Corporate trends / Performance record
Unfair Dismissal Decision Concerning “Personnel Transfer and Wage Reduction (Recognition of Employee Status)” (Unfair Dismissal 93)
- Date2026/01/12 13:19
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[Case Information]
- Case name: Unfair dismissal decision concerning “personnel transfer and wage reduction (recognition of employee status)”
- Decision date:
- Case number: Dismissed
- Decision-making body: Incheon Regional Labor Relations Commission 2025Buhae510 ○ ○ ○ Application for Remedy for Unfair Dismissal
2025.11.19
- Summary of outcome:
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It was held that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
1. Legal Implications
Ⅰ. Case Overview
This unfair dismissal case was handled by the Incheon Regional Labor Relations Commission, which simultaneously examined whether the applicants qualified as employees under the Labor Standards Act, whether the personnel transfer was justified, and whether the wage reduction (pay cut) was lawful. As in many inquiries received by Labor Law Firm Law&, this case arose from a relationship in which, in formal terms, the applicants’ status as employees was ambiguous, while both a personnel transfer and disciplinary action (wage reduction) were at issue.
The employees filed an application with the Labor Relations Commission seeking a remedy on the ground that the employer’s personnel transfer and wage reduction were unjust, while the employer argued that the exercise of its authority over personnel and discipline was legitimate.
Ⅱ. Issues
The issues in this case were whether, in circumstances where the formal employment contract was unclear, personnel who provided labor under the employer’s direction and supervision qualified as “employees” under the Labor Standards Act; whether the personnel transfer in respect of such employees constituted a legitimate exercise of the employer’s authority over personnel; and whether the wage reduction violated the upper limits on wage deductions set out in Article 95 of the Labor Standards Act.
In addition, the Commission examined whether the disadvantages in the employees’ living conditions caused by the personnel transfer significantly exceeded the level ordinarily to be borne by employees, and whether the procedures required under the principle of good faith had been violated in the course of the personnel transfer.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel held that the applicants qualified as “employees” under the Labor Standards Act, in light of the facts that the employer determined the content of their work and exercised substantial direction and supervision; that the applicants continuously provided labor for the purpose of receiving wages; and that, in light of social norms, it was difficult to regard them as independent business operators.
With respect to the personnel transfer, the panel found that there was a business necessity for the transfer; that the disadvantages to the employees’ living conditions did not significantly exceed the level ordinarily to be borne by employees; and that there were no circumstances indicating a serious violation of the procedures required under the principle of good faith in the course of issuing the personnel order. On this basis, the panel held that the transfer was a legitimate exercise of the employer’s authority over personnel.
By contrast, regarding the wage reduction, the panel found that it appeared to exceed the statutory upper limits on wage deductions set out in Article 95 of the Labor Standards Act (“a single deduction shall not exceed one-half of the average wage for one day, and the total amount shall not exceed one-tenth of the total wages”); that, because a disciplinary wage reduction directly disadvantages an employee’s livelihood, the statutory upper limits must be strictly observed; and that there were no circumstances justifying the portion exceeding those limits. Accordingly, the panel held that the wage reduction imposed on Employee 1 violated the Labor Standards Act and was unjust.
Ⅳ. Practical Points (From the Employee’s Perspective)
Even if the written contract describes the relationship as “freelance,” “commissioned,” or similar, if in practice you work at a fixed time and place under the employer’s specific direction and supervision for the purpose of receiving wages, you may be recognized as an “employee” under the Labor Standards Act by the Labor Relations Commission. Because personnel transfers are broadly recognized as falling within the employer’s authority over personnel, it is important to organize objective materials—such as work logs, pay statements, and personnel notices—concerning business necessity, the level of disadvantage to your living conditions, and any procedural violations.
If you are subjected to a wage reduction, you should calculate the amount and period based on your average wage to verify whether they exceed the upper limits set out in Article 95 of the Labor Standards Act. Any portion of a wage reduction that exceeds the statutory limits may be null and void, and depending on the circumstances, the disciplinary action may constitute an unfair disciplinary measure subject to an application for remedy before the Labor Relations Commission. It is therefore necessary to contest the measure on the basis of specific figures.
Ⅴ. Practical Points (From the Employer’s Perspective)
Regardless of the formal title of the contract, if you in substance exercise direction and supervision over personnel, there is a very high likelihood that they will be deemed “employees” under the Labor Standards Act. Accordingly, from the contract-design stage, you should comprehensively review the method of issuing work instructions, whether working hours and place of work are designated, and the method of paying remuneration.
When implementing a personnel transfer, you should internally review and record, in line with the standards set out in Supreme Court precedents, the business necessity, the degree of disadvantage to the employee’s living conditions, and whether the principle of good faith has been observed in the personnel procedures. Doing so will make it easier to substantiate the legitimacy of the transfer before the Labor Relations Commission.
When imposing a wage reduction as a disciplinary measure, you should clearly set out in the rules of employment and personnel regulations the grounds and standards for wage reduction, and, in practice, calculate and verify in advance that the actual reduction does not exceed the upper limits in Article 95 of the Labor Standards Act (one-half of the average wage per day for a single deduction, and one-tenth of total wages in the aggregate). In particular, where a personnel transfer and disciplinary action are implemented concurrently in relation to the same matter, you should carefully distinguish and design the nature and limits of the exercise of your authority over personnel and discipline. Otherwise, there is a significant risk that, even if the personnel transfer is found to be legitimate, the disciplinary measure—such as a wage reduction—will be deemed unlawful or unjust.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It is determined that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
B. Whether the personnel transfer was justified
The personnel transfer appears to have been a legitimate exercise of the employer’s authority over personnel, falling within the scope of that authority. No disadvantage to the employees’ living conditions occurred that significantly exceeded the level they should ordinarily bear, and it is difficult to find that the procedures required under the principle of good faith were violated to a degree that would render the transfer unjust. Accordingly, the transfer is justified.
C. Whether the wage reduction violated Article 95 of the Labor Standards Act
The wage reduction imposed on Employee 1 violated the statutory upper limits on the scale of wage deductions under the Labor Standards Act and therefore violated the Act, rendering it unjust.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It is determined that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
B. Whether the personnel transfer was justified
The personnel transfer appears to have been a legitimate exercise of the employer’s authority over personnel, falling within the scope of that authority. No disadvantage to the employees’ living conditions occurred that significantly exceeded the level they should ordinarily bear, and it is difficult to find that the procedures required under the principle of good faith were violated to a degree that would render the transfer unjust. Accordingly, the transfer is justified.
C. Whether the wage reduction violated Article 95 of the Labor Standards Act
The wage reduction imposed on Employee 1 violated the statutory upper limits on the scale of wage deductions under the Labor Standards Act and therefore violated the Act, rendering it unjust. /
[See More Related Decisions]
- “Unfair Dismissal Decision Concerning ‘Excessive Disciplinary Measure (Allowing a Vehicle to Pass During Nighttime Checkpoint Search)’”
- “Unfair Dismissal Decision Concerning ‘No Formation of Hiring Commitment (Absence of Offer Letter)’” – Decision date: – Case number: First-instance decision upheld
- “Unfair Dismissal Decision Concerning ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’”
[Tags]
Unfair dismissal, personnel transfer and wage reduction (recognition of employee status), disciplinary action, recognition of employee status, personnel transfer (reassignment/relocation), 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&.
※ You can view the previous article, “Unfair Dismissal Decision Concerning ‘Excessive Disciplinary Measure (Allowing a Vehicle to Pass During Nighttime Checkpoint Search)’,” in a new window.
※ The list of decisions related to personnel transfer and wage reduction (recognition of employee status) can be viewed together on the “List of Decisions Related to Personnel Transfer and Wage Reduction (Recognition of Employee Status).”
※ Korean version of this case: Korean article
- Case name: Unfair dismissal decision concerning “personnel transfer and wage reduction (recognition of employee status)”
- Decision date:
- Case number: Dismissed
- Decision-making body: Incheon Regional Labor Relations Commission 2025Buhae510 ○ ○ ○ Application for Remedy for Unfair Dismissal
2025.11.19
- Summary of outcome:
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It was held that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
1. Legal Implications
Ⅰ. Case Overview
This unfair dismissal case was handled by the Incheon Regional Labor Relations Commission, which simultaneously examined whether the applicants qualified as employees under the Labor Standards Act, whether the personnel transfer was justified, and whether the wage reduction (pay cut) was lawful. As in many inquiries received by Labor Law Firm Law&, this case arose from a relationship in which, in formal terms, the applicants’ status as employees was ambiguous, while both a personnel transfer and disciplinary action (wage reduction) were at issue.
The employees filed an application with the Labor Relations Commission seeking a remedy on the ground that the employer’s personnel transfer and wage reduction were unjust, while the employer argued that the exercise of its authority over personnel and discipline was legitimate.
Ⅱ. Issues
The issues in this case were whether, in circumstances where the formal employment contract was unclear, personnel who provided labor under the employer’s direction and supervision qualified as “employees” under the Labor Standards Act; whether the personnel transfer in respect of such employees constituted a legitimate exercise of the employer’s authority over personnel; and whether the wage reduction violated the upper limits on wage deductions set out in Article 95 of the Labor Standards Act.
In addition, the Commission examined whether the disadvantages in the employees’ living conditions caused by the personnel transfer significantly exceeded the level ordinarily to be borne by employees, and whether the procedures required under the principle of good faith had been violated in the course of the personnel transfer.
Ⅲ. Summary of the Labor Relations Commission’s Reasoning
The panel held that the applicants qualified as “employees” under the Labor Standards Act, in light of the facts that the employer determined the content of their work and exercised substantial direction and supervision; that the applicants continuously provided labor for the purpose of receiving wages; and that, in light of social norms, it was difficult to regard them as independent business operators.
With respect to the personnel transfer, the panel found that there was a business necessity for the transfer; that the disadvantages to the employees’ living conditions did not significantly exceed the level ordinarily to be borne by employees; and that there were no circumstances indicating a serious violation of the procedures required under the principle of good faith in the course of issuing the personnel order. On this basis, the panel held that the transfer was a legitimate exercise of the employer’s authority over personnel.
By contrast, regarding the wage reduction, the panel found that it appeared to exceed the statutory upper limits on wage deductions set out in Article 95 of the Labor Standards Act (“a single deduction shall not exceed one-half of the average wage for one day, and the total amount shall not exceed one-tenth of the total wages”); that, because a disciplinary wage reduction directly disadvantages an employee’s livelihood, the statutory upper limits must be strictly observed; and that there were no circumstances justifying the portion exceeding those limits. Accordingly, the panel held that the wage reduction imposed on Employee 1 violated the Labor Standards Act and was unjust.
Ⅳ. Practical Points (From the Employee’s Perspective)
Even if the written contract describes the relationship as “freelance,” “commissioned,” or similar, if in practice you work at a fixed time and place under the employer’s specific direction and supervision for the purpose of receiving wages, you may be recognized as an “employee” under the Labor Standards Act by the Labor Relations Commission. Because personnel transfers are broadly recognized as falling within the employer’s authority over personnel, it is important to organize objective materials—such as work logs, pay statements, and personnel notices—concerning business necessity, the level of disadvantage to your living conditions, and any procedural violations.
If you are subjected to a wage reduction, you should calculate the amount and period based on your average wage to verify whether they exceed the upper limits set out in Article 95 of the Labor Standards Act. Any portion of a wage reduction that exceeds the statutory limits may be null and void, and depending on the circumstances, the disciplinary action may constitute an unfair disciplinary measure subject to an application for remedy before the Labor Relations Commission. It is therefore necessary to contest the measure on the basis of specific figures.
Ⅴ. Practical Points (From the Employer’s Perspective)
Regardless of the formal title of the contract, if you in substance exercise direction and supervision over personnel, there is a very high likelihood that they will be deemed “employees” under the Labor Standards Act. Accordingly, from the contract-design stage, you should comprehensively review the method of issuing work instructions, whether working hours and place of work are designated, and the method of paying remuneration.
When implementing a personnel transfer, you should internally review and record, in line with the standards set out in Supreme Court precedents, the business necessity, the degree of disadvantage to the employee’s living conditions, and whether the principle of good faith has been observed in the personnel procedures. Doing so will make it easier to substantiate the legitimacy of the transfer before the Labor Relations Commission.
When imposing a wage reduction as a disciplinary measure, you should clearly set out in the rules of employment and personnel regulations the grounds and standards for wage reduction, and, in practice, calculate and verify in advance that the actual reduction does not exceed the upper limits in Article 95 of the Labor Standards Act (one-half of the average wage per day for a single deduction, and one-tenth of total wages in the aggregate). In particular, where a personnel transfer and disciplinary action are implemented concurrently in relation to the same matter, you should carefully distinguish and design the nature and limits of the exercise of your authority over personnel and discipline. Otherwise, there is a significant risk that, even if the personnel transfer is found to be legitimate, the disciplinary measure—such as a wage reduction—will be deemed unlawful or unjust.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It is determined that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
B. Whether the personnel transfer was justified
The personnel transfer appears to have been a legitimate exercise of the employer’s authority over personnel, falling within the scope of that authority. No disadvantage to the employees’ living conditions occurred that significantly exceeded the level they should ordinarily bear, and it is difficult to find that the procedures required under the principle of good faith were violated to a degree that would render the transfer unjust. Accordingly, the transfer is justified.
C. Whether the wage reduction violated Article 95 of the Labor Standards Act
The wage reduction imposed on Employee 1 violated the statutory upper limits on the scale of wage deductions under the Labor Standards Act and therefore violated the Act, rendering it unjust.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the applicants fall under “employees” as defined in the Labor Standards Act
It is determined that, at the time of the personnel transfer and wage reduction, the applicants were subject to substantial direction and supervision by the employer and provided labor for the purpose of receiving wages, and therefore qualified as “employees” under the Labor Standards Act.
B. Whether the personnel transfer was justified
The personnel transfer appears to have been a legitimate exercise of the employer’s authority over personnel, falling within the scope of that authority. No disadvantage to the employees’ living conditions occurred that significantly exceeded the level they should ordinarily bear, and it is difficult to find that the procedures required under the principle of good faith were violated to a degree that would render the transfer unjust. Accordingly, the transfer is justified.
C. Whether the wage reduction violated Article 95 of the Labor Standards Act
The wage reduction imposed on Employee 1 violated the statutory upper limits on the scale of wage deductions under the Labor Standards Act and therefore violated the Act, rendering it unjust. /
[See More Related Decisions]
- “Unfair Dismissal Decision Concerning ‘Excessive Disciplinary Measure (Allowing a Vehicle to Pass During Nighttime Checkpoint Search)’”
- “Unfair Dismissal Decision Concerning ‘No Formation of Hiring Commitment (Absence of Offer Letter)’” – Decision date: – Case number: First-instance decision upheld
- “Unfair Dismissal Decision Concerning ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’”
[Tags]
Unfair dismissal, personnel transfer and wage reduction (recognition of employee status), disciplinary action, recognition of employee status, personnel transfer (reassignment/relocation), 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&.
※ You can view the previous article, “Unfair Dismissal Decision Concerning ‘Excessive Disciplinary Measure (Allowing a Vehicle to Pass During Nighttime Checkpoint Search)’,” in a new window.
※ The list of decisions related to personnel transfer and wage reduction (recognition of employee status) can be viewed together on the “List of Decisions Related to Personnel Transfer and Wage Reduction (Recognition of Employee Status).”
※ Korean version of this case: Korean article
