JIPYONG LLC

[Case No. Supreme Court decision 2019du52386 dated February 20, 2020]

The Supreme Court unanimously held that even in the situation where it became impossible for the employee to be reinstated to the original position while disputing the validity of the dismissal by seeking relief from wrongful dismissal due to the employee having reached retirement age or expiration of the term of the employment agreement, if there was a need to receive payment of a substantial amount of wage during the period of dismissal, there are still merits to disputing a decision of the National Labor Relations Commission that denied the relief from the unfair dismissal, as disputing of the decision would maintain the benefit of possibly obtaining relief of receiving payment of wages. 

The plaintiff was given a notice of termination in December 2016 while working under an employment agreement without a term for a third party in the litigation (the “Third Party”). The plaintiff claimed for relief from wrongful dismissal to the Seoul District Labor Relations Commission on January 17, 2017, and subsequently changed the claim from reinstatement to declaration for payment of the equivalent wage. However, the Seoul District Labor Relations Commission dismissed the claim for relief and the National Labor Relations Commission dismissed the claim for review on the ground that there was a legitimate reason for the plaintiff’s termination. In response, the plaintiff filed the complaint in this case on September 22, 2017 seeking cancelation of decision on review. Meanwhile, the Third Party amended the rules of employment on September 19, 2017 and enforced them from October 1, 2017. The amended rules of employment newly established the provisions on retirement stating that the day an employee reaches age 60 should be the retirement and that these provisions should apply on the employees who started work prior to the effective date of the rules of employment.

The lower court’s decision held that there was not a claim to seek cancelation of the decision on review in this case as the plaintiff was retired based on the age on October 1, 2017 which was the effective date of the amended rules of employment.

The existing Supreme Court precedent had denied the claim in a case of termination of employment relationship by the retirement in the process of disputing the validity of the termination by filing a complaint on the decision on review which dismissed the claim for relief on wrongful dismissal on the ground that (i) it was impossible for the employee to be reinstated even if he/she were to obtain the declaration of relief and (ii) the employee could resolve the matter of the unpaid wage during the termination period via civil litigation procedures.

The Supreme Court held that, even in a case the reinstatement was made impossible, if there was a need for the employee to be paid a substantial amount of the wage during the termination period, there was a legitimate claim to dispute National Labor Relations Commission decision on review of dismissing the claim for relief for the following reasons.

(i) The system of declaration for relief on wrongful dismissal was a system introduced to reinstate the employee who was made subject to wrongful dismissal, i.e., to restore the legal status and benefit to be enjoyed by the employee without wrongful dismissal. It was not only for the restoration of the status of the employee. The purpose of the system of declaration for relief on wrongful dismissal included having the employee receive the payment of the substantial amount of the wage during the termination period.

(ii) Between the reinstatement of the employee made subject to wrongful dismissal and the payment of the substantial amount of the wage during the termination period, there was not one method of relief which may be deemed more superior. Since the two methods of relief were different in terms of the purpose and effect, the payment of the substantial amount of the wage was not to be provided only to the employee who could be reinstated.

(iii) The declaration of relief by the National Labor Relations Commission did not directly trigger or change the legal relationship between the employer and employee in terms of the judicial functions; however, it had indirect compulsory power on the employer to assume the liability to enforce the declaration of relief and to pay a charge for compelling the performance in case of failure to perform. Therefore, there was a benefit for the employee to be gained from seeking a declaration for relief with compulsory power with relations to the unpaid wage, and it should be legitimate to recognize the cancelation of decision on review.

(iv) Besides filing a civil action, filing for quick and summarized procedures for relief and a subsequent administrative action for the declaration of wrongful dismissal and recovery of loss in the amount equivalent to the wage was consistent with the intent behind the system of declaration of relief on wrongful dismissal.

(v) In view of the intent for amending the Labor Standards Act which adopted the method of relief which was not based on the reinstatement, it should be fair to recognize the claim even in case the reinstatement was impossible and to grant an opportunity of relief for the employee. Further, in case the claim for relief on wrongful dismissal as to a temporary employee was dismissed, it was not uncommon for the employment agreement of the employee to be terminated in the subsequent process of litigation. Following the earlier Supreme Court precedent could have practical negative effect on the relief of rights of the temporary employee.

The Supreme Court changed the existing case precedents which held that there was no longer a valid claim in case the employment relationship ended on other grounds while the employee was disputing the validity of the dismissal by filing a claim to review the National Labor Relations Commission decision dismissing the claim for relief of wrongful dismissal.