Hello, this is attorney Choi Jong-ha of Cheongchul Law Firm.

Pilates instructors and trainers who focus on personal training (PT) are often treated, in practice, as individual business owners even when they work at a particular studio or gym. Because they signed a freelance-type contract from the outset, many are not even aware that they might have rights as an employee. However, courts look not at the label of the contract but at the substance of how the work is provided, so depending on the specific facts these workers can be recognized as employees—and once recognized as an employee, they become entitled not only to severance pay but also to various allowances (annual leave allowance, weekly holiday allowance, and so on).

The Supreme Court of Korea has consistently held that whether a person qualifies as an employee under the Labor Standards Act (근로기준법) should be determined not by whether the contract is formally one of employment or of contract-for-work, but by whether the substance of the labor relationship is that the person provided labor to the employer in a subordinate relationship for the purpose of wages (Supreme Court, June 27, 2013, Judgment No. 2011Da44276, among many others). Whether such subordination exists is judged comprehensively, considering factors such as: (1) whether the employer determines the content of the work; (2) whether the person is subject to the rules of employment and service regulations; (3) whether the person is subject to direction and supervision in performing the work; (4) whether working hours and place are fixed; (5) whether the person owns the equipment and tools; (6) whether the person bears the risk of profit and loss; (7) whether the remuneration is compensation for the labor itself; (8) whether there is a basic or fixed wage and whether income tax is withheld at source; (9) whether the relationship is continuous and exclusive; and (10) whether the person is recognized as an employee under the four major social insurance schemes.

Recently, a lower court applied this doctrine in a case where the director operating a Pilates business sued the director's own instructor seeking confirmation that the instructor did not hold the status of an employee, and the court recognized the instructor's worker status and dismissed the director's claim (Daegu District Court, Gimcheon Branch, May 22, 2026, Judgment No. 2025Gahap30232[1]).

The court's reasons for recognizing worker status in this judgment can be summarized in five points.

First, the instructor did not recruit clients or set class fees on their own; the director determined these entirely. The instructor took over and continued the existing group and private classes as they were, and the group classes already had fixed times by day of the week. The equipment and work tools were also all provided by the director rather than purchased by the instructor personally. These circumstances make it difficult to view the instructor as having run a business on the instructor's own account, independent of the director.

Second, although the instructor did adjust some of the schedule, this was limited to special cases such as personal circumstances or the absence of group students, and even when adjusting, the instructor generally obtained the director's consent. Considering the nature of private classes, which must be arranged around member schedules, the court held that flexibility in scheduling alone does not mean the instructor was free from direction and supervision.

Third, the instructor was paid on an hourly-rate basis calculated on the monthly teaching hours, and this remuneration was evaluated as compensation for the labor itself.

Fourth, the workplace was limited to the director's business premises, and the instructor did not teach students at any other location. The list of students was also managed by the director, and there was no instance of the instructor personally entering into a separate class contract with a member.

Fifth, while it is acknowledged that the director did not enroll in the four major insurance schemes, the instructor addressed the director as boss (daepyonim), and the director used the term salary in paying the monthly remuneration.

The five factors above apply not only to Pilates instructors but equally to PT trainers, yoga and CrossFit instructors, and others who work in similar forms. In other words, if the class schedule and days are set by the business owner, the authority to decide class fees and manage members lies with the business owner, the workplace is limited to that business, remuneration is paid by the hour or per class according to working hours even without a fixed wage, and the relationship with the business owner is continuous and exclusive, then the likelihood of being recognized as an employee is high.

Conversely, if the instructor recruits members independently, sets the fees, teaches at multiple business locations, uses the instructor's own tools and equipment, and bears the profit and loss of the business, there is greater room to evaluate the substance as closer to that of a freelancer.

The mere fact that the contract states it is a freelance contract and that only 3.3% is withheld at source is not a reason to give up severance pay. If you have effectively belonged to a single business and taught there for five or ten years, it is worth taking the time to sort out which side you are closer to. From the business owner's perspective, clearly determining—right from the stage of first designing the contract with an instructor—whether the substance is closer to a freelancer or to an employee is the surest way to prevent unexpected later claims for severance pay, annual leave allowance, and the like.

[1] First-instance judgment; whether an appeal was filed is unconfirmed.