Most Read Contributor in South Korea, February 2017
On August 24, 2016, the Supreme Court upheld a lower-court
decision which found that an independent salesperson who sold and
delivered dairy products for Korea Yakult Corporation, was not an
employees of the company. See Case No. 2015Da253986 (Sup. Ct.
2016). The plaintiff had claimed entitlement to severance pay as an
employee of Korea Yakult Corporation despite being treated as an
The plaintiff salesperson generally received supplies for
sale/delivery from the company's distribution center in the
morning, and then delivered the supplies to the plaintiff's
regular customers. The plaintiff also sold the company's dairy
products to the general public. When the contract was terminated,
the plaintiff claimed to be an employee of the company and demanded
KRW 29,930,000, comprising compensation for unused annual leave and
statutory severance pay based on continuous years of service.
The Supreme Court stated that, "Whether the plaintiff is an
employee under the Labor Standards Act shall be determined based on
whether the work was carried out under an employer-subordinate
relationship for the purpose of receiving wages, in substance
rather than based on the form of contract."
The Court emphasized that:
With respect to the plaintiff's sales activities carried out
for the general public, it appears that there was little to no
supervision by the company because the plaintiff decided on the
time and place for her sales activities. In addition, the plaintiff
was not only free from any set commute time or attendance check,
but also not liable or punishable for poor service or performance,
nor was she required to attend trainings.
The Court added:
Based on the plaintiff's own discretion, the plaintiff
determined the type and volume of the dairy products and requested
the supplies from the company on a daily basis. The plaintiff
received commissions based on the plaintiff's sales efforts,
whether through additional delivery subscriptions by new customers
or increased sales to the general public. Although the Company
provided the uniform and a portion of the premiums for savings
insurance and support to mutual aid funds, these benefits were only
arranged to encourage the plaintiff's sales activities.
Therefore, the plaintiff cannot claim that she was supervised or
managed by the Company in relation to the way in which she
performed her work.
This was the first Supreme Court decision tackling the potential
employee status of these so-called "Yakult Ladies."
However, these cases are highly fact-dependent, and this decision
does not necessarily apply to every dairy-product salesperson or
every worker in a similar field.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
An employer's duty is very high and can include engaging experts to inspect things such as stairways for latent defects.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).