: A. Standing to be sued as employer in the relief application: Employer 2 merely performed HR tasks outsourced by Employer 1, and there were no circumstances to find that an employment contract had been formed with the worker; therefore, standing to be sued as employer lies with Employer 1. B. Whether it constitutes an ordinary dismissal: Employer 1 terminated the employment relationship due to the worker’s poor work ability and performance, which falls under Article 49(5) of Employer 1’s Rules of Employment (“where work ability is extremely poor and there is no prospect of improvement”), and thus constitutes an ordinary dismissal… 1. Legal Implications Ⅰ. Case Overview In this case, the worker filed an application for relief with the Labor Relations Commission alleging unfair dismissal. The issues were: which of Employer 1 and Employer 2 (which had been entrusted with HR tasks) was the true employer, and whether an ordinary dismissal based on low performance was justified. The Seoul Regional Labor Relations Commission focused its review on who had standing as the employer and whether the worker’s low performance had reached a level where it was no longer reasonably possible to maintain the employment relationship. Ⅱ. Summary of Issues The issues in this case are: “In a situation where there is a company entrusted with HR tasks, who has standing to be sued as employer in an unfair dismissal relief application, and whether an ordinary dismissal based on low performance constitutes ‘a justifiable reason such that, under social norms, the employment relationship cannot be continued’ under Article 23(1) of the Labor Standards Act.” Ⅲ. Summary of the Labor Relations Commission’s Reasoning The panel in this case found that Employer 2 merely performed HR tasks outsourced by Employer 1 and that there was no direct employment contract relationship, i.e., no relationship of subordination as an employer, between Employer 2 and the worker; that the Rules of Employment expressly provide “where work ability is extremely poor and there is no prospect of improvement” as a ground for ordinary dismissal; and that the worker’s poor work ability and performance had reached a level where, under social norms, it was no longer reasonably possible to maintain the employment relationship, and there were no defects in the dismissal procedures. Accordingly, the panel held that in this dismissal: standing to be sued as employer lies with Employer 1; the dismissal constitutes an ordinary dismissal based on low performance; and it is a lawful dismissal carried out with justifiable reason and due procedure under the Labor Standards Act. Ⅳ. Practical Points (From the Worker’s Perspective) From the worker’s perspective, even if an outsourced company handles HR operations, you must pay attention to who the real employer is in substance—i.e., who actually exercises direction and supervision and pays wages—because that party will be the proper respondent in an unfair dismissal relief application. In addition, since an ordinary dismissal based on low performance can be upheld, it is important to secure, on an ongoing basis, materials showing efforts to improve performance during the evaluation period, requests for training and guidance, and evidence concerning the fairness of performance evaluations. Ⅴ. Practical Points (From the Employer/Company Perspective) From the employer’s side, even when HR tasks are outsourced to an external company or an affiliate, it is necessary to clearly identify who is the actual party to the employment contract and who holds employer status, and to design and operate contracts, rules of employment, and command-and-supervision structures in a consistent manner. When considering a low performance dismissal, employers should manage matters so that they can objectively record and prove specific performance indicators, repeated poor performance and lack of improvement potential, and prior guidance, warnings, and evaluation procedures, in a way that aligns with the grounds for ordinary dismissal set out in the Rules of Employment. This decision serves as a reminder that, unlike redundancy (collective) dismissals, ordinary dismissals based on low performance will only be found justified if they meet the strict standard under Article 23(1) of the Labor Standards Act—namely, that “under social norms, it is no longer reasonably possible to continue the employment relationship.” (ⓒ2026 copyright. Labor Attorney Youngseob Moon, Labor Law Firm Law&.) 2. Matters Decided A. Case Overview and Procedural History This is a case in which it was held that standing to be sued as employer lies with Employer 1, and that an ordinary dismissal of a low performer whose performance had deteriorated to the point where the employment relationship could no longer be continued was justified. 3. Gist of the Decision A. Summary of the Labor Relations Commission’s Reasoning a. Standing to be sued as employer in the relief application Employer 2 merely performed HR tasks outsourced by Employer 1, and there are no circumstances to find that an employment contract relationship was formed with the worker; therefore, standing to be sued as employer lies with Employer 1. b. Whether it constitutes an ordinary dismissal Employer 1 terminated the employment relationship due to the worker’s poor work ability and performance, which falls under Article 49(5) of Employer 1’s Rules of Employment (“where work ability is extremely poor and there is no prospect of improvement”), and thus constitutes an ordinary dismissal. c. Whether the dismissal was justified Due to the worker’s poor work ability and performance, the employment relationship between the worker and Employer 1 had, under social norms, reached a level where it was no longer reasonably possible to maintain it; therefore, there was justifiable cause, and as there were no procedural defects, the dismissal was justified. [See More Related Decisions] - “Unfair Dismissal Decision on ‘Relief Interest · Refusal to Rehire (Post-Retirement Fixed-Term Employment)’” - “Unfair Dismissal Decision on ‘Business Necessity (Reassignment of Cleaners)’” - “Unfair Dismissal Decision on ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’” [Tags] Unfair dismissal, low performance ordinary dismissal (outsourced HR · standing to be sued as employer), performance evaluation · poor performance, 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 Decision on ‘Justifiability of Transfer (Reduction of Overseas Sales Operations)’,” in a new window. ※ The list of decisions related to low performance ordinary dismissal (outsourced HR · standing to be sued as employer) can be viewed together in the “List of Decisions on Low Performance Ordinary Dismissal (Outsourced HR · Standing to Be Sued as Employer).” ※ Korean version of this case: Korean article