Corporate trends / Performance record
Unfair Dismissal Decision Concerning “Calculation of Number of Employees (Inclusion of Registered Directors and Freelancers)” (Unfair Dismissal 81)
- Date2026/01/11 20:14
- Read 202
[Case Information]
- Case name: Unfair dismissal decision concerning “calculation of number of employees (inclusion of registered directors and freelancers)”
- Date of decision:
- Case number: Dismissed
- Decision-making body: Seoul Regional Labor Relations Commission 2025BuHae3938 ○ ○ ○ Application for Remedy for Unfair Dismissal
21 November 2025
- Summary of outcome:
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and was granted “administrator” rights on the Gu○ Drive, thereby actually performing decision-making and management duties in an executive capacity; (iii) Choi ○‑woong himself asserted that he was not an employee of the company, but had entered into a freelance mandate contract and worked on an irregular basis; (iv) Choi ○‑woong received irregular amounts as consideration for performing video editing and related work; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, the commission held that in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and that the company’s number of ordinary employees was fewer than five, so the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act was not applicable.
1. Legal Implications
Ⅰ. Summary of the Case
In this case, the employee filed an application with the Labor Relations Commission seeking a remedy for unfair dismissal. The case was dismissed on the ground that the key issue—whether the company had fewer than five ordinary employees—was resolved in the negative for the employee. The employee argued that one in-house director and one freelance video editor were also employees under the employer’s direction and supervision, and that if they were included, the company would have five or more ordinary employees.
At Labor Law Firm Law&, we frequently encounter cases at startups and small-scale workplaces where, in disputes over redundancy dismissals or unfair dismissals, preliminary issues arise as to “who qualifies as an employee and how many ordinary employees there are.”
Ⅱ. Issues in Dispute
The issue in this case was whether the registered executive (COO) and the freelancer who had entered into a mandate contract were subordinated to the employer in providing work and thus fell within the definition of “employee” under the Labor Standards Act, and, accordingly, whether the business should be deemed to have five or more ordinary employees including them, thereby making it subject to the unfair dismissal remedy system.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that: in-house director Seo ○‑hoon, who was the company’s Chief Operation Officer and a registered director, was also a shareholder holding the company’s stock; he was, apart from the representative director, the only person granted authority to use the corporate credit card and was given “administrator” rights on the Gu○ Drive, thereby actually performing decision-making and management duties in an executive capacity; freelancer Choi ○‑woong, who intermittently performed video editing work, asserted that he was not an employee of the company, had entered into a freelance mandate contract, and received irregular amounts as consideration; he was not subject to attendance control or exclusive direction and supervision by the employer; and according to the National Four Social Insurance enrollment records, even if the employee was included, the total headcount was only four, and after excluding the employee, three persons remained.
In light of these circumstances, the commission held that in-house director Seo ○‑hoon and Choi ○‑woong could not readily be regarded as employees under the Labor Standards Act, and that the number of ordinary employees was fewer than five, so the business was not subject to the unfair dismissal remedy system under Article 28 of the Labor Standards Act.
On this basis, the commission dismissed the application, holding that the dismissal in question failed to satisfy the requirements for seeking a remedy, even before considering whether it was lawful or unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
For an employee to apply for a remedy for unfair dismissal, it is first necessary to carefully examine whether the company has at least five ordinary employees, and who can be included in that count as “substantive employees.” Even if a person is referred to as an in-house director, freelancer, or mandatary, there is room for employee status to be recognized if that person continuously provides work at specified times and places under the employer’s direction and supervision and receives remuneration of a wage-like nature in return. It is therefore important to secure in advance materials concerning the actual work performed, the nature and degree of direction and supervision, and the method of remuneration.
As in this case, if the Labor Relations Commission denies employee status or the requisite number of ordinary employees, the application may be dismissed without any determination on the merits. Accordingly, from the initial consultation stage, it is advisable to develop a strategy for proving employee status and the number of ordinary employees together with experts such as Labor Law Firm Law&.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s standpoint, when utilizing various forms of personnel—such as in-house directors, COOs, freelancers, and outsourced workers—it is necessary to align the contractual form with the actual operation so that these individuals are not, in substance, placed in a subordinate employment relationship and evaluated as employees under the Labor Standards Act. In particular, for freelancers and mandataries, the degree of autonomy in working hours and place of work, the extent of direction and supervision over how work is performed, the method of calculating remuneration, and the possibility of hiring third parties should be considered in assessing employee status, and it should be continuously reviewed whether the relationship is substantively one of contract for work/mandate or closer to an employment contract.
In addition, systematically organizing matters such as National Four Social Insurance enrollment status, authority to use corporate credit cards, access rights to IT and management systems, job titles, and actual roles will assist in clearly explaining the employer’s position in future disputes over the calculation of the number of ordinary employees or over unfair dismissal and redundancy dismissal.
To prevail in this type of case, it is essential to have an accurate understanding of the criteria for determining employee status and the legal principles governing the calculation of the number of ordinary employees, and to have in place, in advance, the experience and capability to systematically organize and prove the facts in accordance with those principles.
2. Matters Decided
A. Case Overview and Procedural History
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and, having been granted “administrator” rights on the Gu○ Drive, performed his duties in an actual executive capacity, including being granted authority to view folders; (iii) Choi ○‑woong asserted that he was not an employee of the company, had entered into a freelance mandate contract, and worked on an irregular basis; (iv) Choi ○‑woong, in performing video editing and related tasks, received irregular amounts as consideration; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and the company’s number of ordinary employees was fewer than five, so the business was not subject to the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and, having been granted “administrator” rights on the Gu○ Drive, performed his duties in an actual executive capacity, including being granted authority to view folders; (iii) Choi ○‑woong asserted that he was not an employee of the company, had entered into a freelance mandate contract, and worked on an irregular basis; (iv) Choi ○‑woong, in performing video editing and related tasks, received irregular amounts as consideration; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and the company’s number of ordinary employees was fewer than five, so the business was not subject to the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act. /
[See More Related Decisions]
- “Unfair Dismissal Decision Concerning ‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’” – Date of decision: – Case number: First-instance decision upheld
- “Unfair Dismissal Decision Concerning ‘Expression of Intention to Resign (Resignation Remark Made by Telephone Call)’”
- “Unfair Dismissal Decision Concerning ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’”
[Tags]
Unfair dismissal, calculation of number of employees (inclusion of registered directors and freelancers), 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 in the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “Unfair Dismissal Decision Concerning ‘Expression of Intention to Resign (Remark in Group Chat Room)’”, in a new window.
※ The list of decisions related to calculation of number of employees (inclusion of registered directors and freelancers) can be viewed together on the “List of Decisions Related to Calculation of Number of Employees (Inclusion of Registered Directors and Freelancers)” page.
※ Korean version of this case: Korean article
- Case name: Unfair dismissal decision concerning “calculation of number of employees (inclusion of registered directors and freelancers)”
- Date of decision:
- Case number: Dismissed
- Decision-making body: Seoul Regional Labor Relations Commission 2025BuHae3938 ○ ○ ○ Application for Remedy for Unfair Dismissal
21 November 2025
- Summary of outcome:
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and was granted “administrator” rights on the Gu○ Drive, thereby actually performing decision-making and management duties in an executive capacity; (iii) Choi ○‑woong himself asserted that he was not an employee of the company, but had entered into a freelance mandate contract and worked on an irregular basis; (iv) Choi ○‑woong received irregular amounts as consideration for performing video editing and related work; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, the commission held that in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and that the company’s number of ordinary employees was fewer than five, so the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act was not applicable.
1. Legal Implications
Ⅰ. Summary of the Case
In this case, the employee filed an application with the Labor Relations Commission seeking a remedy for unfair dismissal. The case was dismissed on the ground that the key issue—whether the company had fewer than five ordinary employees—was resolved in the negative for the employee. The employee argued that one in-house director and one freelance video editor were also employees under the employer’s direction and supervision, and that if they were included, the company would have five or more ordinary employees.
At Labor Law Firm Law&, we frequently encounter cases at startups and small-scale workplaces where, in disputes over redundancy dismissals or unfair dismissals, preliminary issues arise as to “who qualifies as an employee and how many ordinary employees there are.”
Ⅱ. Issues in Dispute
The issue in this case was whether the registered executive (COO) and the freelancer who had entered into a mandate contract were subordinated to the employer in providing work and thus fell within the definition of “employee” under the Labor Standards Act, and, accordingly, whether the business should be deemed to have five or more ordinary employees including them, thereby making it subject to the unfair dismissal remedy system.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel in this case found that: in-house director Seo ○‑hoon, who was the company’s Chief Operation Officer and a registered director, was also a shareholder holding the company’s stock; he was, apart from the representative director, the only person granted authority to use the corporate credit card and was given “administrator” rights on the Gu○ Drive, thereby actually performing decision-making and management duties in an executive capacity; freelancer Choi ○‑woong, who intermittently performed video editing work, asserted that he was not an employee of the company, had entered into a freelance mandate contract, and received irregular amounts as consideration; he was not subject to attendance control or exclusive direction and supervision by the employer; and according to the National Four Social Insurance enrollment records, even if the employee was included, the total headcount was only four, and after excluding the employee, three persons remained.
In light of these circumstances, the commission held that in-house director Seo ○‑hoon and Choi ○‑woong could not readily be regarded as employees under the Labor Standards Act, and that the number of ordinary employees was fewer than five, so the business was not subject to the unfair dismissal remedy system under Article 28 of the Labor Standards Act.
On this basis, the commission dismissed the application, holding that the dismissal in question failed to satisfy the requirements for seeking a remedy, even before considering whether it was lawful or unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
For an employee to apply for a remedy for unfair dismissal, it is first necessary to carefully examine whether the company has at least five ordinary employees, and who can be included in that count as “substantive employees.” Even if a person is referred to as an in-house director, freelancer, or mandatary, there is room for employee status to be recognized if that person continuously provides work at specified times and places under the employer’s direction and supervision and receives remuneration of a wage-like nature in return. It is therefore important to secure in advance materials concerning the actual work performed, the nature and degree of direction and supervision, and the method of remuneration.
As in this case, if the Labor Relations Commission denies employee status or the requisite number of ordinary employees, the application may be dismissed without any determination on the merits. Accordingly, from the initial consultation stage, it is advisable to develop a strategy for proving employee status and the number of ordinary employees together with experts such as Labor Law Firm Law&.
Ⅴ. Practical Points (From the Employer/Company’s Perspective)
From the employer’s standpoint, when utilizing various forms of personnel—such as in-house directors, COOs, freelancers, and outsourced workers—it is necessary to align the contractual form with the actual operation so that these individuals are not, in substance, placed in a subordinate employment relationship and evaluated as employees under the Labor Standards Act. In particular, for freelancers and mandataries, the degree of autonomy in working hours and place of work, the extent of direction and supervision over how work is performed, the method of calculating remuneration, and the possibility of hiring third parties should be considered in assessing employee status, and it should be continuously reviewed whether the relationship is substantively one of contract for work/mandate or closer to an employment contract.
In addition, systematically organizing matters such as National Four Social Insurance enrollment status, authority to use corporate credit cards, access rights to IT and management systems, job titles, and actual roles will assist in clearly explaining the employer’s position in future disputes over the calculation of the number of ordinary employees or over unfair dismissal and redundancy dismissal.
To prevail in this type of case, it is essential to have an accurate understanding of the criteria for determining employee status and the legal principles governing the calculation of the number of ordinary employees, and to have in place, in advance, the experience and capability to systematically organize and prove the facts in accordance with those principles.
2. Matters Decided
A. Case Overview and Procedural History
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and, having been granted “administrator” rights on the Gu○ Drive, performed his duties in an actual executive capacity, including being granted authority to view folders; (iii) Choi ○‑woong asserted that he was not an employee of the company, had entered into a freelance mandate contract, and worked on an irregular basis; (iv) Choi ○‑woong, in performing video editing and related tasks, received irregular amounts as consideration; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and the company’s number of ordinary employees was fewer than five, so the business was not subject to the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
The employee argued that in-house director Seo ○‑hoon and Choi ○‑woong were employees under the employer’s direction and supervision. However, (i) in-house director Seo ○‑hoon was the company’s Chief Operation Officer (COO), a registered director, and a shareholder holding the company’s stock; (ii) in-house director Seo ○‑hoon, apart from the representative director, was the only person with authority to use the corporate credit card and, having been granted “administrator” rights on the Gu○ Drive, performed his duties in an actual executive capacity, including being granted authority to view folders; (iii) Choi ○‑woong asserted that he was not an employee of the company, had entered into a freelance mandate contract, and worked on an irregular basis; (iv) Choi ○‑woong, in performing video editing and related tasks, received irregular amounts as consideration; (v) there was no circumstance in which Choi ○‑woong was subject to the employer’s attendance control; and (vi) according to the company’s National Four Social Insurance enrollment records, as of 4 September 2025 there were four persons enrolled including the employee, and as of 29 October 2025 there were three persons enrolled excluding the employee. In light of all these circumstances, in-house director Seo ○‑hoon and Choi ○‑woong could not be regarded as employees under the Labor Standards Act, and the company’s number of ordinary employees was fewer than five, so the business was not subject to the application for remedy for unfair dismissal under Article 28 of the Labor Standards Act. /
[See More Related Decisions]
- “Unfair Dismissal Decision Concerning ‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’” – Date of decision: – Case number: First-instance decision upheld
- “Unfair Dismissal Decision Concerning ‘Expression of Intention to Resign (Resignation Remark Made by Telephone Call)’”
- “Unfair Dismissal Decision Concerning ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’”
[Tags]
Unfair dismissal, calculation of number of employees (inclusion of registered directors and freelancers), 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 in the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “Unfair Dismissal Decision Concerning ‘Expression of Intention to Resign (Remark in Group Chat Room)’”, in a new window.
※ The list of decisions related to calculation of number of employees (inclusion of registered directors and freelancers) can be viewed together on the “List of Decisions Related to Calculation of Number of Employees (Inclusion of Registered Directors and Freelancers)” page.
※ Korean version of this case: Korean article
