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 independent contractor.
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.
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