February 2017 Labor & Employment Legal Update www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 1 Employment & Labor Year in Review 2016, and Prospects for 2017 As we welcome the New Year, we have briefly summarized some of the key labor and employment developments and cases of 2016, which may be of interest to members of management and HR professionals. We have also outlined our forecast of what the labor-law landscape is likely to look like in 2017. 2016 Developments The prior year saw a variety of significant legal developments in the labor and employment field, and we outline below some of the most noteworthy cases and issues. For more details, please refer to the appendix. Government’s Publication of Twin Labor-Reform Guidelines In January 2016, the Ministry of Employment and Labor published two sets of guidelines on significant labor-reform subjects, called the “Guidelines on Rules of Employment” and “Guidelines on Fair Personnel Management,” respectively. Although the guidelines do not have the force of law and do not attempt radical change, labor organizations expressed strong opposition to them, characterizing them as regressive and intended to make it easier to dismiss employees. Introduction of Performance-Based Pay in the Public Sector The government prompted state-controlled enterprises to implement performancebased pay far more broadly in 2016, adding to the measures to increase efficiency implemented in 2014 and the wage-peak system introduced in 2015. Many of those enterprises have now done so without obtaining the collective consent of their employees, and the unilateral imposition of performance-based pay is now being litigated. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 2 2 Labor & Employment Legal Update Supreme Court Approves Industrial Union Branch Breakaway In an expansion of past precedents, the Supreme Court held that if an industrial-union branch operates essentially like an unincorporated workers’ association, and acts as an independent organization with its own regulatory/enforcement body, it may independently change its form to an enterprise union even if it lacks the ability to independently engage in collective bargaining or enter into a collective bargaining agreement. Court Finds Wage Discrimination against Fixed-Term Employees Converted to Indefinite-Term with Inferior Benefits The law prohibits unjustified discrimination against fixed-term workers. In this case, however, the Seoul Southern District Court held that unfavorable terms extended to indefinite-term employees who had been converted from fixed to indefinite terms is also prohibited. The court reasoned that the form of their employment fell within “social status,” a prohibited ground for discrimination under Article 6 of the Labor Standards Act. The court held that an employment agreement cannot fail to extend, to such converted former fixed-term employees, all the benefits available to the other indefinite-term employees (such as a housing allowance). Imprisonment of Former CEO for Unfair Labor Practices The Daejeon District Court sentenced a former CEO, who was charged with unfair labor practices, to 10 months’ imprisonment and ordered him arrested immediately to be detained during the appeal proceedings. Seoul Administrative Court Upholds Performance Improvement Plan for Extremely Low Performers and Consequent Dismissal The Seoul Administrative Court, hearing a challenge to the Labor Relations Commission’s rejection of an unjust dismissal claim, upheld the decision. The court reasoned that dismissing an employee who has not shown willingness to improve their job performance, despite receiving the lowest rating on their evaluation for four consecutive years, is reasonable. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 3 3 Labor & Employment Legal Update Supreme Court Upholds Refusal to Grant Employee Status to Dairy-Product Salesperson The plaintiff in this case was an independent salesperson who sold and delivered dairy products supplied by Korea Yakult Corporation. The Supreme Court upheld the lowercourt’s decision—based on a variety of factors—declining to recognize the plaintiff as an employee of Korea Yakult Corporation, which would have entitled her to statutory severance pay and compensation for unused annual leave. Using Employer Held Jointly Liable for Punitive Damages for Discrimination against Dispatched Workers In this case, the Seoul Administrative Court held that a using employer and workerdispatch agency were jointly liable for punitive damages for discriminatory treatment against dispatched workers. Where the discriminatory acts are intentional or repeated, the relevant law authorizes total damages up to three times the actual damages. And in this case the court imposed an amount of damages double the actual amount. Forecast for 2017 We expect the following labor and employment issues to be central in 2017. Potential Requirement to Count All Weekend Work Beyond the Weekly 40-Hour Limit as Overtime Work In 2017, the Supreme Court is expected to decide whether weekend work can count as both “overtime” and “day-off” work—each entitled to a cumulative 50% premium— only after an employee has worked 8 hours that day, or as soon as the normal 40-hour threshold has been passed that week. If the Supreme Court accepts the prevailing view of the lower courts which have addressed this issue (11 out of 14 cases), and sides with the employees, the resulting annual cost to businesses is expected to be approximately KRW12 trillion (estimated by the Korea Economic Research Institute). Further Debate over the Four Labor Reforms Bills www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 4 4 Labor & Employment Legal Update The four labor reform bills (amendments to the Labor Standards Act, the Employment Insurance Act, the Industrial Accident Compensation Act, and the Act on the Protection of Temporary Agency Workers), which were initially introduced by the ruling party in the 19th and 20th National Assemblies, are expected to be taken up again. Due to the opposition of labor organizations and the political climate generally—including the opposition party having gained a majority in the National Assembly—the bills have languished without being adequately addressed. Given the current political climate, however, the likely fate of these bills is unclear. Restructuring Due to Economic Recession Given current domestic and foreign economic conditions and increasing international political uncertainty, we expect that the trend of workforce restructurings that we have witnessed will continue. And this will likely lead to a growing number of disputes in all industries, particularly the shipbuilding, shipping, and petrochemical industries where the outlook is especially grave. Unstable Political Climate and Labor Relations In anticipation of a possible power shift through presidential elections and reorganization of the political order, labor organizations are expected to press for more attention to the issues important to them. In particular, they are likely to focus on pushing forward priorities to which the conservative ruling party has been unsympathetic. And they will likely attempt to bolster their political activism, primarily led by national-level federations of unions. Based on data from previous years, the number of work days lost due to industrial action tends to increase before and after a presidential election. Court Decisions on the Implementation of Performance-Based Pay The imposition of performance-based pay in the public sector, which is scheduled to be much more broadly implemented in 2017, is currently subject to fierce argument in court through various lawsuits which seek to declare the pay-system change invalid. These suits argue, among other things, that the employers have failed to obtain the collective consent of employees required for an adverse change of the work rules. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 5 5 Labor & Employment Legal Update There are currently pending requests for injunctions to suspend implementation. The outcome in court will not only be of vital importance with respect to the broad implementation of performance-based pay in public enterprises, but also will have substantial implications for the introduction of performance-based pay systems elsewhere. In the financial community in particular, including commercial banks, performance-based pay is already scheduled to be introduced in the future. Increasing Disputes Regarding Non-Regular Workers The number of lawsuits seeking confirmation of employee status for workers in ambiguous types of service arrangements is expected to keep growing. While these types of workers, such as insurance salespersons, private tutors who provide instruction on subscription educational materials, and truck drivers under consignment or entrustment agreements, are remote from the traditional meaning of “employee” as defined in Labor Standards Act, it is also controversial to categorize such workers as self-employed. Additionally, the number of lawsuits seeking remedies for discrimination against dispatched workers, fixed-term workers, and indefinite-term workers converted from fixed-term contracts, is expected to grow. CONTACT Kang, Hee-Chul +82-2-528-5203 firstname.lastname@example.org Mandel, Christopher +82-2-528-5040 email@example.com www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 6 6 Labor & Employment Legal Update Appendix Government’s Publication of Twin Labor-Reform Guidelines On January 22, 2016, the Ministry of Employment and Labor published two sets of guidelines called “Guidelines on Rules of Employment,” and “Guidelines on Fair Personnel Management,” respectively. The Guidelines on Fair Personnel Management are aimed primarily at performance management, and in particular the proper standards and process for performance-based dismissals. They offer principles and practices to apply to basic personnel-management subjects such as compensation, promotions and raises based on fair evaluations, improvement of workers’ competence, and providing outplacement support for employees who voluntarily resign when requested to do so. In addition, the guidelines recommend taking various measures to avoid performancebased dismissals—such as a reshuffling personnel and providing job training—and using fair and objective performance evaluations to justify dismissing employees for poor performance or lack of ability to perform the job. The Guidelines on Rules of Employment are intended to clarify when an amendment to a company’s Rules of Employment that is adverse to the employees can nonetheless become effective even without the normally required collective workforce consent, under a judicially crafted exception for changes that are “reasonable in light of socially accepted norms.” This is an important issue because many businesses are eager to (i) change their compensation systems from purely seniority-based to performance-based; and (ii) adopt a “salary peak” to reduce the burden of retaining older employees, which they are required to do under a recent amendment to the law that requires companies to raise their internal mandatory retirement ages to 60. Entities in the public sector are already litigating these issues (see below). Labor organizations have expressed strong opposition to both sets of guidelines, accusing the government of simply trying to make it easier and more convenient to www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 7 7 Labor & Employment Legal Update dismiss employees. Whereas the business community has welcomed the effort at reform, characterizing the guidelines as necessary given current economic conditions and declining employment. However, these guidelines are simply an expression of the official views of the administration. They do not change the law and are not legally binding on the courts, which hold the ultimate authority to decide disputes over the law in these areas. And the guidelines do not add much to the existing principles governing these areas; they primarily attempt merely to clarify existing laws and precedents. Implementation of Performance-Based Pay in the Public Sector The government announced guidelines in 2016 pushing for broader implementation of performance-based pay in the public sphere. The government indicated that it would penalize state-controlled enterprises with reduced funding if they failed to follow the guidelines, and many state-controlled enterprises adopted the recommended changes. This effort is a continuation of earlier initiatives aimed at reforming public enterprises, specifically measures to increase efficiency in 2014, and implementation of a wage-peak system in 2015. The government justified its decision to implement performance-based pay more broadly at state-controlled enterprises on the grounds that public-sector productivity is only 70- 80% of productivity in the private sector, there is a lack of internal competition at statecontrolled enterprises, and their organizational and remuneration systems do not provide proper motivation to their workers. The government had already introduced more limited performance-based pay primarily for executives and senior management, in 2010. Whereas the government’s 2016 guidelines required state-controlled enterprises to implement performance-based pay more broadly, so as to cover lower-level employees; and to increase the weight that performance ratings have on ultimate take-home pay. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 8 8 Labor & Employment Legal Update Organized labor opposed the guidelines, and engaged in or threatened industrial action including strikes. Labor groups also commenced legal disputes challenging the changes. A major basis for those challenges is the claim that the enterprises amended their Rules of Employment (workforce rules) without any agreement from the union, which is normally required in the case of a change adverse to employees. Supreme Court Approves Industrial Union Branch Breakaway In February 2016, the Supreme Court set aside a lower-court decision that had overturned the conversion of a branch of an industrial union into an independent enterprise union. See Case No. 2012Da96120 (Sup. Ct. Feb. 19, 2016). A branch (the “Valeo Electric Systems Branch”) of the Metal Workers’ Union, an industrial union, had converted itself into an enterprise union (the “Valeo Electric Systems Union”) through a resolution of its general meeting. The Metal Workers’ Union had filed a lawsuit seeking a declaration that the resolution was invalid, because withdrawal from the Metal Workers’ Union by means of a general meeting is not permitted by the union’s rules. Prior precedents have recognized that a labor union is allowed to change its form based on a general meeting’s resolution if it is itself an enterprise union; or if it is a branch or chapter of an industrial/regional/occupational labor union with the ability to independently undertake collective bargaining or enter into a collective bargaining agreement in connection with matters specific to its organization or members. In addition, it should have its own regulatory and enforcement body, and act as an independent group. Based on those precedents, the initial trial and appeal both ruled in favor of the Metal Workers’ Union, declaring that the union’s rules did not allow the Valeo Electric Systems Branch to engage in independent decision-making contrary to the intent of the Metal Workers’ Union. The Valeo Electric Systems Branch was not an independent union, as wage negotiations and collective bargaining were carried out at the level of the Metal Workers’ Union. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 9 9 Labor & Employment Legal Update However, the Supreme Court decided to expand the established principles governing the change of a union’s form, holding that, “If a subgroup of an industrial union or a branch of an industrial union satisfies one of the following conditions, it may change its form to an enterprise union: The industrial union’s subgroup or branch (1) has the ability, similar to an enterprise union, to independently undertake collective bargaining or enter into a collective bargaining agreement; or (2) operates essentially like an unincorporated workers’ association that has its own regulatory and enforcement body, and acts as an independent group, even though it may not have the ability to undertake collective bargaining or enter into a collective bargaining agreement.” Court Finds Wage Discrimination against Fixed-Term Employees Converted to Indefinite-Term with Inferior Benefits In June 2016, the Seoul Southern District Court ruled in favor of 97 former fixed-term contract employees of a broadcasting company who had been converted to indefiniteterm employees. The employees had filed the lawsuit against the company to demand the same employment benefits, such as a housing allowance, that were available to regular indefinite-term employees who had not started on fixed-terms and been converted. The plaintiffs had initially been hired by the company as fixed-term employees, and their contracts were extended to indefinite-term contracts. That, in essence, provides them with the same employment security enjoyed by other indefinite-term employees who were not initially on fixed-terms. However, as between the former fixed-term employees and the other indefinite-term employees, there were some discrepancies in terms of benefits and remuneration, including a housing allowance offered only to the latter group. Article 8(1) of the Protection of Fixed-Term and Short-Term Employees Act prohibits unjustified discrimination against fixed-term employees, but this statute does not expressly cover providing inferior terms to employees who have converted from fixedterm to indefinite-term. As such, the parties’ arguments focused extensively on whether their converted, former fixed-term status falls within “social status,” which is listed in Article 6 of Labor Standards Act as an impermissible ground for discrimination. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 10 10 Labor & Employment Legal Update The Seoul Southern District Court held that it did, and ruled against the company. The court reasoned: There is no difference, in terms of the type, scope, volume, and difficulty of work, between the plaintiffs and the regular [indefinite-term] employees, while the hiring process, and the possibility of being made the head of department or being promoted are different. The part of the employment agreement between the plaintiffs and the company depriving them of benefits such as the housing allowance, is in violation of Article 6 of Labor Standards Act and thus invalid. If this decision is upheld on appeal, indefinite-term workers who have been converted from fixed-term contracts with restrictions on their available benefits will be able to demand equal treatment with other indefinite-term employees. Imprisonment of Former CEO for Unfair Labor Practices In July 2016, the Daejeon District Court sentenced a former CEO, who was charged with unfair labor practices, to 10 months’ imprisonment and ordered him arrested immediately to be detained during the appeal proceedings. This sentence was actually heavier than the 8-month sentence that the prosecutor had requested. Convictions for unfair labor practices more typically result in monetary fines rather than imprisonment. This case is a useful demonstration that employers may also face imprisonment as a result of such violations. In December 2014, the former CEO held a meeting with 20 individuals (former members of the police and special forces) at the headquarters of his company in Seoul. At the meeting, they agreed that “upon joining the company, they must not join or must withdraw from the Metal Workers’ Union.” In the same month, the former CEO hired 60 new employees (including 13 former policemen and 19 former special-forces members) and urged them to withdraw from the Metal Workers’ Union and to join the company’s favored www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 11 11 Labor & Employment Legal Update union instead. By mid-April 2015, 52 out of the 60 new employees had joined the company’s favored union. The former CEO’s actions violated Article 81(2) of Trade Union and Labor Relations Adjustment Act, which prohibits employers from requiring an employee to join or withdraw from a particular labor union as a condition of employment, i.e. yellow-dog contracts. Seoul Administrative Court Upholds Performance Improvement Plan for Extremely Low Performers and Consequent Dismissal In July 2016, the Seoul Administrative Court accepted the Labor Relations Commission’s determination that the dismissal of an employee who had continuously shown poor performance was justified. See Case No. 2015Guhap12830 (Seoul Admin. Ct. July 14, 2016). Since 2014, the manufacturing-company defendant had been implementing what it called its “Capacity Advancement Process,” a kind of performance-improvement plan for underperforming employees. The employee plaintiff was subjected to the Capacity Advancement Process in 2014 because the employee received the lowest performance grade for three consecutive years from 2011 to 2013. However, the employee’s performance did not improve even after completing the Capacity Advancement Process, and the employee was placed in the Capacity Advancement Process for a second time in the same year. In 2014, this employee received the lowest performance rating again. The company then concluded that the employee was incompetent to continue in his/her position. And the company placed the employee on standby for transfer by removing the employee’s assigned responsibilities. Eventually, the company dismissed the employee citing its Rules of Employment, which provide that an employee can be dismissed “in the event that one’s service record or job performance is noticeably poor.” www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 12 12 Labor & Employment Legal Update The employee then petitioned the Seoul Regional Labor Relations Commission to void the dismissal as unjust, but the claim was dismissed. The employee then filed an appeal to the Central Labor Relations Commission, but the appeal was likewise dismissed. The employee then filed a lawsuit in the Seoul Administrative Court seeking to rescind the Commission’s decision. The court ruled that there was no evidence demonstrating that the defendant company’s evaluation was arbitrary or unfair, considering that the employee plaintiff (1) received the lowest performance rating for four consecutive years; (2) did not display any willingness to improve and instead complained about the assignments given or worked on something other than his/her assignments despite poor job performance; and (3) was criticized by superiors over a lack of job capacity, creativity, and ability to proactively communicate. The genuine purpose of the Capacity Advancement Process also became an issue. The legality of performance-management measures must be assessed in detail case by case, and the purpose and motive behind a performance-management program for underperforming employees may be disputed based on various factors, such as the process by which the program was created, the reasons for implementation, the results of implementation, the rate of participants being found suitable to return to their original post, and the actual training provided in the program. In this case, the court stated that the purpose of the process was legitimate because (1) the process was introduced based on a considerable amount of discussion and preparation; and (2) more than 50% of those who completed the process successfully returned to the company’s workforce. However, employers should understand that the legitimacy of such programs depends on whether they help underperforming employees to improve their work skills and return to their positions in the workforce. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 13 13 Labor & Employment Legal Update Supreme Court Upholds Refusal to Grant Employee Status to Dairy-Product Salesperson 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. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 14 14 Labor & Employment Legal Update 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. Using Employer Held Jointly Liable for Punitive Damages for Discrimination against Dispatched Workers For the first time, a court has approved holding a worker-dispatch agency and using employer jointly liable for punitive damages—equivalent to double the amount of actual damages—based on intentional or repeated discrimination against dispatched workers. See Case No. 2016Guhap70416 (Seoul Admin. Ct. Nov. 18, 2016). Around September 2014, the Act on the Protection of Temporary Agency Workers was amended to allow the Labor Relations Commission to award damages up to three times the amount of actual damage suffered, for discriminatory treatment of dispatched workers that is intentional or repeated. This ruling was the first court decision to actually approve of the Labor Relations Commission’s imposition of such liability on an agency and using company. www.yulchon.com Korea Tel +82 2 528 5200 China Tel +86 10 8567 0828 Myanmar Tel +95 1 934 5323 Russia Tel +7 495 510 5200 Vietnam Ho Chi Minh City Tel +84 8 3911 0225 Hanoi Tel +84 4 3837 8200 15 15 Labor & Employment Legal Update The using company in this case utilized temporary workers dispatched by an agency. But compared to the using company’s regular employees, the dispatched workers were paid less bonus compensation and were not provided with compensation for unused annual leave. The dispatched workers petitioned the Labor Relations Commission to correct the discriminatory treatment. In the original proceedings, the Incheon District Labor Relations Commission found only the dispatch agency liable to compensate the workers for the discrimination, not the using company. But during the de novo appellate proceedings, the Central Labor Relations Commission ruled that the worker-dispatch agency and the using company were jointly liable to compensate the dispatched workers, in an amount double the actual damages. The worker-dispatch agency and the using company filed an administrative lawsuit at the Seoul Administrative Court requesting that the ruling be rescinded. However, the Seoul Administrative Court acknowledged that the differential bonus payment constituted discriminatory treatment, and upheld as reasonable the decision of the Central Labor Relations Commission to hold the employer and the dispatch agency jointly liable for double the amount of actual damages. However, the court overturned the holding that the using company was liable for failure to compensate for unused annual leave, because it determined that it is a violation of the Labor Standards Act and did not constitute discriminatory treatment prohibited by the Act on the Protection of Temporary Agency Workers. This decision signals that businesses which regularly use contractor companies to perform work in-house under the company’s own control and supervision—which may be construed as a disguised worker-dispatch relationship—should not only be concerned about the direct liability that may stem from a determination that they have a disguised worker-dispatch relationship. They should also be concerned about any potential discrimination problems respecting wages and benefits that could follow from any such determination.