[Plaintiff (Selected Party), Appellant]
[Defendant, Appellee] Jaeneung Education Co., Ltd. (Attorney: Seoul Jonghap Law Firm, Attorney Yoon Sang-il and 1 other)
[Judgment Below] Seoul District Court Decision 94Na49860 rendered on April 7, 1995
[Order]
The appeal is dismissed. The costs of the appeal are to be borne by the Plaintiff (Selected Party).
[Reasoning]
We examine the grounds of appeal.
1. As to Grounds One and Two
As the argument correctly states, in determining whether a person constitutes an "employee" under the Labor Standards Act (근로기준법), regardless of whether the contract in question is a contract of employment or a contract for work under the Civil Act (민법), the determination must be made based on whether, in substance, the person provided labor to an employer in a subordinate relationship for the purpose of receiving wages within a business or workplace (see this Court's Decisions 91Da24250 rendered on December 13, 1991; 94Da22859 rendered on December 9, 1994; 95Nu2050 rendered on December 22, 1995, among others). In determining whether such a subordinate relationship exists, the following factors must be comprehensively considered: whether the content of the work is determined by the employer and the person is subject to rules of employment, service regulations, personnel regulations, etc., and whether the person receives specific and direct direction and supervision from the employer in the course of performing the work; whether working hours and place of work are designated by the employer and the person is bound thereby; whether the work is substitutable, such as whether the worker may hire a third party to perform the work on his or her behalf; the ownership of equipment, raw materials, work tools, etc.; matters relating to remuneration, including whether the remuneration has the character of consideration for the labor itself, whether a basic or fixed wage is set, and whether income tax is withheld at source as wage income; the continuity of the labor-providing relationship and the existence and degree of exclusive affiliation with the employer; whether the person's status as an employee is recognized under other statutes, such as those concerning social security systems; and the economic and social conditions of both parties (see the aforementioned Decision 94Da22859).
Turning to this case, the record establishes the following facts: Unlike general employees and technical employees (hereinafter "employees") who are subject to the rules of employment and personnel regulations with respect to hiring, personnel matters, promotion, working hours, remuneration, disciplinary action, etc., the Defendant company applies the Regulations on Management of Educational Counseling Teachers (hereinafter the "Management Regulations") to educational counseling teachers (hereinafter "Counseling Teachers") such as the Plaintiff (Selected Party) and the Selectors (hereinafter the Plaintiff and the Selectors are collectively referred to as "the Plaintiff et al."). The Defendant entered into service entrustment contracts with Counseling Teachers, ordinarily for a term of one year, under which the Counseling Teachers were to perform duties including: work related to maintaining and managing members recruited by the Defendant as study-material subscribers, such as educational counseling regarding the students' study progress and delivery of study materials; work for recruiting new members, such as counseling, introduction, and guidance for new enrollment; and work for collecting membership fees such as enrollment fees and monthly fees (all of the foregoing collectively referred to as "entrusted duties"). Although Counseling Teachers receive encouragement from the Defendant to improve their performance of entrusted duties through morning assemblies or training sessions at each branch office, which is one of the Defendant's organizational units, they are not subject to specific and direct direction and supervision by the Defendant regarding the content or method of performing the entrusted duties or the hours of performing such duties. Counseling Teachers are paid only a commission, the payment and amount of which is determined solely by objectively demonstrated results of performance of entrusted duties—namely, the increase in new members or the collection performance based on monthly fee registrations—regardless of the content or hours of labor actually provided by the Counseling Teacher in performing the entrusted duties. As a result, the monthly commission paid to different Counseling Teachers varies significantly, ranging from approximately 300,000 won to approximately 1,800,000 won, and even the commission paid to the same Counseling Teacher varies from month to month. Unlike the regulations applicable to employees, the Management Regulations applicable to Counseling Teachers contain no provisions regarding clock-in and clock-out times or hours of work performance, and in actual practice, apart from receiving minimal instructions or training from the Defendant in the capacity of an entrusting party for the purpose of encouraging smooth performance of the entrusted duties, Counseling Teachers receive no direction or supervision whatsoever regarding the specific performance of the entrusted duties as noted above; rather, each Counseling Teacher performs the entrusted duties according to his or her own discretion and abilities, and may freely withdraw from the process of performing the entrusted duties at will. Moreover, the place of work performance is not a place of business such as the Defendant's branch office, but is freely determined, mainly being the residences of study-material members. Under the Management Regulations, unlike employees who are subject to strict regulation regarding hiring qualifications, hiring standards, and disqualifications from hiring under the personnel regulations, Counseling Teachers are subject only to the abstract qualification requirement of being "a university graduate aged 20 or older, or a person recognized as having equivalent qualifications." Among the documents that a Counseling Teacher prepares and submits upon entering into the service entrustment contract are a "business plan" and a "certificate of property tax payment," which employees are not required to submit. While Counseling Teachers are restricted from engaging in competing business or working for competing companies of the same type due to the nature of the entrusted duties, unlike employees, they are not restricted from working in other industries or from conducting business activities under their own name. Unlike employees, no disciplinary regulations are established for Counseling Teachers regarding violations of the company's service order, etc.; rather, only grounds for termination of the entrustment contract are prescribed when the causes set forth in the Management Regulations arise. In addition, Counseling Teachers register as business operators with respect to their commission income and pay business income tax, rather than paying wage income tax, and are not automatically insured persons under the workplace health insurance association (직장의료보험조합) established at the Defendant company, but rather have voluntarily enrolled individually in regional health insurance associations (지역의료보험조합).
If so, considering all of the circumstances noted above—namely, that Counseling Teachers are not subject to specific and direct direction and supervision by the Defendant regarding the content, method, or hours of performing the entrusted duties in the course of performing such duties; that the commission paid by the Defendant is difficult to regard as wages paid in consideration of labor provided under a subordinate relationship, since the payment and amount thereof are determined solely according to the objectively demonstrated performance results of the entrusted duties—namely, the increase in new members or the collection performance based on monthly fee registrations—regardless of the content or hours of labor provided by the Counseling Teacher in performing the entrusted duties; and that, among other things, there is no fixed determination of working hours—it cannot be said that Counseling Teachers such as the Plaintiff et al. are employees who provided labor for the purpose of receiving wages under a relationship of employment and subordination with the Defendant. Accordingly, the court below's determination, to the same effect, that it is difficult to regard the Plaintiff et al. as employees subject to the application of the Labor Standards Act, based on a comprehensive consideration of the facts that the Plaintiff et al. entered into the entrustment contracts set forth in the judgment below with the Defendant company, that they received only the commission set forth in the judgment below without any fixed basic wage, and other circumstances set forth in the judgment below, is justified. There is no error of law based on a misunderstanding of the legal principles concerning employees and wages, and the argument, in the end, results from a misunderstanding of the content of the judgment below and cannot be accepted.
2. As to Ground Three
Setting aside the separate question of whether the Defendant company could employ Counseling Teachers to perform the aforementioned entrusted duties in the same status as ordinary sales employees, it cannot be said that, in this case, the Plaintiff et al. directly and substantially hold the status of employees as sales employees of the Defendant company. According to the record, it is recognized that the branch manager of the Defendant company substantially determined, through independent judgment, whether to enter into an entrustment contract with an applicant for the position of Counseling Teacher. Furthermore, even if, as argued, the Defendant company placed recruitment advertisements for Counseling Teachers, determined the method of hiring, and conducted interviews at the Defendant company's head office to determine whether to hire, such actions must be viewed as having been taken by the Defendant in order to determine whether to enter into the entrustment contract set forth in the judgment below with an applicant desiring to become a Counseling Teacher. Considering the various circumstances noted above comprehensively, such circumstances do not lead to the conclusion that the entrustment contract relationship between the Defendant and the Plaintiff et al. is, in substance, an employment contract relationship bearing a relationship of employment and subordination. Moreover, even if, as argued, in the process of Counseling Teachers fulfilling their obligations under the entrustment contract—such as reporting to the Defendant company on matters relating to member recruitment or the results of counseling and guidance, and remitting membership fees to the Defendant company—they, in principle, go to the branch office at fixed times each day, receive instructions regarding the entrusted duties through morning assemblies and training sessions within the branch during such hours, prepare work logs and obtain approval therefor from the section chief and branch manager, and even if the Management Regulations provide that Counseling Teachers belong to the branch, which is an organizational unit of the company, and are to act under the supervision of the branch manager and receive his or her instructions, and are to faithfully comply with the regulations, internal rules, and other matters instructed by the company, such circumstances merely constitute the receipt of minimal instructions or training given by the Defendant company in the capacity of the entrusting party for the purpose of encouraging performance results of the entrusted duties in order to ensure smooth performance thereof, or constitute part of the process of fulfilling obligations under the entrustment contract. The recognition of such circumstances does not lead to the conclusion that the Plaintiff et al. provided labor while receiving specific and direct direction and supervision from the Defendant under a relationship of employment and subordination. The fact that Counseling Teachers paid freelance occupation income tax rather than wage income tax is merely the natural result of their having registered as business operators and engaged in income-generating activities while performing the entrusted duties, and it cannot be concluded, as argued, that this was a means by which the Defendant engaged in labor management by expedient methods in order to avoid the economic burden thereof. Furthermore, even if, as argued, the Defendant, in recruiting applicants for the position of Counseling Teacher, advertised that "persons eligible for veteran's benefits will be given preferential treatment pursuant to relevant statutes," this merely means that the Defendant intended to apply the preferential treatment provisions set forth in the Act on the Honorable Treatment of Persons of Distinguished Service to the State (국가유공자예우등에관한법률) to persons eligible for employment protection under said Act when entering into entrustment contracts with applicants for the position of Counseling Teacher, and the fact that the Defendant placed such advertisement does not mean that the Defendant hired Counseling Teachers as its employees.
Accordingly, it cannot be said that the judgment below is unlawful due to insufficient deliberation or violation of the rules of evidence as argued, and the arguments contesting these points cannot be accepted either.
3. Therefore, the appeal is dismissed, and the costs of the appeal are to be borne by the losing party. This Judgment is rendered as stated in the Order by the unanimous opinion of the Justices involved.
Justice Cheon Gyeong-song (Presiding Justice), Ahn Yong-deuk, Ji Chang-gwon (Justice in Charge), Shin Seong-taek