Seven former training managers (the “Plaintiffs”) each entered into commission contracts with NONGHYUP LIFE INSURANCE CO.,LTD. (the "Defendant”) to provide training services to new insurance solicitors between March 2012 and January 2015. Between 2019 and 2021, each Plaintiff was notified of dismissal and subsequently left the company. Upon their dismissal, the Defendant refused to pay severance, contending that training managers were not employees. In response, the Plaintiffs filed a lawsuit against the Defendant seeking severance pay, claiming that they should be recognized as employees under the Labor Standards Act because they provided labor in a subordinate position in exchange of wages.

The first-instance court upheld the Plaintiffs’ claims, finding that they qualified as employees because they performed work at designated times and places and received remuneration in turn. However, the appellate court denied the Plaintiffs’ employee status, reasoning that: (i) the Plaintiffs had entered into commission contracts with the Defendant under which they were paid commissions, rather than employment contracts; (ii) in addition to commissions under the commission contracts, the Plaintiffs also received separate commissions based on insurance sales and management; and (iii) it was insufficient to view them as having received a minimum fixed monthly wage, since they were only provided additional commissions as coaching activity support to make up for any shortfall when their total monthly commissions fell below KRW 3 million.

Representing the Plaintiffs before the Supreme Court, DR & AJU actively argued for their recognition as employees on the following grounds: (i) the Plaintiffs provided labor in a subordinate position without independent decision-making authority or discretion, as they were subject to specific work instructions and evaluations from the company, required to report attendance and obtain approval for leave, and restricted from giving external lectures; (ii) they were guaranteed a minimum fixed monthly payment of KRW 3 million, exclusive of performance-based incentives, regardless of actual performance; and (iii) both the basic commissions and performance-based commissions were, in substance, remuneration for their labor, as they were paid based on an assessment of the quantity and quality of their work.

As a result, the Supreme Court overturned the appellate court’s decision and fully accepted our arguments, holding that “it is highly likely that the Plaintiffs qualify as employees.”

This ruling establishes that training managers who enter into commission contracts with insurance companies may nonetheless be recognized as employees when certain criteria are satisfied, with emphasis placed on the substance of the employment relationship rather than the formal terms of the contract. In particular, the court acknowledged employee status after comprehensively considering factors such as supervision and control of work, fixed working hours and workplace, lack of independence, and the presence of a fixed salary. This significant decision reaffirms the principle that determining employee status requires a substantive assessment of the actual working relationship over formal contractual designations.