As the permanent special counsel team currently investigating allegations related to Kwan Bong-gwon and Coupang named Coupang as a suspect for violating the Employee Retirement Benefit Security Act (retirement pay law), a legal dispute has been rekindled over who is responsible for paying severance to day laborers at logistics centers.
Because day laborers are, in principle, not eligible for severance, the key issue in the investigation and trial is expected to be whether day laborers who worked long-term at Coupang's logistics centers can be regarded as "full-time employees."
On the 28th, according to legal sources, Special Prosecutor Ahn Kwon-seop's special counsel team recently carried out searches and seizures of Coupang's headquarters, Coupang Fulfillment Services (CFS) offices, and former Coupang CFS CEO Eom Sung-hwan, among others, and specified alleged violations of the retirement pay law in the warrant. The allegation is that they failed to fulfill the obligation to pay severance within 14 days after a worker's separation.
The special counsel team believes that day laborers who worked long-term at Coupang's logistics centers in effect qualify as full-time employees. The retirement pay law states that severance must be paid if the following are met: ▲ a continuous service period of at least one year ▲ an average of at least 15 hours of work per week over four weeks.
However, in related precedents, the courts have determined full-time employee status by comprehensively considering not only simple tenure and working-hours requirements but also ▲ whether the worker was subject to the employer's direction and supervision ▲ the degree of control over working hours and place ▲ the continuity of the labor-providing relationship and exclusivity to the employer.
In principle, day laborers are not eligible for severance, but there has been an accumulation of rulings that severance must be paid in exceptional cases where full-time employee status is recognized.
The special counsel team believes full-time employee status is established because workers at Coupang's logistics centers worked under the employer's direct instruction and supervision, their labor contracts were repeatedly concluded, and they continued providing labor for more than a year.
Coupang counters that the workers faced no penalties for failing to show up, were not restricted from working at other logistics centers, and were hired on a first-come, first-served basis for the day with immediate daily pay, making them typical day laborers.
Accordingly, the investigation and trial are expected to focus on whether day laborers who worked more than a year at logistics centers can be deemed full-time employees. If the court recognizes full-time status, Coupang will find it hard to avoid legal liability for unpaid severance. If they are deemed day laborers, the very premise of the special counsel's investigation could be shaken.
Meanwhile, Coupang also faces allegations that in May 2023 it changed its work rules to the disadvantage of workers. At the time, Coupang revised the basis for calculating severance so that if even a single day during the employment period included a week with less than 15 working hours, the severance calculation period would be reset. This is the so-called "severance reset rule."
Criticism has been raised that this violated the Labor Standards Act because Coupang did not follow procedures for disadvantageous changes to work rules. Under the Labor Standards Act, when an employer changes work rules to the disadvantage of workers, it must obtain consent from the labor union or a majority of workers.
Coupang said it notified day laborers of the changes to the work rules and obtained consent from 9,277 out of 10,525 workers (88.1%). However, it has not been confirmed whether workers engaged in sufficient discussion or exchange of views on the changes.
However, this matter was not specifically stated in the criminal facts section of the special counsel team's search and seizure warrant, and the only charge listed in the warrant is a violation of the retirement pay law. The special counsel team is expected to examine, during the investigation, whether to apply suspected violations of the Labor Standards Act as well, focusing on the retirement pay law violations.