Korean Statute of Limitations for Unpaid Wages in Illegal Worker Dispatch Cases in Korea

The Supreme Court of Korea ruled in April of 2023 for the first time on the statute of limitation for damages claims based on an illegal dispatch of workers in Korea. The Supreme Court of Korea ruled that the statute of limitations clause under Article 766 of the Korean Civil Code and not the statute of limitations clause under Article 49 of the Korean Labor Standards Act should be applied to unpaid wage claims filed by a subcontractor’s employee against the Contracting Company (Supreme Court Decision 2021Da213477, April 27, 2023).

Korean Civil Code Article 766 statute of limitations is (i) three years commencing from the date on which the injured party or his or her legal representative becomes aware of such damage and of the identity of the person who caused it; and (ii) ten years from the date on which the unlawful act was committed. While the statute of limitation under Article 49 of the Korean Labor Standards Act is a mere three years from the date of non-payment of the wages.

Korean Supreme Court Illegal Dispatched Worker Statute of Limitations Case

The Employee-plaintiff filed a claim against the Contracting Company that hired the subcontracting company that dispatched the Employee to the Contracting Company. The Employee worked for the subcontractor of the Contracting Company, since 2013. The Employee filed a claim against the Contracting Company when the Employee was terminated from the subcontractor in 2015 and filed a damages compensation claim for discrimination for not being treated the same as directly employed workers of the Contracting Company.

The Supreme Court held that the Contracting Company discriminated against the Employee in violation of Article 21(1) of the Act on the Protection of Temporary Agency Workers, since it paid lower wages to the employee when compared to employees who worked under similar jobs and conditions as employees directly employed by the Contracting Company. Thus, the Employee was entitled to the difference between the pay of the directly employed workers pay and the Employee’s pay, and the statute of limitation under the Korean Civil Code shall apply to the matter.

For an post on the definition of an employee under Korean Law, please see: “Employee” under Korean Law.

If you want to know more about Employment & Labor Law in South Korea, you may schedule a No-Charge Initial Consultation with an Attorney at: Please Schedule a Call with an Attorney.

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