- A Paradigm Shift in the Burden of Proof and a New Era of Employee Status Disputes
I. BACKGROUND
On January 20, 2026, the Ministry of Employment and Labor announced its plan to complete the “Labor Act Package” by Labor Day (May 1). This legislative initiative centers on enacting the Framework Act for Rights of Working Persons and implementing the principle of presumption of employee status under the Labor Standards Act. In line with this objective, a proposed amendment to the Labor Standards Act (introduced by Representative Ju-young Kim on December 24, 2025) introduces a new provision (Article 104-2). This provision stipulates that in civil disputes concerning rights and obligations, any individual who personally provides labor for another’s business (“Labor Provider”) is to be presumed an employee. This presumption remains in effect unless the person or company receiving the labor (“Labor Recipient”) successfully rebuts it.
Below we examine the key details of the presumption of employee status principle, its expected impact, and the implications for businesses.
II. KEY CHANGES AND IMPACT OF THE INTRODUCTION
1. Key Changes: A Shift in the Burden of Proof regarding Employee Status
The main provisions of the amendment regarding the presumption of employee status are as follows:
(a) Labor Providers (e.g., special-type employment workers, freelancers, and platform workers) are presumed to be “employees” in disputes under the Labor Standards Act.
- Under the general principle of burden of proof, the Labor Provider bears the burden of proving employee status. With the change in law, however, the Labor Recipient will be required to produce sufficient evidence to establish that the Labor Provider is not an employee. This goes beyond merely alleviating the Labor Provider’s evidentiary burden—it effectively shifts the burden of proof to the Labor Recipient.
(b) If a Labor Provider reports a violation of the law, Labor Inspectors may require the Labor Recipient to submit specific materials to verify employee status, and the Labor Recipient must comply unless there is a justifiable reason.
- Failure to comply without a justifiable reason may result in an administrative fine of up to 5 million KRW.
(c) The Minister of Employment and Labor may establish and operate advisory committees within regional employment and labor offices to determine the employee status of Labor Providers.
2. Expected Impact: Expansion of Disputes and Increased Evidentiary Burden on Labor Recipients
If a Labor Provider claims severance pay, statutory allowances, or challenges an unfair dismissal as an “employee,” the new presumption significantly lowers the bar for gaining legal recognition as an employee. As labor groups note, even if the statutory definition and judicial criteria for “employee” remain unchanged, Labor Recipients will face challenges to rebut the presumption. Effectively, the introduction of this presumption is expected to expand the recognition of “employee” status in practice.
Notably, courts determine employee status on a case-by-case basis. If such disputes persist for years, Labor Recipients may face prolonged litigation risk and uncertainty, including potential criminal liability exposure. While the proposed amendment introduces the presumption of employee status in civil disputes, it also expands Labor Inspectors' authority to request documents and conduct investigations when handling complaints filed with Labor Offices. Consequently, this presumption may influence how such complaints—and criminal cases—are handled. Once an individual is deemed an employee in a civil dispute, relevant penalty provisions, including criminal liability, would apply accordingly, effectively increasing criminal liability risk for Labor Recipients.
III. IMPLICATIONS
As the presumption of employee status principle is a key component of the government’s legislative agenda and is being actively promoted by the current administration and the Democratic party, businesses must closely monitor legislative developments. Once implemented, companies that engage Labor Providers through contracts (such as special-type employment workers) should proactively review their contract structures and operational practices. It is essential to prepare reasonable explanations in advance for any factors that could indicate an employment relationship, and to secure supporting materials and evidence demonstrating independent contractor status.
Furthermore, this principle may materially expand the scope of employee status through litigation, potentially requiring significant adjustments to existing business models and workforce management practices. Accordingly, early preparation and strategic risk assessment will be essential.
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