Supreme Court Rules "Consignment Sellers at Department Stores Cannot Receive Severance Pay"

[Asia Economy Reporter Baek Kyunghwan] The Supreme Court has ruled that store managers who operated other companies' stores together in department stores and autonomously conducted discount sales cannot be considered employees.

On the 11th, the Supreme Court's First Division (Presiding Justice Park Jeonghwa) announced that it upheld the lower court's ruling, which dismissed the appeal filed by Mr. A and 10 others against Kolon Industries in a severance pay claim lawsuit.

Mr. A and others had signed contracts to sell clothing and other items at department store locations designated by Kolon Industries and received commissions as compensation. After the contracts ended, they demanded severance pay from Kolon Industries.

The first trial court ruled that Mr. A and others were "employees" under the Labor Standards Act, as they were substantially subordinated to the company, and ordered Kolon Industries to pay severance. The court cited that Kolon Industries decided the store locations and product sales prices and that store managers were bound to work according to the department store's business hours.

The second trial court's judgment differed. It focused on the fact that store managers sometimes conducted discount sales at their discretion and that the company decided on the implementation of promotional events for each store in consultation with the managers. It also noted that some store managers operated other brand stores within the department store, making it difficult to consider them as exclusive employees of Kolon Industries.

Although the store managers worked according to the department store's business hours, this was interpreted as a characteristic of the department store space rather than evidence that Kolon managed their working hours.

The Supreme Court also affirmed the ruling, stating, "The lower court's judgment that Mr. A and others cannot be regarded as employees under the Labor Standards Act who provided labor to Kolon Industries in a subordinate relationship for wages is appropriate."

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