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Study of Elements Violating the Act on the Protection, etc. of Temporary Agency Workers: The Classifying Standard of Temporary and Contract Work

  • Dae-Keun Kim, Hee-sook Woo   |   2016
  • Wednesday, February 22, 2017
  • Hits : 505


To manage an efficient business organization as well as save production and labor cost, businesses largely rely on external labor. On industrial sites, in particular, growing amount of work is being performed through external labor. External labor is mainly used in the form of in-house subcontracting where a client contractor (hereinafter “client”) facilitates workers of another prime contractor (hereinafter “contractor”) to work at the client’s workplace. Recently, the service industry as well as traditional manufacturing including the automobile, shipbuilding, and chemical industries are also making use of external labor. As aforementioned, in-house subcontracting is carried out in the form of the client facilitating the contractor or (mainly) its workers. Thus, as the contractor's workers are not employed to the client, the client is not subject to labor regulations such as the Labor Standards Act. This is one of the reasons behind such prevalent use of in-house subtracting on Korean industrial sites.

 

Meanwhile, since the adoption of the Act on the Protection, Etc. of Temporary Agency Workers (hereinafter "Temporary Worker Act") after the 1998 foreign exchange crisis, temporary placement of workers has been excluded from the worker supply service which is in principle prohibited under the Labor Standards Act and Employment Security Act. In fact, the number of approved temporary work agency businesses have been increasing consistently since 1998. Despite the increase, however, temporary work agency businesses are largely restricted by the Temporary Worker Act so alternatively, businesses choose to take advantage of contract workers. In other words, businesses are subject to related labor laws when directly employing, or indirectly employing workers through contracts on the placement of temporary workers. So as to avoid such liability, businesses turn to facilitating contract workers. Moreover, this phenomenon of contracting out labor to avoid regulations is spreading even widely since the enforcement of the Act on the Protection, etc. of Fixed-term and Part-time Workers (hereinafter "Fixed-term Act") on July 1, 2007.

 

The problem, however, is not in contracting out and making use of external labor. The problem is that even though businesses hire workers with rights protected by the Temporary Work Act or the Fixed-term Act, they disguise these workers as contract workers or entrusted workers to avoid being subject to related labor laws. This problem is also related to the fact that temporary work is not explicitly distinguishable from the contract work approved under Article 664 of the Civil Act. Consequently, workers have been consistently filing lawsuits arguing that as in-house subcontracting is a disguised form of contract work, subcontractors should be deemed either directly employed or a temporary worker, and therefore the client has the implicit responsibility to perform obligations of direct employment following the legal principles of the labor contract or obligations of employment according to the current Temporary Work Act (i.e. regarding as employed according to the former Temporary Work Act). Disguised subcontracting not only raises problems in the context of labor law, it also raises inequity issues. As disguised contracting is subject to criminal punishment under the Temporary Work Act, it is important to distinguish contract work and temporary work prior to punishing the user company. And in the case the work is concluded as disguised contracting, the business is subject to the regulations of the Criminal Act on either individual employment relationship or collective industrial relations according the status of worker.

 

Unfortunately, the current law does not clearly distinguish the difference between contract work and temporary work. To be sure, progress has been made regarding this issue. Since the adoption of the Temporary Work Act in 1998, contract work and in-house subcontracting, in particular, have been widely used on industrial sites. Subsequently, there have been numerous legal disputes arguing whether in-house subcontracting should be regarded as contract work according to the Civil Act or temporary work according to the Temporary Work Act. As a result, many cases were accumulated and composed together to establish legal principles that provide standards to differentiate contract work and temporary work. In addition, in 2015, the Supreme Court provided a general standard using various cases including the Hyundai Motor case. Despite the provision of the general standard, however, a more explicit standard to differentiate the two works is required for the following reasons: 1) the general standard is a mere group of signs drawn from previous cases; 2) the general standard does not fully reflect the distinctive features of each respective type of in-house subcontracting; and 3) the process of making a comprehensive judgement after individual judgement is very unclear and as a result, despite the Supreme Court’s decision in 2015, judgements among lower courts have remained inconsistent.

 

The Korean government is currently making efforts to address the problem of disguised contracting on industrial sites by referring to the Guidelines on the Judging Standards of Temporary Placement of Workers (April 19, 2007) as outlined in the Reference to Classify Temporary and Contract Work. However, these guidelines do not reflect the general standard set out by the Supreme Court in 2015. This type of miscommunication can hinder the predictability of judgements distinguishing temporary and contract work, and eventually weaken the public’s trust in law. It can also raise doubts on the effect of measures taken to prevent further disguised contracting. Furthermore, it is important to note that the Supreme Court focused on the status of the worker when establishing the classifying standard. Thus, further discussion is necessary to determine the suitability of the standard when applying it to interpret criminal elements related to the violation of the Temporary Work Act.


In this context, this study seeks to analyze the classifying standards of temporary work and contract work focusing on (Supreme) court cases. First, Chapter II provides an analysis of the GM Daewoo case which was the first to acknowledge the criminal liability of illegal placement of temporary workers. Before going into an in-depth analysis of the court’s judgement on each level, the study reviews the elements violating the current Temporary Work Act. This review is to provide a criminological view of each violation of the Temporary Work Act as currently, discussions on distinguishing temporary and contract work is centered around labor laws. If the Supreme Court’s standard to distinguish temporary and contract work is applied without any adjustments and without clear understanding of the violating elements, there is high chance that the variability of standard will lead to the violation of the Principle of legality as the Clear Statement. This was the case with GM Daewoo.

 

Second, Chapter III examines, in detail, the classifying standards of temporary work and contract work which was developed from the legal principle set through cases judged by the Supreme Court. The principle is largely divided into two parts: whether the implicit principle of the labor contract is applied between the client, contractor, and worker, and thus, the worker is recognized as directly employed; if not, whether they are engaged in a contract work relationship or a temporary work relationship. Related to the former, the study looks at some major cases where workers were recognized as directly employedSK Corporation case (Insight Korea case) and Hyundai Mipo Dockyard case. For the latter, the study provides analyses of the court’s judgements prior to and after the establishment of the general standard in 2015. It looks at the Supreme Court’s position before 2015 and the lower court’s decision after 2015. By doing so, the study seeks to prove that the general standard which was developed from cases such as the Hyundai Motor case is merely collective signs that were drawn from previous cases to distinguish temporary and contract work. The standard is only a result of accumulation and still remains unclear. Also, the study emphasizes the importance of restructuring fact relations in the process.

 

Third, Chapter IV points out the problems of previous discussions focusing on various factors including the Supreme Court’s judgement on legal relations using labor of another person; Guidelines on the Judging Standards of Temporary Placement of Workers which was jointly set out by the Ministry of Labor, Ministry of Justice and Supreme Prosecutors’ Office in 2007 and is still currently being enforced; and the Amendment of the Act on the Protection, Etc. of Temporary Agency Workers which was proposed by representative Lee In-je on September 16, 2015. Also the chapter looks at the cases of Germany, and Japan comparatively to reestablish the classifying standards of temporary and contract work. Based on such research, the study concludes that the current Temporary Work Act should be at the center of establishing the classifying standard. The chapter also proposes a new standard to distinguish temporary and contract work focusing on the requirements of temporary work under the current Temporary Work Act, as well as the specific contents of the authority to conduct which was developed through the legal principle set out by the Supreme Court.

Keyword Temporary worker, Violation