Paragraph 6 of Article 2 of the Law on Labor Standards defines an “employment contract” as “an agreement which establishes an employer-employee relationship with dependency”. Therefore, “dependency” is the key element of an employment contract. However, as the Act respecting labor standards does not specify the means of identifying “dependence”, the scope of “dependence” can only be made more specific or concrete by relevant interpretations in judgments.
The supreme courts are of the opinion that “dependence” should include characteristics of “personal dependence”, “economic dependence” and “organizational dependence”, as the following point of view shows in the judgment of the Supreme Court 96 -Tai-Shang-2630 (2007):
“In accordance with the provisions of the Act respecting labor standards, an employment contract designates an agreement under which one party provides labor in a relationship of dependence to the other party and which pays the remuneration. In essence, the dependence between the worker and his employer (1) usually has a personal dependency, namely that the employee submits to the authority of the employer within the organization of the employer’s company. and is obliged to accept discipline or sanction from the employer; (2) is executed in person and prohibits the use of an agent; (3) has an economic dependency, ie the employee, rather than working for his own company, works in subordination to another person for the purpose of another person; and (4) has organizational dependency, ie the employee is integrated into the employer’s production system and works in cooperation with his colleagues with a fair division of labor. These characteristics are very different from those of a statutory warrant (continued), under which the attorney deals with matters for a specific purpose and has independent discretion over those matters.
In a case concerning whether the contract between a truck driver and the moving company for which he works is an employment contract or an employment contract, the Supreme Court accepts the following opinion in the Supreme Court ruling 110-Tai-Shang-90 (2021) dated April 22, 2021: “… However, in accordance with the provisions of the Law on Labor Standards, an employment contract is understood to mean an agreement under which one party supplies labor in a relationship of dependency to the other party, who pays the remuneration, which can be seen in paragraphs 3 and 6 of article 2 of the Law on Labour Standards. The employee in an employment contract is generally in a personal, economic and organizational dependence on the employer. On the other hand, in an employment contract, the parties agree that one of them will complete a specific work for the other, which pays remuneration after the completion of the work, as specified in paragraph 1 of the article 490 of the Civil Code. upon completion of the services, and the contractor is only bound to complete a defined job within the agreed timeframe and is not in a relationship of dependency with the owner. Therefore, an employment contract and an employment contract are of a different nature. Since the Labor Standards Act is enacted to protect service providers, except when the parties expressly enter into an employment contract, or there is clearly no relation to the nature of the employment relationship, in order to protect workers, the identification of the nature of a contract must be made favorable to the service provider. Partial dependency alone will suffice to establish a contractual employment relationship. “
The latest Supreme Court judgment cited above indicates that in addition to reiterating the characteristics of an employment contract, including personal dependency, economic dependence and organizational dependence, the Supreme Court has even adopted a lenient test in the differentiation between employment contract and employment contract. Except when the parties expressly conclude an employment contract, or there is clearly no relation to the nature of the employment relationship, since the Act respecting labor standards is enacted to protect workers, a dependency partial alone will suffice to establish a labor contract relationship. On the basis of this lenient criterion, in the above-mentioned case, despite an employment contract concluded between the removal company and the trucker, due to the fact that the method of calculating the remuneration provided for in this employment contract (by the actual volume transported) was different from that of the actual remuneration received by the driver (part of the driver’s monthly remuneration is a fixed amount) and that the testimony of a witness indicated that such an employment contract had been concluded for the labor inspectorate, the Supreme Court cast doubts as to whether the two parties had a real intention to enter into an employment contract and therefore set aside the judgment of the High Court.
It emerges from the aforementioned Supreme Court rulings that in order to prevent a contract from being identified as an employment contract, the parties must expressly conclude an employment contract. In addition, efforts should be made to avoid that the relevant provisions thereof are identified as presenting personal dependency, economic dependence and organizational dependence. In addition, even when there is only partial dependence, in order to protect workers, the court can always use a lenient criterion to determine the establishment of a contractual employment relationship. When it is necessary to move forward to conclude an employment contract, the parties are advised to conduct cautious discussions on its provisions by referring to the reasons for the said Supreme Court judgments to avoid that this contract is not identified as an employment contract.