Constitutional Court Rules Clause Excluding Domestic Workers from Retirement Benefits Act Article 3 Constitutional

Constitutional Court Grand Bench.../Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The Constitutional Court has ruled that the provision in the "Employee Retirement Benefit Security Act" (Retirement Benefit Act) excluding domestic workers responsible for household tasks such as cooking, cleaning, caregiving, and childcare from the scope of retirement benefit payments is constitutional.

According to the "Act on the Improvement of Employment of Domestic Workers" (Domestic Workers Act), which came into effect in June this year, domestic workers who have signed employment contracts with domestic service providers can now be covered by labor-related laws such as the Retirement Benefit Act and the Minimum Wage Act.

The issue arises in cases like this one, where domestic workers are directly employed by users without going through a domestic service provider. The Constitutional Court concluded that this constitutes a reasonable distinction, considering concerns about potential invasion of privacy of users or their families, difficulties in proper state management and supervision, and the possibility that economic and administrative burdens too heavy for users could discourage the use of domestic workers.

On the 2nd, the Constitutional Court announced that it decided by a 7 to 2 majority that the clause in the Retirement Benefit Act excluding domestic workers from the scope of application of the law is constitutional in a constitutional complaint case filed by domestic worker A, who claimed that Article 3, proviso of the Retirement Benefit Act, which excludes "employment activities within the household" from the law's application, violated her rights to equality, property, and pursuit of happiness.

Article 3 (Scope of Application) of the Retirement Benefit Act states, "This Act applies to all businesses or workplaces employing workers. However, it does not apply to businesses employing only cohabiting relatives or to employment activities within the household."

In this case, the part excluding the application of the Retirement Benefit Act to domestic workers under "employment activities within the household" was the subject of review.

A worked as a domestic worker at Mr. Seo's home from May 21, 2014, to March 4, 2018, for about four years before retiring.

After retirement, A filed a lawsuit against Mr. Seo seeking retirement pay and delayed interest under the Retirement Benefit Act but lost in the first trial on September 1, 2018. The court ruled that Mr. Seo's employment of A fell under "employment activities within the household" and thus was not subject to the Retirement Benefit Act from the outset.

A appealed and requested a constitutional review of the disputed provision (Article 3, proviso of the Retirement Benefit Act), but the second trial court dismissed A's appeal and the constitutional review request in September 2019.

Ultimately, two months later, A filed a constitutional complaint with the Constitutional Court, asking it to examine the unconstitutionality of the provision under review.

In the constitutional complaint, A argued that the provision ▲ discriminates without reasonable grounds between those engaged in domestic labor and others, violating her right to equality; ▲ denies her claim to retirement pay, infringing on her property rights and right to pursue happiness; and ▲ excludes domestic labor from the retirement benefit system, which mainly involves women, thus violating Article 32, Paragraph 4 of the Constitution, which stipulates that "women's labor shall receive special protection and shall not be subject to unfair discrimination in employment, wages, or working conditions."

The Constitutional Court rejected all of A's other claims and only examined whether the provision violated the principle of equality.

First, the Court held that retirement pay claims acquire property rights only when the legal requirements are met, and since domestic workers lack the legal requirements for retirement benefits, there is no issue of property rights restriction.

Regarding the right to pursue happiness, the Court noted that it is a broad freedom right allowing individuals to pursue happiness without state interference, not a right to demand active benefits from the state. Therefore, even if A did not receive retirement benefits due to the provision, it is difficult to see this as a restriction on her right to pursue happiness.

Finally, the Court stated, "Although Article 32, Paragraph 4 of the Constitution prohibits unfair discrimination against women in employment, wages, and working conditions, not only women engage in employment activities within the household, and even if many domestic workers are female, this cannot be seen as a legal effect caused by the provision under review," and thus did not consider a violation of Article 32, Paragraph 4 as part of the review.

Meanwhile, regarding the violation of the principle of equality, the Court ruled that "even if the provision excludes domestic workers from the scope of the Retirement Benefit Act differently from general workers, it is a discrimination with reasonable grounds and does not violate the principle of equality," and thus upheld its constitutionality.

The seven Constitutional Court justices cited as reasons ▲ the risk of invading the privacy of users and their families if the Retirement Benefit Act were applied to employment activities within the household as with other workplaces, as well as difficulties in proper state management and supervision ▲ the concern that full application of the Retirement Benefit Act to domestic workers would impose economic and administrative burdens too heavy for users, causing adverse effects ▲ and the fact that with the enactment and enforcement of the Domestic Workers Act, domestic workers can now choose whether to enter into employment contracts with certified domestic service providers and be covered by labor laws or to be directly employed by users without coverage under the Domestic Workers Act and labor laws.

On the other hand, two justices, Lee Seok-tae and Kim Ki-young, expressed opinions of constitutional inconsistency.

They argued, "Employment activities within the household are a female-dominated occupation with an overwhelming proportion of women, so strict scrutiny based on the proportionality principle should be applied," and "the provision under review directly violates the Constitution's requirement for gender equality in labor and employment, and its purpose cannot be justified."

They also stated, "Recognizing claims for retirement pay, which is a wage after employment ends, is unrelated spatially or temporally to the privacy of the household, so the discriminatory treatment under the provision cannot be seen as an appropriate means to protect family privacy," and concluded that "the provision violates the principle of equality."

However, considering the possibility that a simple declaration of unconstitutionality could worsen women's employment conditions, they issued a decision of constitutional inconsistency with provisional application of the current provision until the National Assembly amends the law.

A Constitutional Court official said, "This decision is the first time the Constitutional Court has ruled on whether excluding domestic workers from the Retirement Benefit Act violates the principle of equality compared to general workers."

Since its enactment, the Labor Standards Act has excluded domestic workers or employment activities within the household from its scope of application. Accordingly, other labor-related laws such as the Retirement Benefit Act, Industrial Accident Compensation Insurance Act, Employment Insurance Act, and Minimum Wage Act have also not applied to domestic workers.

However, with the enactment of the "Act on the Improvement of Employment of Domestic Workers" on June 15, 2021, and its enforcement from June 16 this year, domestic workers who have signed employment contracts with domestic service providers certified by the Minister of Employment and Labor can now be covered by labor-related laws such as the Labor Standards Act, Minimum Wage Act, and Retirement Benefit Act.

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