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Jipyong News|Newsletter_Labor & Employment

[Case Highlight 1] Successful representation at Supreme Court arguing for reversing and remanding a decision on method of calculating amount of compensatory damage

2020.07.15

A bank branch manager was suspended for six months and ordered to compensate 350 million KRW on four disciplinary grounds, including improperly dealing in loans and engaging in private financial transactions with the bank customers in violation of the bank’s internal regulations. The order for the compensatory damage was based on three grounds which comprised of: (i) 700 million KRW in damage for the first disciplinary cause, (ii) 2.1 billion KRW in damage for the second disciplinary cause, and (iii) 50 million KRW in damage for the third disciplinary cause. The amount of the compensatory damage was calculated as a sum of 300 million KRW, the maximum limit provided under the rules of employment for the damage incurred as a result of non-willful conduct in connection with (i) and (ii); additional 50 million KRW which was the amount of the damage incurred as a result of willful conduct. 
 
In case of the employee’s claim to the lower court (i.e., the Seoul High Court) for declaration of invalidation of the suspension and compensation, the lower court affirmed three out of four grounds of the disciplinary actions, rejecting the second disciplinary ground that was related to the employee’s non-willful conduct. The court further held that the suspension of six months was legitimate while the compensation order was legitimate for 125 million KRW only. Since the second disciplinary ground was rejected, the court concluded that the compensation of 300 million KRW should be reduced to the proportion of the damage under the first disciplinary ground which is one fourth or 75 million KRW (with 50 million KRW under (iii) which remained the same). 
 
Jipyong represented the bank and argued that the lower court’s method of calculating the compensation amount was based on improper interpretation of the rules of employment and that, as long as the first ground for the disciplinary actions that caused damages was recognized, the compensation order in the amount of 300 million KRW was legitimate even if the second disciplinary ground was not recognized. The Supreme Court accepted this argument for the bank, noting the compensation was valid as to the entire amount, to reverse and remand the case to the Seoul High Court.

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