Worked Without a Contract? You Can Still Claim Wages and Severance -- What Shows You Are an Employee, and the 14-Day and 3-Year Deadlines

No contract does not mean you are not an employee

The test in the case law summarized by Easy Law is not whether the agreement is called employment, contracting or mandate. The court looks at the substance: whether you provided work to an employer in a subordinate relationship, for wages. So even if an owner called you a "freelancer," you can be recognized as an employee if the way you worked looked like a staff member's. The reverse also happens: a written contract exists, yet the substance leads to a finding that the person was not an employee.

Seven facts the courts look at

The factors the cases weigh together are roughly these. Direction of work (who decides content and method), set hours and place, independence (whether you can hire others, who owns the tools and materials), bearing profit and loss, the nature of pay (a fixed wage, tax withheld or not), continuity and exclusivity, and whether social insurance applies. No single factor decides it; they are viewed as a whole. The case law also says the lack of a base wage or tax withholding alone cannot easily rule out employee status, because an employer may have set it up that way by using its stronger economic position.

Two cases that went opposite ways

The examples on Easy Law show how the test is applied. A golf-course caddie had no contract, was paid fees directly by customers, had no fixed working hours and had no tax withheld, and was found not to be an employee (Supreme Court 2011Da78804). A beauty-school instructor, by contrast, taught to a set timetable and was paid a fixed amount per hour, and was recognized as an employee (Supreme Court 2006Do777). To see which side your work resembles, write down the facts that correspond to each of the seven factors above.

What to collect when you have no documents

There is plenty that can stand in for a contract: bank deposit records showing your pay, text and messenger conversations with the owner or manager (work instructions, schedule changes, talk about pay), work schedules, clock-in records, a uniform or staff ID, and social insurance records if any exist. With no documents at all, a notebook or memo you kept yourself can be used to state your working hours, and at the labor office an inspector questions both sides to establish the facts. If conversations are still on your phone, saving screenshots before you leave the job is the easiest preparation.

Severance pay has its own conditions

Being recognized as an employee does not by itself produce severance pay. It arises only after one year or more of continuous service, and ultra-short-hour workers who average under 15 contractual hours a week over four weeks are excluded under Article 4 of the Employee Retirement Benefit Security Act. Workplaces with fewer than five employees have owed full statutory severance since January 1, 2013. The amount is based on the average wage, which is the total pay for the three months before leaving divided by the number of days in that period; the calculation is covered separately in severance pay calculation done by hand.

Remember the 14-day deadline and the three-year limit

Under Article 36 of the Labor Standards Act, the employer must settle wages, severance and all other money within 14 days of the day you leave, and the period can be extended only by agreement of both sides for special reasons. Claims also expire. Both wages and severance lapse if not pursued for three years. Each paycheck is counted three years from its own pay date, while severance is counted from the day you left. The clock can be interrupted by a court claim, a payment order, seizure or provisional seizure, or the employer acknowledging the debt. The older the unpaid pay, the sooner it disappears from the back, so time keeps running while you hesitate.

How a labor office complaint proceeds

You can visit the regional employment and labor office that covers the workplace, or file a wage-arrears complaint through the e-customer center on the Ministry of Employment and Labor website. Once an inspector is assigned, you are summoned, the case is investigated, and a corrective order follows if a violation is found. If the employer still does not pay, the matter can move into criminal proceedings. The recently changed investigation system is covered in labor inspectors now investigate wage arrears directly from October 2, and the penalties for an employer who did not write a contract are in when no employment contract was written. For the state scheme used when the employer has closed or has no money, see substitute payment when wages are overdue.

Order of steps if you worked without a contract

First, write down when and how you worked, by date. Second, save your bank deposit records and conversations. Third, mark which of the seven factors apply to you. Fourth, for severance, check whether you worked a year or more and at least 15 hours a week. Fifth, if more than 14 days have passed since you left, file a complaint. Whether you count as an employee in your particular situation is decided by the labor office investigation and the courts, so this post does not replace legal advice. If you are unsure, contact the Ministry of Employment and Labor counseling line (1350) or a labor office complaint desk.