Since the Supreme Court’s decision in 2017 that recognized the employee status of consignment sales agents of department stores (Supreme Court Decision 2015Da59146, January 25, 2017), there have been several disputes over the employee status of consignment sales agents of large retail stores.
We hereby introduce this case as the Seoul Central District Court recently rendered a decision which denied the employee status of consignment sales agents who entered into a consignment agreement with a large retailer and operated stores (Seoul Central District Court Decision 2019Gahap58373, September 16, 2021, final and conclusive).
The Defendant in this case is a company that operates hypermarkets, and the Plaintiffs entered into a consignment agreement with the Defendant then later entered into an employment agreement.
The Plaintiffs argued that before entering into the employment contract with the Defendant, the Plaintiffs entered into a consignment agreement, but in substance, they were under the Defendant’s substantial supervision and control, providing their services under the Defendant in a subordinate relationship. The Plaintiffs filed a lawsuit seeking (i) the payment of the difference between the re-calculated severance pay and the already paid severance pay, or (ii) the confirmation that the Defendant is obligated to pay the retirement pension contributions to the retirement pension provider (trustee) for the above period.
As such, Kim & Chang represented the Defendant in obtaining a favorable decision from the court by arguing and substantiating the following reasons:
The Defendant did not manage the Plaintiffs’ attendance (e.g., by regularly checking their arrival and departure times from work).
The Plaintiffs hired sales assistants to perform their store tasks.
The Plaintiffs were paid sales commissions based on their sales performance.
The Defendant determined the sales price as it was necessary to ensure that the same products were offered at the same price across all stores.
The mere fact that the Defendant checked and managed the Plaintiffs’ sales and inventories did not mean that the Defendant exercised substantial supervision and control.
This decision is meaningful in that it clearly confirmed how the various terms and conditions that were already agreed upon due to the nature of consigned work from the execution stage of the contract – including the store’s operating hours, management of sales or inventory, and the authority to determine product prices – are not necessarily interpreted as a direct sign of employee status.