Korean Administrative Court Rules Legal Executive Not a “Worker” Under Korean Labor Standards Act

The Seoul Administrative Court dismissed a lawsuit claiming unfair dismissal by an in-house counsel and registered director in a landmark decision impacting the classification of high-ranking/high-paid corporate officials as “workers” under the Korean Labor Standards Act.

The Seoul Administrative Court held that an in-house attorney who concurrently served as a registered director and earned over KRW 700 million annually is not considered a “worker” under the Labor Standards Act of Korea.

IPG Legal successfully represented company executives in cases of unfair dismissal and successfully defended foreign capital-invested companies against similar claims. For more information on Korea’s Employment Law, please see: IPG Legal’s Korean Labor & Employment Law Archive.

Company Executive as a Worker under the Korean Labor Standards Act

Background

1. Attorney A was employed by Company B, the Korean subsidiary of multinational firm C’s asset management division.
2. He started in September 2011 as Head of the Legal Team and was subsequently promoted and appointed as a registered director.
3. In April 2022, Attorney A expressed opposition to the company’s plan for listing a specific investment vehicle. When his recommendation was not adopted, he resigned from his position as a registered director on May 2, 2022.
4. After failed negotiations regarding the terms of his departure, he submitted a resignation on June 12, 2022, effective July 11. Although he attempted to withdraw the resignation five days later, Company B maintained that the resignation had already been accepted and would take effect as communicated by Attorney A.

Korean Labor Commission and Korean Court Proceedings for Alleged Unfair Dismissal

Following Company B’s acceptance of his resignation, Attorney A filed a request for relief, arguing that the company’s actions constituted an unfair dismissal. Both the Seoul Regional Labor Relations Commission and the Central Labor Relations Commission of Korea dismissed the claim because the Plaintiff did not meet the legal definition of a “worker” under Korean Law.

Subsequently, Attorney A brought a lawsuit against the Chairman of the Central Labor Relations Commission, seeking to reverse the retrial decision. Company B joined the litigation as an “assistant” defendant.

Court Rules that Executive Role Precludes “Worker” Classification Under Korean Labor Law

In its judgment dated July 10, 2025 (Case No. 2023GuHap57852), the Seoul Administrative Court dismissed the Plaintiff’s claim. The Court found that the Plaintiff served as an executive responsible for delegated duties, rather than as a subordinate employee under the employer’s direction and control. The key determination under law is whether the worker is under the “direction and control” of the employer.

The Court emphasized the Plaintiff’s board membership role and his active participation in core managerial decisions, including oversight of fund strategies and governance. As such, his role went beyond typical employee functions and was integral to the company’s executive operations. The Court, thus, rejected the Plaintiff’s argument that the board merely ratified decisions from the parent company, noting that C’s global executive committee played a limited role focused on strategic oversight rather than day-to-day fund management.

The Court also highlighted the Plaintiff’s significant autonomy and his background by noting that the lawyer was licensed as an attorney since 2003, was previously employed at a law firm, independently managed legal affairs, and reported directly to C’s asset management leadership. His responsibilities in providing legal advice were deemed too specialized to be subjected to routine direction by Company B’s CEO.

Additionally, the Court noted that the Plaintiff’s annual remuneration of KRW 280 million in base salary and KRW 450–475 million in performance bonuses was considered indicative of an executive compensation structure. The Court found this significantly exceeded that of general employees and reflected performance-based incentive pay, not remuneration for subordinate labor.

Resignation Legally Effective and Not Subject to Withdrawal

Citing Supreme Court precedents (98Da8615 and 90Da10247), the Court reaffirmed that the legal relationship between a company and its directors is governed by the principles of mandate under the Korean Civil Act. A resignation, once effectively communicated and accepted, cannot be unilaterally withdrawn. Given that Attorney A had clearly expressed his intent to resign to both the head of the asset management division and the company’s leadership, the contractual relationship was lawfully terminated on July 11, 2022. The Court held that this did not constitute an unfair dismissal, thereby validating the administrative decision under review.

Conclusion: Directors and Executives Not Automatically Covered by Labor Protections

This ruling reiterates the principle that not all individuals receiving compensation from a company are “workers/employees” under the LSA. Where individuals serve in positions of corporate governance and perform their roles independently, they may be excluded from the statutory definition of “worker.” Few cases exist in which a registered director was considered a “worker” under the Korean Labor Standards Act.

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. He assists clients with their contentious, non-contentious, and business development needs, and is regularly quoted by leading media sources on Asia’s legal and business issues. Sean is rated a Top 100 attorney, and his firm was rated a top dispute resolution law firm in Korea. When Attorney Sean Hayes was away from Korea during the COVID-19 pandemic period, he ran for Attorney General for the State of New York and for New York City Counsel

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at: Schedule a Call with Attorney Sean Hayes.