South Korean Court Orders POSCO to Hire Subcontracted Workers

In a landmark decision, South Korea’s Supreme Court ruled that steelmaker POSCO must directly employ most of the subcontracted workers involved in two long-running lawsuits. The ruling, announced on July 16, has significant implications for labor rights in the country.

The Supreme Court’s Second Division upheld lower court rulings that partially favored 378 current and former employees of POSCO subcontractors at the company’s Pohang and Gwangyang steel mills. The workers, who had been formally employed by outside contractors, argued that they performed their jobs under POSCO’s supervision and instructions.

The court’s decision was based on the South Korean Act on the Protection of Temporary Agency Workers, which requires a company to directly employ a dispatched worker when the worker has been used for more than two years. The trial court recognized a worker dispatch arrangement between POSCO and the subcontractor employees, excluding 12 workers who had reached retirement age.

The appeals court largely agreed with the trial court’s decision but ruled against four POSCO M-TECH employees responsible for packaging cold-rolled products. The appeals court found that there was insufficient evidence that they had received substantial instructions or supervision from POSCO. The Supreme Court upheld this conclusion, stating that POSCO M-TECH possessed independent experience and technical expertise.

The court’s decision is a significant victory for labor rights in South Korea, where employees have long been subject to exploitation by companies that rely on subcontractors to minimize their labor costs. The ruling sets a precedent for other companies in the country to directly employ their subcontracted workers, rather than relying on intermediaries.

Employees of POSCO contractors have filed 10 rounds of lawsuits over alleged illegal labor dispatch practices since 2011. The Supreme Court has already ruled in favor of 59 workers involved in the first and second rounds of litigation in July 2022. In April, the court upheld rulings favoring 215 workers in the third and fourth lawsuits but returned the cases of seven POSCO M-TECH employees to a lower court with instructions to rule against them.

The current lawsuit involved the fifth and part of the seventh rounds of litigation, with the Supreme Court ruling in favor of 378 workers. In separate proceedings involving the sixth lawsuit and another part of the seventh, the Supreme Court declined to hear POSCO’s appeals, finalizing rulings in favor of 88 workers. Trial court proceedings remain underway in the eighth through 10th lawsuits, which involve 1,177 plaintiffs.

**Key Facts and Figures:**

• 378 current and former employees of POSCO subcontractors benefited from the Supreme Court’s ruling.
• The court upheld lower court rulings that partially favored the workers, excluding 12 workers who had reached retirement age.
• The appeals court ruled against four POSCO M-TECH employees responsible for packaging cold-rolled products.
• The Supreme Court has already ruled in favor of 59 workers involved in the first and second rounds of litigation in July 2022.
• 215 workers in the third and fourth lawsuits benefited from the court’s ruling in April.
• 1,177 plaintiffs remain involved in ongoing trial court proceedings.