Supreme Court Recognizes Worker Status for POSCO's Second-Tier Subcontractors, Affirming Dispatch Relationship

In a landmark ruling, South Korea's Supreme Court has recognized the worker status of employees working for POSCO's second-tier subcontractors, marking the first time the court has affirmed such a relationship. This decision establishes that POSCO effectively functions as the employer for these workers, confirming a "dispatch relationship" under the law.

The Supreme Court's decision came in response to lawsuits filed by 578 workers from POSCO's partner companies at the Pohang and Gwangyang steelworks. These workers sought official recognition of their employee status. While the court ruled in favor of 369 workers, excluding those who had passed retirement age or were employed by POSCO M-Tech, the core of the ruling affirmed POSCO's employer responsibility over workers from second-tier subcontractors like SIOMTECH.

The central issue in the case revolved around whether POSCO directly supervised and instructed these subcontracted workers. South Korea's dispatch labor law mandates that companies directly hire dispatched workers if they are employed for more than two years. The lower courts had previously sided with the workers, finding a dispatch relationship existed. However, the appellate court had ruled against four POSCO M-Tech employees, stating there was insufficient evidence of direct command from POSCO.

The Supreme Court's affirmation of the dispatch relationship for second-tier subcontractors is significant. POSCO had announced in April plans to directly hire 7,000 subcontracted workers, a move met with resistance from the Metal Workers' Union POSCO In-house Subcontracting Branch, which criticized the company for unilaterally announcing the plan without prior discussion on the scale and scope. This latest Supreme Court ruling is likely to fuel further conflict between labor and management regarding the extent and specifics of POSCO's direct employment obligations.

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The court confirmed that the plaintiffs, excluding those who had passed retirement age and employees of POSCO M-Tech, were in a dispatch relationship with POSCO.