Landmark Ruling on Criteria for Determining Regular Employees at Foreign Companies’ Korean Operations

Sojong Partners successfully represented Company C, a foreign corporation, in a landmark decision by the Korean Supreme Court. The Court held that under Article 11 of the Korean Labor Standards Act (LSA), the term “business or workplace” refers solely to those located within the Republic of Korea. Accordingly, when determining whether a workplace employs “five or more regular employees” under Article 11(5) of the LSA, employees working outside of Korea - who are not subject to Korean labor law - cannot be included.

In this decision (Supreme Court Case No. 2023Du46074), the Supreme Court overturned the lower court’s ruling, which had relied on the issue of workplace independence to calculate the number of employees. This ruling sets a significant precedent in defining the scope of the LSA and provides important guidance for foreign companies operating in Korea.