[Plaintiffs, Appellants] As stated in the list of plaintiffs in the attachment. (Litigation representative: Law Firm Owol, Attorney Kang Ho-min)
[Defendant, Appellee] Seoul Express Bus Co., Ltd. (Litigation representative: Law Firm Hwasan, Attorney Yoon Woo-jung and 2 others)
[Judgment Below] Seoul High Court Decision 2014Na32955 decided October 30, 2015
[Order]
The judgment below is reversed, and the case is remanded to the Seoul High Court.
[Reasoning] The grounds of appeal are examined.
1. Judgment of the court below
The court below determined that the plaintiffs' claim—seeking payment of additional statutory allowances and retirement pay calculated on the basis of an hourly ordinary wage computed by including the length-of-service allowance, driving allowance, and work-grade allowance (hereinafter collectively referred to as the "length-of-service allowance, etc.") and the bonus in the ordinary wage—amounts to pursuing an unexpected benefit far exceeding the wage level agreed upon between labor and management, and thereby imposes on the Defendant an unforeseen new financial burden that would cause serious managerial difficulties or endanger the survival of the enterprise, which cannot be tolerated in light of the concept of justice and equity; accordingly, the court below held that the plaintiffs' claim in this respect was inadmissible as being in violation of the principle of good faith.
2. Judgment of the Supreme Court
A. The principle of good faith and fair dealing (hereinafter the "principle of good faith") refers to the abstract norm that a party to a legal relationship must not exercise rights or perform obligations in a manner or with content that is inequitable or betrays the trust of the other party, giving due consideration to the other party's interests. 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, objectively viewed, the other party's holding of such trust was legitimate, 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 invalid for violating a mandatory provision of the Labor Standards Act (근로기준법), if an assertion of such invalidity were rejected on the ground that it constitutes an exercise of rights in violation of the principle of good faith, this would result in undermining the legislative purpose of the mandatory provision; therefore, in principle, such an assertion cannot be deemed to violate the principle of good faith. However, this does not mean 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 are met and, notwithstanding the mandatory nature of the Labor Standards Act, there exist special circumstances justifying the priority application of the principle of good faith, may an assertion of the invalidity of the labor-management agreement be regarded as violating the principle of good faith and thus be disallowed.
Where, under a labor-management agreement premised on the understanding that a bonus paid at intervals exceeding one month in correspondence to work provided during a certain reference period (hereinafter "regular bonus") does not in itself constitute ordinary wages, the parties agreed to exclude the regular bonus from the basis for calculating ordinary wages and set the wage level on that premise, it may be significantly contrary to good faith, in light of the concept of justice and equity, for the employee side to add the regular bonus to the ordinary wage and, on that basis, seek payment of additional statutory allowances, thereby imposing on the employer a new financial burden that causes serious managerial difficulties or endangers the survival of the enterprise.
On the other hand, unless the practice—whereby, on the premise that a specific allowance, like the regular bonus, does not in itself constitute ordinary wages, labor and management have long agreed during wage negotiations to exclude that specific allowance from ordinary wages—has continued for a long period in most enterprises and such labor-management agreements have become generalized and settled as an established practice, the mere fact that the labor and management of an individual enterprise agreed to exclude a specific allowance other than the regular bonus from the basis for calculating ordinary wages and set the wage level on that premise cannot, by itself, establish that the employee side's claim for additional statutory allowances and retirement pay, calculated by adding the specific allowance to the ordinary wage, has reached a degree that cannot be tolerated in light of the concept of justice, or that there exist special circumstances justifying the priority application of the principle of good faith notwithstanding the mandatory nature of the Labor Standards Act. In such a case, this cannot constitute an exceptional case. Ultimately, the exercise of such rights by the employee side cannot be said to violate the principle of good faith (see, e.g., Supreme Court en banc Decision 2012Da89399 decided December 18, 2013).
B. According to the reasoning of the judgment below and the record, with respect to the length-of-service allowance, etc. considered by the court below in its determination of the good-faith defense, it is difficult to find that a general practice has become established whereby, on the premise that such allowances do not in themselves constitute ordinary wages, they are excluded from ordinary wages during wage negotiations.
Examining these circumstances in light of the legal principles set forth above, it cannot be said that the plaintiffs' claim for additional statutory allowances and retirement pay, calculated by adding the length-of-service allowance, etc. to the ordinary wage, violates the principle of good faith.
Nevertheless, the court below erred in the legal principles concerning the principle of good faith by determining that the entirety of the plaintiffs' claims for additional statutory allowances and retirement pay, calculated on the basis of the hourly ordinary wage that included not only the regular bonus but also the length-of-service allowance, etc., violated the principle of good faith. The ground of appeal pointing this out is well-founded.
3. Conclusion
Therefore, the judgment below is reversed, and the case is remanded to the court below for further hearing and determination. This judgment is rendered by the unanimous opinion of the Justices involved in the decision, as stated in the Order.
[[Attachment] List of Plaintiffs: Omitted]
Justice Kwon Soon-il (Presiding Justice), Lee Ki-taek, Park Jung-hwa (Justice in charge), Kim Seon-su