Supreme Court: "Debt Collectors Are Workers Under Labor Standards Act If Subject to Company Direction and Supervision"

[Asia Economy Reporter Kim Hyung-min] The Supreme Court has ruled that debt collectors who receive commissions based on performance rather than fixed wages are considered "workers under the Labor Standards Act" if they are subject to direction and supervision from the company.

The Supreme Court's 3rd Division (Presiding Justice Min Yoo-sook) overturned the lower court ruling that dismissed Mr. A's claim for severance pay against credit rating agency B and remanded the case to the Seoul Central District Court on the 17th.

The court defined the relationship between Mr. A and company B as "a labor contract relationship providing labor under a subordinate relationship, contrary to the form of the concluded contract," stating, "The company sufficiently exercised direction and supervision over the work performance by requiring the input of specific debt collection tasks into the internal computer management system, issuing various work instructions, setting management standards, managing performance, and providing training."

It added, "Although the plaintiff did not receive a basic or fixed salary, paid business income tax instead of labor income tax, and was not recognized as a worker under other social security systems, these circumstances are merely matters that can be arbitrarily determined by the employer's superior position, so the worker status under the Labor Standards Act cannot be easily denied."

Mr. A worked as a debt collector at one of company B's branches from December 2008 to September 2015, performing assigned tasks. He entered daily performance and debt management status into company B's internal computer management system and worked at a designated seat in company B's office.

Upon retirement, he filed a lawsuit demanding severance pay of 32 million won, arguing, "Although a formal consignment contract was concluded with company B, the actual work content shows a subordinate labor relationship."

In response, company B argued during the trial, "Mr. A was an independent business operator running his own business, so there is no obligation to pay severance pay."

The first trial court ruled in favor of company B, stating, "Mr. A performed duties as a commissioned debt collector for company B and received commissions based on performance only," and "Company B withheld business income tax instead of labor income tax and did not enroll him in the four major social insurances."

The second trial court upheld the first trial court's ruling.

This content was produced with the assistance of AI translation services.