Korean Supreme Court: Broad Recognition of Status of “Employee” under the Korean Labor Standards Act

The Supreme Court of Korea ruled that a hairstylist with a payment based on 100% commission is an employee under the Korean Labor Standards Act (“LSA”) entitled to severance benefits and other protections under Korea’s Labor & Employment Law.

Article 2(1) of the LSA defines an “employee” as “a person, regardless of the kind of occupation, who offers labor to business or a workplace for the purposes of earning wages.” “Wages” is defined as “wages, salary and any other kinds of money or valuables, regardless of their titles, which the employer pays to an employee as remuneration for work.”

In February of 2025, the Korean Supreme Court (2023Do18735) held that a hairstylist who worked for a beauty saloon via a service commission-only contract was an “employee” under the LSA. The Court, additionally, upheld a lower Korean court decision imposing a criminal fine. The criminal fine was imposed for not paying severance under the Employee Retirement Benefit Security Act of Korea.

Facts

1. Hairstylist was 100% commission-based worker with no base salary.
2. Hairstylist was required to report to work at certain hours and was imposed penalties for coming to work late.
3. Hairstylist was required to do non-commission-based tasks such as cleaning and attending work meetings.

Supreme Court Holding on Commission Worker Case

The Korean Supreme Court main issue decided in the matter was whether the hairstylist was an “employee” under the LSA. The Court specified that the main determination is whether the worker is under a “subordinate relationship with the employer” and if the employer “retains a significant degree of supervision and control” over the worker.

The Court noted that working hours and the penalty suffered from non-compliance with the employer’s supervision and control as definitive in deciding the case. Thus, the fact that the hairstylist was required to work at a particular time, was fined for non-compliance with working hours, was mandated to attend regular meetings and perform cleaning tasks indicated that the hairstylist was under a subordinate relationship with the employer.

The case has major implications for Korean Labor & Employment Law. Lower courts have more broadly interpreted the criteria for determining if a worker is an “employee” for the purposes of the LSA and many lawyers in Korea were eager to see a ruling at the Supreme Court of Korea on this issue. From court holidngs, delegated debt collectors, freelance announcers, and drivers for online sales platforms shall be deemed “employees” under the LSA. The following holding extends the scope of application to many commission workers.

For commission workers in the service industry the Supreme Court shall consider the standard factors for independent contracts and shall consider specifically:

1. If the working hours and place of work are mandated by the employer; and
2. If the worker shall suffer a disadvantage for not complying with the alleged supervision and control of the employer.

Numerous changes occurred over the past few years in Korean Labor & Employment Law and it is advisable to have a proactive attorney review your employment agreements, employment practices, and employment handbooks.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only a few non-Korean lawyers as a Top Attorney by AsiaLaw. Sean is regularly quoted by leading international media sources, including the Wall Street Journal, New York Times, France 24, and Bloomberg. Sean works with leading retired judges, former government attorneys, corporate counsel, and top-rated lawyers that worked with major global law firms throughout Asia, Europe, and North America.