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Revisiting the Use of Subcontracted Workers in Korea (Part 3)


Please refer to the attached document for the final part of our three-part newsletter series addressing the use of subcontracted workers in Korea:

In the course of this newsletter series, we discussed the key legal issues and considerations that businesses in Korea face when using subcontracted workers.
In closing, we view that the following are the key takeaways for businesses when using subcontracted workers:

  • The distinction between worker dispatch and subcontracting is legally relevant in the Korean employment law framework, and there are important legal requirements that must be fulfilled by businesses to avoid being deemed to have committed illegal worker dispatch in either case.

  • Although the illegal worker dispatch issue has been more pronounced in the manufacturing sector, there are signs that disputes and government investigation and enforcement activities will increase in the non-manufacturing sector going forward with respect to the illegal worker dispatch issue.

  • The typical triggers for illegal worker dispatch cases include the following:


    A company ends existing subcontracting arrangement and the subcontracted workers file a petition for relief from illegal worker dispatch (as well as a civil claim for damages and regular employee status)


    The labor office conducts a labor inspection of the company and identifies the instance of illegal worker dispatch

  • Once a dispute or a government investigation takes place in connection with the illegal worker dispatch issue, it is very difficult for businesses to mitigate risks.  The exposure to liability can be significant in terms of administrative, civil and criminal sanctions (including for the CEO of the company).

  • In light of the growing complexity of compliance obligations in Korea, it is becoming ever more important for businesses to adopt a holistic approach to compliance with input from all relevant functions (including business, legal, HR and EHS) when managing subcontracting arrangements.  By way of example, for companies in Korea with 50 or more employees, the Serious Accident Punishment Act imposes compliance obligations on the company’s top management personnel (so-called “responsible management personnel”) to secure safety and health of not only the regular employees but also the subcontracted workers, which can lead to companies increasing their risk exposure to the illegal worker dispatch issue.

Attachment Revisiting the Use of Subcontracted Workers in Korea_Q&A Part 3.pdf