[Plaintiffs, Appellants] Plaintiff 1 and 1 other person (Law Firm Yeoneun, Attorneys Song Yeong-seop and 1 other, Counsel for the Plaintiffs)
[Defendant, Appellee] Daedong Industrial Co., Ltd. (Attorney Lee Hyeon-deuk and 1 other, Counsel for the Defendant)
[Judgment Below] Daegu High Court Decision 2015Na20569 rendered June 17, 2020
[Order]
The judgment below is reversed, and the case is remanded to the Daegu High Court.
[Reasoning] The grounds of appeal are examined.
1. The principle of good faith and fair dealing (hereinafter “the principle of good faith”) refers to the abstract norm that parties to a legal relationship must not exercise rights or perform obligations in a manner or content that is inequitable or betrays trust, out of consideration for the interests of the other party. In order to deny the exercise of a right on the ground that it violates the principle of good faith, it must be shown that trust was extended to the other party, or that the other party's holding of such trust has objectively reached a state where it is justified, and that the exercise of the right in violation of such trust of the other party has reached a degree that cannot be tolerated in light of the concept of justice.
Where the content of a labor-management agreement, such as a collective bargaining agreement, is null and void for violating a mandatory provision of the Labor Standards Act (근로기준법), if an assertion of such nullity were rejected on the ground that it constitutes an exercise of rights in violation of the principle of good faith, this would result in defeating the legislative purpose underlying the mandatory provision; therefore, in principle, such an assertion cannot be deemed to violate the principle of good faith. However, it is not the case that the application of the principle of good faith is excluded without exception merely because the content of a labor-management agreement violates a mandatory provision of the Labor Standards Act. Only in exceptional cases where the general requirements for applying the principle of good faith set forth above are satisfied, and where there exist special circumstances justifying the prioritized application of the principle of good faith notwithstanding the mandatory nature of the Labor Standards Act, can an assertion of the nullity of such labor-management agreement be deemed impermissible as violating the principle of good faith.
Where, in a labor-management agreement, it was agreed to exclude regular bonuses from the basis for calculating ordinary wages on the premise that regular bonuses themselves do not constitute ordinary wages, and wage levels were set on that premise, if the employees were to add the regular bonuses to ordinary wages and, on that basis, demand payment of additional statutory allowances, thereby imposing a new financial burden on the employer that causes serious managerial difficulties or threatens the survival of the enterprise, this may be significantly contrary to good faith in light of the concept of justice and equity (see Supreme Court en banc Decision 2012Da89399 rendered December 18, 2013).
However, in determining whether to apply the principle of good faith in preference to the mandatory provisions governing labor relations, it is necessary to fully consider the legislative purpose of the Labor Standards Act and similar statutes, which is to set minimum standards for working conditions in order to guarantee and improve the basic livelihood of workers. Furthermore, since it is the employer who manages the enterprise, and the business conditions of an enterprise may change at any time depending on various economic and social circumstances both inside and outside the enterprise, if a worker's claim for additional statutory allowances resulting from the recalculation of ordinary wages were rejected on the ground that it causes serious managerial difficulties or threatens the survival of the enterprise, this could effectively result in shifting the risks of business management onto the worker. Therefore, whether a worker's claim for additional statutory allowances, etc. violates the principle of good faith by causing serious managerial difficulties for the employer or threatening the survival of the enterprise must be determined carefully and strictly (see Supreme Court Decision 2015Da217287 rendered February 14, 2019).
2. Examining the following circumstances, which can be ascertained from the reasoning of the judgment below and the record, in light of the legal principles set forth above, it cannot be concluded that paying the additional statutory allowances arising from including the bonus in ordinary wages would cause serious managerial difficulties for the Defendant or threaten the survival of the enterprise; therefore, the Plaintiffs' claims in this case cannot be deemed to violate the principle of good faith.
A. The court below found that the scale of additional statutory allowances that arose for the Defendant's employees from around November 2010 to around December 2013 was approximately 9.2 billion won, of which the portion attributable to the Plaintiffs and the co-plaintiffs in the court below was approximately 6.4 billion won. However, around December 2019, in the court below, a recommendation for reconciliation was finalized providing that “the Defendant shall pay 70% of the principal amount of the claimed amount to the co-plaintiffs in the court below excluding the Plaintiffs,” and by around January 2020, payment of the total amount determined thereunder, approximately 4.4 billion won, had been completed. Meanwhile, considering that the date of conclusion of the fact-finding hearing in this case was April 29, 2020, it appears that the statute of limitations would have expired for most of the additional statutory allowances arising from around November 2010 to around December 2013 with respect to the remaining employees of the Defendant who did not file an ordinary wage lawsuit. After deducting each of the above portions, the remaining scale of additional statutory allowances for the Plaintiffs as found by the court below amounts to only approximately 14 million won in total (the full principal amount of the claimed amount) plus delay damages thereon.
B. The above scale of additional statutory allowances does not even amount to 0.1% of the Defendant's annual sales revenue and labor costs, respectively, from 2010 to 2019. Meanwhile, even including the amount of additional statutory allowances paid in full to the co-plaintiffs in the court below pursuant to the recommendation for reconciliation as set forth above, the scale of additional statutory allowances amounts to only approximately 1% of the Defendant's annual sales revenue and approximately 10% of its annual labor costs from 2010 to 2019. Furthermore, looking at the Defendant's cash flow, the inflow of cash from business operations is smooth, and the cash and cash equivalents held annually by the Defendant, as well as its retained earnings, are also of a considerable scale. Sales revenue has also been stably maintained at approximately 500 billion won each year without significant fluctuation, and increased to approximately 600 billion won in 2019, and it appears that operating profit likewise reached its largest scale. Accordingly, it is difficult to find that the Defendant would have difficulty in securing funds to repay the additional statutory allowances or in bearing such burden.
C. Even if, as found by the court below, the inclusion of the bonus in ordinary wages would increase the Defendant's employees' ordinary wages beyond the agreed ordinary wages, causing the rate of wage increase to exceed the initial expectations and potentially imposing an unforeseen new financial burden on the Defendant, and even if there exist circumstances such as the Defendant's cumulative net income from 2010 to 2019 showing a loss and its borrowings increasing, in light of the scale of additional statutory allowances found above and the Defendant's financial situation, etc., such circumstances also cannot provide sufficient grounds to find that the payment of the additional statutory allowances would cause serious managerial difficulties for the Defendant or threaten the survival of the enterprise.
3. Nevertheless, the court below's determination that the Plaintiffs' claims in this case are impermissible as violating the principle of good faith, based solely on the reasons stated in its judgment, involves an error of law that affected the judgment, in that it misapprehended the legal principles concerning the principle of good faith or violated the rules of logic and experience, thereby exceeding the limits of free evaluation of evidence and erroneously finding facts. The ground of appeal pointing out this error is well-founded.
4. Therefore, the judgment below is reversed, and the case is remanded to the court below for further hearing and determination, this Judgment being rendered as set forth in the Order by the unanimous opinion of the participating Justices.
Justice Ro Jeong-hui (Presiding Justice), Park Sang-ok (Justice in Charge), Ahn Cheol-sang, Kim Sang-hwan