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Newsletter | December 2013
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INSURANCE |
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Recent Court Ruling: Post Office Insurance Agent Not an "Employee" |
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On June 17, 2013, the Supreme Court of Korea (the “Court”) held that a post office insurance agent is not an "employee" and is, therefore, not eligible for severance pay in connection with a lawsuit filed by a post office insurance agent that solicited insurance related products.
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The Court held that a post office insurance agent cannot be deemed an "employee" under the Labor Standards Act of Korea for the following reasons: (i) a post office insurance agent is only subject to termination under the applicable agency agreement and is not subject to any disciplinary regulations, (ii) a post office insurance agent’s work is not subject to the applicable agency agreement with regards to soliciting potential customers, geographical scope for solicitation or solicitation methods, but instead is able to act in accordance with his or her own discretion, and (iii) the compensation of a post office insurance agent is entirely performance-based, without any base or fixed salary. |
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The above ruling is notable because the Court appears to have taken a step in the opposite direction from the Court’s recent trend to broadly interpret the scope of "employees," to include workers providing services pursuant to agent/sub-contract agreements. |
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However, we note that in an agency type agreement, there is always a possibility that a superior-subordinate relationship will exist. Therefore, the above ruling should not be interpreted to mean that a post office insurance agent will never be deemed an "employee." Accordingly, parties must be cautious as to how an agency agreements is drafted and how work is actually performed by the agent. |
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