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[Case Highlight 5] Successful representation on validity of consent after reduction of severance pay without liability for payment in lieu of notice as to day laborers

2020.09.21

A construction company completed the structural works at the construction work site and terminated the employment relationship with the day laborers for the structural works by making severance pay. The company, due to its financial difficulty, partially reduced the severance pay as agreed with the laborers. 
 
Notwithstanding the agreement, the laborers subsequently filed a claim for wages, arguing that the severance pay, various statutory allowances and annual paid leave allowances were not paid in full and that the payment in lieu of notice was not paid despite that it was required under the circumstances of termination which took place before the completion of the works at the construction site. 
 
Jipyong represented the construction company, and argued that the payment of various statutory allowances and annual paid leave allowances were included in the comprehensive wage package which was valid for the laborers working at the construction site. Jipyong strongly argued that the severance pay was valid because the payment of the reduced amount was in accordance with the agreement after the termination of the employment agreement by presenting specific evidentiary materials. Jipyong additionally argued that the termination of the employment agreement was not unilateral by the construction company noting that the termination was on the ground of the completion of the structural works as provided under the employment agreement. 
 
The court therefore found that there was not sufficient evidence to conclude that the construction company failed to pay the wages or annual paid allowances; the agreement with the laborers to make the severance pay in the reduced amount was valid; and the termination of the laborers was due to the expiration of the contract period rather than the dismissal requiring the payment in lieu of notice to be made by the construction company. The court therefore dismissed all the claims filed by the day laborers.

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