[Case Information] This case is a decision that was procedurally dismissed at the stage of examining the issue of the “employee headcount requirement (registration of employer’s family as employees).” Decision body: Gyeongnam Regional Labor Relations Commission 2026Buhae664 ○ ○ ○ Application for Remedy for Unfair Dismissal 2026-09-11 · Case outcome: Dismissed Key issue summary: … given that he appears to have been involved in the operation of the business, that although Ryu ○‑hun is listed on the payroll ledger, the employer’s remuneration can also be processed in the form of wages for accounting and tax purposes, and that subscription to the four major social insurances is only one factor in determining employee status and does not, in itself, conclusively establish that a person is an “employee” under the Labor Standards Act, the Commission held that, absent objective materials indicating otherwise, the number of regular employees employed at the workplace during the one month prior to the date of dismissal should be calculated by excluding Ryu ○‑hun… 1. Legal Implications Ⅰ. Case Overview In this case, the applicant filed an application with the Labor Relations Commission seeking a remedy for unfair dismissal. The employer, however, contested that the workplace in question was not a business or workplace with five or more regular employees, to which the dismissal‑restriction provisions of the Labor Standards Act apply. The Gyeongnam Regional Labor Relations Commission focused its review on whether a person named Ryu ○‑hun—who appeared to be a family member of the employer, was listed on the payroll ledger, and was enrolled in the four major social insurances, but in reality was involved in the operation of the business—could be excluded from the calculation of the number of regular employees. The key issue in this case is whether “family members or persons in a special relationship with the employer, who are formally registered as employees on the payroll ledger and enrolled in the four major social insurances, can be counted as regular employees for headcount purposes.” Ⅱ. Summary of Issues In this case, the number of regular employees being five or more was unclear. The question was whether the employee status of a particular individual could be recognized solely on the basis of the payroll ledger and records of enrollment in the four major social insurances, thereby allowing the application of the dismissal‑restriction provisions under the Labor Standards Act, which is a prerequisite for an unfair dismissal remedy application. The panel in this case found that, although Ryu ○‑hun was listed on the payroll ledger and enrolled in the four major social insurances, there were indications that he was actually involved in the operation of the business; that the employer’s remuneration may be processed in the form of wages for accounting and tax purposes; and that enrollment in the four major social insurances is only one factor in determining employee status and does not, in itself, automatically mean that the person is an “employee” under the Labor Standards Act. Accordingly, the panel held that the number of regular employees employed at the workplace during the one month prior to the date of dismissal should properly be regarded as four, excluding Ryu ○‑hun. The dismissal in this case was therefore deemed a personnel measure taken at a workplace to which the dismissal‑restriction provisions of the Labor Standards Act do not apply, because the premise that there were five or more regular employees was not established. On that basis, the panel held that it was appropriate to dismiss the application for remedy for unfair dismissal itself. Ⅲ. Summary of the Labor Relations Commission’s Reasoning The Labor Relations Commission, first, noted that even if a person’s name appears on the payroll ledger and money is paid in the form of wages, there may be a practice whereby the employer, while actually being involved in business operations, has his or her remuneration processed as wages for accounting and tax purposes. Second, it pointed out that enrollment in the four major social insurances is only one factor in determining employee status and does not, in itself, allow one to conclude that the person is an “employee” under the Labor Standards Act. Third, based on objective materials, it appeared that the individual in question was a family member of the employer and was actually involved in management. Taking all of these factors together, the Commission excluded this individual from the calculation of the number of regular employees. As a result, the number of regular employees during the one month prior to the dismissal was only four, and the workplace was therefore not considered a business or workplace with five or more employees to which the dismissal‑restriction and redundancy dismissal requirements under the Labor Standards Act apply. Since the premise that there were five or more regular employees was entirely rejected, the Commission found no need to further examine the remaining issues related to unfair dismissal and dismissed the application for remedy. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s perspective, before asserting unfair dismissal, it is important to first confirm whether the workplace where you worked is one with five or more regular employees, to which the dismissal‑restriction provisions apply. The mere fact that the employer’s family members or persons in a special relationship are listed on the payroll ledger or enrolled in the four major social insurances does not automatically mean they are included in the number of regular employees. It is therefore necessary to secure objective materials showing who actually provided labor in a subordinate relationship under the employer’s direction and supervision. In addition, in the case of small‑scale workplaces where recognition of the number of regular employees is ambiguous, you should keep materials such as employment contracts, work schedules, records of work instructions, and time and attendance records so that you can prove the “actual number of persons providing labor.” Ⅴ. Practical Points (From the Employer’s/Company’s Perspective) From the employer’s perspective, in small‑scale workplaces where the number of regular employees fluctuates around five, it is very important for dispute prevention to clearly distinguish, in accounting and HR documents, between the actual employer and employees. In particular, even if remuneration paid to the representative or family members is processed in the form of wages, you should maintain materials such as organizational charts, job descriptions, and decision‑making structures that can explain that such persons are, in substance, managers/employers and not providers of labor. Furthermore, even if the number of regular employees is fewer than five, social norms regarding fairness and procedural legitimacy in the process of dismissal or redundancy are becoming increasingly stringent. It is therefore advisable to refine your HR and labor regulations and, prior to dismissal, to observe basic procedures such as issuing warnings, conducting interviews, and providing an opportunity to explain. (ⓒ2026 copyright. Labor Attorney Moon Young‑seop, Labor Law Firm Law&.) 2. Matters Decided a. Case Overview and Procedural History … given that he appears to have been involved in the operation of the business, that although Ryu ○‑hun is listed on the payroll ledger, the employer’s remuneration can also be processed in the form of wages for accounting and tax purposes, and that subscription to the four major social insurances is only one factor in determining employee status and does not, in itself, conclusively establish that a person is an “employee” under the Labor Standards Act, the Commission held that, absent objective materials indicating otherwise, the number of regular employees employed at the workplace during the one month prior to the date of dismissal should be regarded as four, excluding Ryu ○‑hun. Accordingly, there was no need to further examine the remaining issues that presuppose that the number of regular employees was five or more. 3. Gist of the Decision a. Summary of the Labor Relations Commission’s Reasoning … given that he appears to have been involved in the operation of the business, that although Ryu ○‑hun is listed on the payroll ledger, the employer’s remuneration can also be processed in the form of wages for accounting and tax purposes, and that subscription to the four major social insurances is only one factor in determining employee status and does not, in itself, conclusively establish that a person is an “employee” under the Labor Standards Act, the Commission held that, absent objective materials indicating otherwise, the number of regular employees employed at the workplace during the one month prior to the date of dismissal should be regarded as four, excluding Ryu ○‑hun. Accordingly, there was no need to further examine the remaining issues that presuppose that the number of regular employees was five or more. / [See More Related Decisions] - “Unfair Dismissal Decision on ‘Denial of Employee Status (Privately Owned Delivery Vehicle)’” - “Unfair Dismissal Decision on ‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’” - “Unfair Dismissal Decision on ‘Expectation of Renewal (Internal Recruitment Fixed‑Term Employee with at Least Three Years Remaining Until Retirement)’” [Tags] Unfair dismissal, employee headcount requirement (registration of employer’s family as employees), 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 one of Labor Law Firm Law&’s “Unfair Dismissal Decision” series. ※ You can view the previous article, “Unfair Dismissal Decision on ‘Expectation of Renewal (Internal Recruitment Fixed‑Term Employee with at Least Three Years Remaining Until Retirement)’,” in a new window. ※ The list of decisions related to the employee headcount requirement (registration of employer’s family as employees) can be viewed together in the “List of Decisions Related to the Employee Headcount Requirement (Registration of Employer’s Family as Employees).” ※ Korean version of this case: Korean article