The Korean Supreme Court issued a decision on October 27, 2022 concerning the use of subcontracted workers at Hyundai Motor Company (“HMC”).  This case addressed, among other things, HMC’s use of subcontracted workers who performed logistics tasks for HMC yet were the employees of “Tier 2” vendors (i.e., subcontractors of “Tier 1” vendors, which in turn are subcontractors of HMC).

The above Supreme Court decision may be regarded as significant since it is a leading case concerning unlawful subcontracting arrangements (which are commonly referred to in Korea as “illegal worker dispatch”) and expected to have a significant impact on other illegal worker dispatch cases going forward.  In particular, the HMC decision is the first decision rendered by the Supreme Court on such case in approximately eight years, which indicates the desire of the Supreme Court to provide updated guidance on the illegal worker dispatch issue at this juncture.

Accordingly, we view that it is an opportune moment for multinational companies with operations in Korea to revisit the use of subcontracted workers.  We are of the view that having a fresh look at the relevant legal issues and considerations - from the perspective of how the companies can manage their workforce needs in Korea in a flexible and cost-efficient manner despite the challenging economic environment - in connection with the use of the subcontracted workers with input from the relevant constituent parts of the company’s organization (including business, HR and legal) can be helpful to mitigate potential risks and enhance compliance going forward.

In this regard, we have prepared a three-part series of newsletters addressing the use of subcontracted workers in Korea as follows:
 

• Part 1 of 3 : key aspects of the Korean legal system in relation to the use of subcontracted workers

• Part 2 of 3 : key issues and considerations facing the manufacturing sector in connection with the use of subcontracted workers

• Part 3 of 3 : key issues and considerations facing the non-manufacturing sector in connection with the use of subcontracted workers

This newsletter comprises Part 1 of the three-part series.  Please refer to the attached Q&A file for more information.