The Supreme Court building in Seocho-gu, Seoul. [Yonhap]
The Supreme Court building in Seocho-gu, Seoul. [Yonhap]

The Supreme Court has ruled that Posco must recognize the employee status of its in-house subcontracted workers.

The Supreme Court's Second Division, presided over by Justice Park Young-jae, on Thursday upheld a lower court ruling in the final appeal of a worker-status confirmation lawsuit filed by 241 subcontractor employees, including a plaintiff surnamed Kim, against Posco. The court confirmed the lower court's decision to dismiss the claims of plaintiffs who had already passed retirement age while recognizing the employee status of the remaining plaintiffs. On the same day, the Second Division, presided over by Justice Eom Sang-pil, also upheld a lower court ruling that partially granted a separate worker-status confirmation lawsuit filed by 137 subcontractor employees.

In both cases, the court found that "there was no error in the lower court's judgment that the workers, having been hired by subcontractors and then placed under Posco's direction and command to perform work for Posco, were in a worker dispatch relationship with the defendant — nor did the lower court misapply the legal standards for determining such a relationship or fail to conduct the necessary review."

The court added that it had "assessed whether the lower court's determination of a worker dispatch relationship was valid, based on established legal principles, in a case involving workers who performed various production-related tasks at subcontractors of Posco, a steelmaker."

However, the court held that workers among the plaintiffs who had already passed retirement age could not have their status restored, and that seeking confirmation of employee status was therefore "not the most effective and appropriate means of eliminating the uncertainty or risk surrounding an existing right or legal standing."

Kim and more than 300 fellow members of the Posco In-house Subcontractors' Branch of the Korean Metal Workers' Union, affiliated with the Korean Confederation of Trade Unions, filed the lawsuit after working at the Pohang and Gwangyang steelworks. They argued that they had in effect entered into dispatch contracts with Posco and had worked under such arrangements for more than two years.

The trial court in the case involving 241 workers ruled in January 2024 that the subcontracted workers held employee status at Posco. The court found that "Posco set key performance indicators for each subcontractor's work performance and periodically evaluated and notified the results to the contractors," and concluded that "Posco has an obligation to directly employ the subcontracted workers."

The trial court handling the separate case involving 137 workers also ruled in June 2024 that the subcontracted workers' employee status at Posco was confirmed. The court found it "reasonable to conclude that Posco exercised considerable direction and command over workers belonging to each subcontractor."

The Seoul High Court's Civil Division 15-3, sitting as the appellate court, issued rulings in both cases in January and largely upheld the trial court decisions recognizing the subcontracted workers' employee status. However, it declined to recognize employee status for workers belonging to Posco M-tech, a packaging subcontractor, ruling that transmitting information through a manufacturing execution system did not constitute binding instructions over packaging specifications.

Posco's in-house subcontracted workers have consistently pursued litigation against the company. In July 2022, courts recognized employee status in the first and second rounds of cases. In April, workers prevailed in four additional lawsuits. First-instance rulings in suits filed by 745 and 186 workers, respectively, are scheduled at the Suncheon Branch of the Gwangju District Court in August. A separate suit filed by 246 workers is currently before the Seoul Central District Court.

In April, Posco announced it would directly hire about 7,000 subcontractor employees at its Pohang and Gwangyang steelworks in a bid to resolve the longstanding contractor-subcontractor structural problem. The company said it would draw up a roadmap to hire subcontractor workers performing support duties directly linked to operations on a phased basis.

Posco said Thursday that it "respects the ruling and will faithfully carry out the follow-up procedures," adding that it "has decided to directly employ on-site subcontractor workers performing support duties directly linked to steelmaking operations, in order to fundamentally improve the contractor-subcontractor structure and overhaul on-site safety management, and will proceed with follow-up steps for the winning plaintiffs in sequence, taking into account steelworks safety and smooth integration with existing operations."


bell@heraldcorp.com