Most Read Contributor in South Korea, January 2017
For the first time, a Korean court has approved the imposition
of punitive-damages against both a worker-dispatch agency and the
company using the dispatched workers, for discrimination prohibited
under the Dispatched Worker Protection Act (the
Under the DWPA, both a worker-dispatch agency and the company
using its workers are prohibited from subjecting the dispatched
workers to discriminatory treatment. However, in past cases
involving discriminatory payment of wages to dispatched workers,
the worker-dispatch agency alone has more often been held
Moreover, for willful or repeated violations of the
anti-discrimination rule, the Labor Relations Commission
("LRC") can impose damages of up to three times the
actual damages suffered, as a punitive measure. The
punitive-damages system was adopted in September 2014 by amendments
of the Protection of Fixed-Term and Part-Time Employees Act and the
DWPA, and it applies to unjustified discrimination against
fixed-term, part-time, or dispatched workers. But this case is the
first instance when its application has been approved by a
The present decision disposed of a challenge, before the Seoul
Administrative Court (the "Administrative Court"),
seeking to overturn a ruling by the Central Labor Relations
Commission (the "CLRS"). The dispatched workers who
brought the initial claim had received lower bonus compensation
compared to regular employees of the using company, and had not
been compensated for unused annual leave. The CLRS found that there
had been discriminatory treatment against the dispatched workers,
and it held both the worker-dispatch agency and the using company
jointly liable and ordered them to pay the dispatched workers
The Administrative Court agreed that the dispatched workers had
been subject to discriminatory treatment due to differential
payment of bonuses. And the Administrative Court further upheld the
CLRS's decision that both the using company and the
worker-dispatch agency were jointly liable for double damages. See
Case No. 2015Guhap70416 (Seoul Admin. Ct. Nov. 18 2016).
However, the Administrative Court found that other Labor
Standards Act violations, such as failure to compensate for unused
annual leave, did not constitute discriminatory treatment
prohibited by the DWPA; and thus the using company could not be
held liable because the worker-dispatch agency, as the legal
employer, is solely responsible for compliance with those
requirements (as opposed to non-discrimination).
In another relatively recent case involving a major automobile
company, the employees of a contractor of the company sought civil
damages on the basis that the contractor was in substance providing
dispatched workers, and they were subject to discriminatory
treatment proscribed by the DWPA. See Case No. 2010gahap112481
(Seoul Cent. Dist. Ct. Sept. 18, 2014) (appeal pending). The court
found there to be, in substance, a worker-dispatch relationship
between the contractor and the automobile company, and imposed
liability for discriminatory wage payment not only on the
contractor but also on the using company. However, that case was a
civil tort case, and thus the court could not consider imposing
additional penalties beyond awarding compensation for actual
It is possible that these cases may signal that imposition of
liability for discrimination on both worker-dispatch agencies and
using companies will be a continuing trend.
Companies that use contractors whose employees could potentially
be characterized as dispatched workers should carefully assess
whether there is any risk of discrimination claims, which can lead
to liability greatly in excess of workers' actual damages.
December 2016 Labor & Employment Legal
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guide to the subject matter. Specialist advice should be sought
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