[Case Information] This case is a decision that was procedurally dismissed at the stage of determining “employee status (academy investor · shuttle driver · shuttle assistant).” Decision date: 2026-09-07 · Decision body: Seoul Regional Labor Relations Commission · Case No.: 2026부해2413 Key issues in summary: (i) The vice-director of the academy had entered into an investment agreement to receive 40% of the net profit of the business and was an investor in the academy, and since opening the business there was no evidence that he had actually received any profit distribution due to operating losses; (ii) the two shuttle drivers had entered into service contracts for transporting academy students and used their own vehicles, bearing all costs for fuel, insurance, repairs, and other maintenance, as well as all accident risks, making it difficult to regard them as employees; (iii) the two shuttle assistants, during the contract period, could hire third parties to perform the work in their place... 1. Legal Implications Ⅰ. Case Overview In this case, a worker employed at a private academy (hagwon) filed an application for relief with the Labor Relations Commission, claiming unfair dismissal. The Seoul Regional Labor Relations Commission held that the academy in question employed fewer than five regular employees and therefore did not fall within the scope of the unfair dismissal relief system under the Labor Standards Act. The Commission individually examined whether the vice-director, the shuttle drivers and shuttle assistants, and the cleaning personnel qualified as “employees,” and whether they could be excluded from the calculation of the number of regular employees. In doing so, the Commission focused on the criteria for determining employee status and the “five or more employees on a regular basis” requirement under Article 11 of the Labor Standards Act. As a result, it reached the conclusion that the applicant’s request for relief from unfair dismissal should be dismissed. Ⅱ. Summary of Issues The issue in this case is whether the academy’s vice-director, shuttle drivers and shuttle assistants, and cleaning personnel can be regarded as “employees” under the Labor Standards Act and, accordingly, whether the academy qualifies as a workplace with five or more regular employees. Ⅲ. Summary of the Labor Relations Commission’s Findings The panel in this case found that the vice-director was merely an investor in the academy who had entered into an investment agreement to receive 40% of the academy’s net profit, and that there was no evidence that he had actually received any profit distribution while the academy was operating at a loss; that the two shuttle drivers were in a service contract relationship for transportation, using their own vehicles and bearing all maintenance costs such as fuel, insurance, and repairs, as well as all accident risks; that the two shuttle assistants could hire third parties to substitute for them in performing the contracted services, could refuse or decline to participate in particular routes, and autonomously determined the method, order, and time of performing the services, making it difficult to recognize the employer’s direction and supervision; and that the cleaning personnel had entered into a freelance service contract under which they were paid per visit for each cleaning, with the number and schedule of visits determined in advance by mutual agreement, and there was no evidence of direction over the work or control over working hours. In light of the above, the Commission held that these personnel could not readily be regarded as “employees who provide labor under the direction and control of the employer in return for wages” under the Labor Standards Act. Regardless of whether the dismissal in this case was substantively justified, the Commission held that the workplace employed fewer than five regular employees and therefore did not fall within the scope of workplaces covered by the unfair dismissal relief system under the Labor Standards Act. On that basis, it concluded that the application for relief from unfair dismissal did not satisfy the necessary prerequisites and could not be accepted. Ⅳ. Practical Points (From the Employee’s Perspective) To apply for relief from unfair dismissal, an employee should first confirm whether the workplace where they worked had at least five regular employees and whether the personnel working alongside them can legally be recognized as “employees.” For investors, pure service contractors, and freelancers, whether they are recognized as employees will vary depending on whether they in fact worked under the employer’s direction and control in a subordinate manner. Accordingly, it is important to secure sufficient materials not only regarding the form of the contract but also the actual working arrangements. Ⅴ. Practical Points (From the Employer/Company’s Perspective) From the employer’s standpoint, the calculation of the number of regular employees can determine whether the Labor Standards Act applies and the scope of liability in the event of disputes over unfair dismissal or redundancy. It is therefore important to clearly distinguish between employees and independent contractors/freelancers and to align the contract structure with actual operations. In particular, where service, outsourcing, or freelance arrangements are used in sectors such as academies, transportation, and cleaning, employers should clearly design the method of direction and supervision, the structure of remuneration, and the allocation of risk, and manage matters so that the documentation and actual operations are consistent. In this type of case, if you obtain assistance from experts such as Labor Law Firm Law& in advance to review the criteria for calculating the number of regular employees and the factors for determining employee status, you can reduce unnecessary legal risks in disputes before the Labor Relations Commission. 2. Decision A. Case Overview and Procedural History A case in which it was held that, because the number of regular employees was fewer than five, the workplace did not fall within the scope of application of the unfair dismissal relief system under the Labor Standards Act. 3. Summary of the Decision A. Summary of the Labor Relations Commission’s Findings (i) The vice-director was an investor in the academy who had entered into an investment agreement to receive 40% of the business’s net profit, and there was no evidence that he had actually received any profit distribution after opening the business, which was operating at a loss; (ii) the two shuttle drivers had entered into service contracts for transporting academy students and, using their own vehicles, bore all costs for fuel, insurance, repairs, and other vehicle maintenance, as well as all accident risks, making it difficult to regard them as employees; (iii) the two shuttle assistants, during the contract period, could hire third parties to perform the service work in their place, could refuse or decline to participate in specific routes, and autonomously determined the method, order, and time of performing the services, and thus were in a service contract relationship in which there was no evidence that they were under the employer’s direction and supervision; and (iv) the cleaning personnel had entered into a freelance service outsourcing contract under which they were paid a service fee per cleaning visit, with the number and schedule of visits determined in advance by mutual agreement, and there was no evidence of direction over their work or control over their working hours. Taking all of these factors together, the Commission determined that the number of regular employees at the workplace was fewer than five. [See More Related Decisions] - “Unfair Dismissal Decision on ‘Relief Interest · Refusal to Rehire (Post-Retirement Fixed-Term Employment)’” - “Unfair Dismissal Decision on ‘Expectation of Employment Succession (Logistics Center Competitive Bidding)’” - “Unfair Dismissal Decision on ‘Disciplinary Sanctions (Participation in Services for Another Institution)’” [Tags] Unfair dismissal, employee status (academy investor · shuttle driver · shuttle assistant), others, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm ※ This article is part of Labor Law Firm Law&’s “Unfair Dismissal Decisions” series. ※ The previous article, “Unfair Dismissal Decision on ‘Discipline · Transfer (Separation Measures for Workplace Harassment Perpetrator)’,” can be viewed in a new window. ※ A list of decisions related to employee status (academy investor · shuttle driver · shuttle assistant) can be viewed together under “List of Decisions on Employee Status (Academy Investor · Shuttle Driver · Shuttle Assistant).” ※ Korean version of this case: Korean article