Supreme Court: Insurance Company Training Managers Are Also Employees... Must Be Paid Severance Pay

The Supreme Court has ruled that training managers who sign appointment contracts to train insurance planners at insurance companies are considered employees and must be paid severance.

Supreme Court, Seocho-gu, Seoul. Photo by Yonhap News

According to the legal community on August 12, the First Division of the Supreme Court (Presiding Justice Seo Kyunhwan) overturned the lower court's ruling, which had dismissed the severance pay lawsuit filed by Mr. A and six others against NH NongHyup Life Insurance, and remanded the case to the Seoul Southern District Court.

Mr. A and the six others worked as training managers at NH NongHyup Life Insurance before being notified of their dismissal and leaving the company. They filed a lawsuit claiming severance pay, arguing that, as training managers under the direction and supervision of NH NongHyup Life Insurance, they were employees who trained and managed insurance planners in a subordinate position.

The court of first instance ruled that the managers were employees, citing that they performed tasks designated by the company, were under the company's direction and supervision, and worked at times and locations set by the insurance company.

However, the appellate court did not recognize their status as employees. It found that it was difficult to conclude the company exercised significant direction and supervision over the managers beyond the scope of the appointment contract. The court stated, "The plaintiffs entered into appointment contracts with commission-based compensation rather than employment contracts, and were not subject to the same work rules, service regulations, or personnel policies as regular employees."

The Supreme Court overturned the appellate court's decision and recognized their employee status. The Supreme Court acknowledged factors such as the determination of work content, significant direction and supervision, the designation and restriction of work hours and locations, and the continuity and exclusivity of the employment relationship, concluding that the plaintiffs were employees. The court stated, "It is reasonable to view that the company determined the work content and exercised significant direction and supervision during the performance of duties," adding, "It is difficult to consider that the plaintiffs were free to choose when to start and end work or to take leave, and they were bound by the work hours and locations designated by the company."

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