[Case Information] This case is a decision in which the employer prevailed (application dismissed) on the issue of “ordinary dismissal for poor performance (outsourced HR · standing as employer).” Decision body: Seoul Regional Labor Relations Commission 2026Buhae1874 ○ ○ ○ Application for Remedy for Unfair Dismissal 2026-07-31 · Case result: Dismissed Summary of key issues: A. Standing as employer in the application for remedy: Employer 2 merely performed HR tasks outsourced by Employer 1, and there were no circumstances to find that an employment contract had been formed between Employer 2 and the employee; therefore, standing as employer lies with Employer 1. B. Whether the dismissal is an ordinary dismissal: Employer 1 terminated the employment relationship due to the employee’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 is justified: Due to the employee’s poor work ability and performance, it became difficult, under social norms, to maintain the employment relationship between the employee and Employer 1 any longer, and therefore… 1. Legal Implications Ⅰ. Case Overview In this case, the employee filed an application with the Labor Relations Commission seeking a remedy on the ground that his/her dismissal constituted unfair dismissal. The issues were (i) which party, Employer 1 or Employer 2, should be named as the respondent employer, and (ii) whether an ordinary dismissal based on poor work performance was justified. The Labor Relations Commission focused on the facts that Employer 2 had been entrusted only with HR tasks and was not a party to the employment contract, and that Employer 1 had based the dismissal on the provision in its Rules of Employment allowing dismissal “where work ability is extremely poor and there is no prospect of improvement.” Ⅱ. Summary of Issues The issues in this case are: “Whether a third-party corporation or individual entrusted with HR tasks qualifies as the actual employer, and whether a dismissal based on poor work ability and performance is justified as an ordinary dismissal.” Ⅲ. Summary of the Labor Relations Commission’s Findings The panel in this case found that Employer 2 merely performed HR tasks outsourced by Employer 1 and could not be regarded as the de facto business owner who directs and supervises the employee and pays wages. It further found that, in terms of the employee’s duties, working patterns, and reporting lines, the employment relationship centered on Employer 1. It emphasized that the existence of a substantive employment relationship must be determined not by form but by comprehensively considering factors such as the relationship of subordination in the work, the entity paying wages, and whether there is direction and supervision. On this basis, it held that the employer under the employment contract with the employee was limited to Employer 1. Furthermore, based on the provision in Employer 1’s Rules of Employment allowing dismissal “where work ability is extremely poor and there is no prospect of improvement,” the Commission found that the employee’s poor work ability and performance had continued to such an extent that, under social norms, it had become difficult to maintain the employment relationship. It therefore held that the dismissal at issue constituted an ordinary dismissal and was justified. Ⅳ. Practical Points (From the Employee’s Perspective) Employees should be aware that, even if a separate company handles HR and payroll in practice, standing as employer before the Labor Relations Commission will be determined by who actually directs and supervises them and pays their wages. In addition, in cases of ordinary dismissal based on poor performance or low ability, the key factor is not merely short-term poor results but whether, compared with the standards in the Rules of Employment, performance is “extremely poor and there is no prospect of improvement.” It is therefore important to objectively record and retain, on an ongoing basis, one’s work performance, evaluation history, and whether guidance and training opportunities were provided. Ⅴ. Practical Points (From the Employer/Company Perspective) From the company’s perspective, even when HR tasks are outsourced to an affiliate or an external entity, it is advisable to clearly define in the employment contract who the employer is, who pays wages, and how direction and supervision are structured, in order to prevent disputes over standing as employer. Furthermore, if planning an ordinary dismissal for poor performance, the company should set clear performance standards in advance that are linked to the dismissal grounds in the Rules of Employment, provide warnings about declining performance and opportunities for improvement such as training or reassignment, and systematically accumulate evaluation materials and records of guidance so that it can prove that the employee’s work ability remained significantly poor to the extent that it became difficult to maintain the employment relationship. This type of decision once again demonstrates that, in dismissal disputes including unfair dismissal and redundancy dismissal, the Labor Relations Commission focuses on the existence of an actual employer and the objective proof of poor performance, rather than on formal contractual relationships. Both employees and employers preparing for Labor Relations Commission proceedings should, from the early stages of a case, seek assistance from experts such as Labor Law Firm Law&, to organize the facts and evidence. 2. Matters Decided A. Case Overview and Procedural History A. Standing as Employer in the Application for Remedy 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 employee; therefore, standing as employer lies with Employer 1. B. Whether the Dismissal Is an Ordinary Dismissal Employer 1 terminated the employment relationship due to the employee’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 Is Justified Due to the employee’s poor work ability and performance, it became difficult, under social norms, to maintain the employment relationship between the employee and Employer 1 any longer, and therefore… 3. Summary of Decision A. Summary of the Labor Relations Commission’s Findings A. Standing as Employer in the Application for Remedy 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 employee; therefore, standing as employer lies with Employer 1. B. Whether the Dismissal Is an Ordinary Dismissal Employer 1 terminated the employment relationship due to the employee’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 Is Justified Due to the employee’s poor work ability and performance, it became difficult, under social norms, to maintain the employment relationship between the employee and Employer 1 any longer, and therefore… / [See More Related Decisions] - “‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’ Unfair Dismissal Decision” - “‘Dismissal (Non-Appearance at Hearing)’ Unfair Dismissal Decision” – Date of decision: – Case number: Dismissed - “‘No Formation of Hiring Commitment (Absence of Offer Letter)’ Unfair Dismissal Decision” – Date of decision: – Case number: Initial decision upheld [Tags] Unfair dismissal, ordinary dismissal for poor performance (outsourced HR · standing 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 the “Unfair Dismissal Decisions” series by Labor Law Firm Law&. ※ The previous article, “‘Justifiability of Transfer (Reduction of Overseas Sales Operations)’ Unfair Dismissal Decision,” can be viewed in a new window. ※ The list of decisions related to ordinary dismissal for poor performance (outsourced HR · standing as employer) can be viewed together in the “Ordinary Dismissal for Poor Performance (Outsourced HR · Standing as Employer) Decisions List.” ※ Korean version of this case: Korean article