Supreme Court Rules POSCO Must Directly Hire Subcontracted Workers, Including Second-Tier Subcontractors

The Supreme Court has once again ruled that POSCO must directly hire its subcontracted workers or recognize their status as direct employees.

On July 16, the Second Division of the Supreme Court (presided over by Justices Park Young-jae and Eom Sang-pil) upheld the lower court's ruling in favor of 369 out of 378 plaintiffs who had filed lawsuits seeking recognition of their status as direct employees.

Notably, this marks the first time the court has recognized the employee status of 18 workers from COMTECH, a second-tier subcontractor for POSCO.

However, the Supreme Court upheld the lower court's decision to rule against four employees of POSCO M-Tech, who were responsible for packaging cold-rolled products, stating that they were not subject to substantial direction and supervision from POSCO.

Additionally, the Supreme Court dismissed the claims of five workers who had already passed the mandatory retirement age, citing a lack of legal interest in the lawsuit.

A total of 568 workers, including a person surnamed Kim, who worked at POSCO's Pohang and Gwangyang steelworks as employees of subcontractors, filed lawsuits against POSCO in 2018 and 2021 seeking recognition as direct employees. Excluding those who withdrew their claims during the trial, 378 plaintiffs received a final judgment from the Supreme Court.

These workers were employed by subcontractors such as Dongil, Hwaintech, Roll & Roll, Seonggwang, and Poace, performing tasks including crane operation, factory work, raw material unloading, rolling processes, roll processing, steelmaking processes, and coke oven maintenance.

The core issue was whether a dispatch relationship existed between POSCO and these subcontracted workers.

Under the Act on the Protection of Dispatched Workers, if a user company employs dispatched workers for more than two years, it is legally required to hire them directly.

The first trial court determined that a dispatch relationship existed between POSCO and the subcontracted workers.

The court reasoned that the subcontracted workers were effectively integrated into POSCO's business and performed their duties under the company's direction and supervision.

Specifically, the court cited that POSCO set Key Performance Indicators (KPIs) to evaluate the subcontractors' human resources, labor management, and overall business operations, and that the work standard manuals detailed the sequence and specific methods for the tasks the subcontracted workers were to perform.

The second trial court also ruled in favor of most of the workers, but ruled against the four POSCO M-Tech employees, stating that there was insufficient evidence to prove they received substantial direction or supervision from POSCO.

The court determined that POSCO M-Tech possessed its own independent expertise and technology, and that POSCO likely relied significantly on POSCO M-Tech when drafting or modifying the work standard manuals and specifications for the packaging process.

The Supreme Court maintained this judgment.

Subcontracted workers at POSCO have been pursuing lawsuits regarding illegal dispatch practices since 2011.

The first and second lawsuits, filed by a total of 59 workers in 2011 and 2016, were finalized in favor of the plaintiffs by the Supreme Court in July 2022.

In the third and fourth lawsuits filed in 2017, the Supreme Court confirmed the victory for 215 plaintiffs in April of this year, while remanding the cases of seven POSCO M-Tech employees with the intent of ruling against them.

The current case involves the fifth and seventh-first lawsuits.

The sixth and seventh-second lawsuits, involving 88 plaintiffs, were also finalized in favor of the plaintiffs after the Supreme Court dismissed the appeals without a hearing. Meanwhile, the eighth through tenth lawsuits, involving 1,177 workers, are currently in the first trial stage.

(Photo: Yonhap News TV, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.