[Plaintiffs, Appellees and Appellants] As listed in the list of plaintiffs in Attachment 1. (Attorneys at Law, Law Firm Woorio, Attorney Yang Je-sang and 2 others, as counsel)
[Plaintiffs, Appellants] As listed in the list of plaintiffs in Attachment 2. (Attorneys at Law, Law Firm Woorio, Attorney Yang Je-sang and 2 others, as counsel)
[Plaintiffs, Appellees] As listed in the list of plaintiffs in Attachment 3.
[Plaintiffs, Appellees and Incidental Appellants] As listed in the list of plaintiffs in Attachment 4. (Attorneys at Law, Law Firm Woorio, Attorney Yang Je-sang and 2 others, as counsel)
[Defendant, Appellant, Appellee and Incidental Appellee] Hanjin Heavy Industries & Construction Co., Ltd. (Attorney Lee Hyun-jong and 1 other, as counsel)
[Judgment Below] Seoul High Court Decision 2015Na26148, 2015Na26155 dated July 22, 2016
[Order]
The part of the judgment below concerning the claims for unpaid statutory allowances by the plaintiffs listed in Attachments 1, 2, and 4, excluding Plaintiff 21 and Plaintiff 83, and the part concerning the claims for unpaid retirement pay by the plaintiffs listed in Attachment 5, are reversed, and this part of the case is remanded to the Seoul High Court. The Defendant's appeal, and the remaining appeals and incidental appeals of the plaintiffs listed in Attachments 1, 2, and 4, are all dismissed. The costs of the appeal incurred between the plaintiffs listed in Attachment 3 and the Defendant shall be borne by the Defendant.
[Reasoning] The grounds of appeal are examined.
1. Judgment on the Plaintiffs' grounds of appeal
A. As to grounds of appeal Nos. 1 and 2
(1) 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 that betrays the other party's trust, while taking the other party's interests into consideration. 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 conferred upon the other party, or that, objectively viewed, the other party has reasonably come to rely on such trust, 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 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, 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 set out above are satisfied, and where there are special circumstances justifying the application of the principle of good faith in preference to the mandatory nature of the Labor Standards Act, can an assertion of invalidity of such labor-management agreement be held impermissible as violating the principle of good faith.
Where, in a labor-management agreement, it is agreed to exclude regular bonuses from the basis for calculating ordinary wages on the premise that regular bonuses do not in themselves constitute ordinary wages, and wage levels are set on that premise, it may be significantly contrary to good faith, in light of the concept of justice and equity, for the employees to add the regular bonuses to the 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 (see Supreme Court en banc Decision 2012Da89399 delivered on December 18, 2013).
However, in determining whether the principle of good faith should be applied in preference to the mandatory provisions governing labor relations, it is necessary to fully consider the legislative purpose of the Labor Standards Act and other statutes, which is to guarantee and improve the basic livelihood of workers by setting minimum standards for working conditions. Moreover, since the entity that manages the enterprise is the employer, and the business conditions of an enterprise may change from time to time depending on various economic and social circumstances both within and outside the enterprise, if a worker's claim for additional statutory allowances arising 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 in effect result in shifting the risks of business management onto the workers. Therefore, whether a worker's claim for additional statutory allowances violates the principle of good faith by causing serious managerial difficulties to the employer or threatening the survival of the enterprise must be determined cautiously and strictly (see Supreme Court Decision 2015Da217287 delivered on February 14, 2019).
(2) Examining the following circumstances, which can be known from the reasoning of the judgment below and the record, in light of the above legal principles, it cannot be concluded that paying additional statutory allowances by including the regular bonus in the ordinary wage would cause serious managerial difficulties to the Defendant or threaten the survival of its enterprise; therefore, the claims for unpaid statutory allowances by the plaintiffs listed in Attachments 1, 2, and 4, excluding Plaintiff 21 and Plaintiff 83 (hereinafter "the remaining plaintiffs excluding Plaintiff 21 et al."), cannot be deemed to violate the principle of good faith.
① Considering that the additional statutory allowances sought by the remaining plaintiffs excluding Plaintiff 21 et al. arose between April 2009 and June 2012, while the date on which the fact-finding court closed the hearing was June 17, 2016, it appears highly likely that the extinctive prescription period has already run with respect to the additional statutory allowances of the Defendant's employees who did not file an ordinary wage lawsuit.
② The additional statutory allowances that the Defendant would bear as a result of the lawsuit filed by the remaining plaintiffs excluding Plaintiff 21 et al. appear to amount to approximately KRW 500 million. While the Defendant's annual sales revenue has remained stable at approximately KRW 2 trillion without significant fluctuation each year, the amount of the above additional statutory allowances constitutes only about 0.025% of the Defendant's annual sales revenue. Moreover, this amounts to about 0.3% of the approximately KRW 150 billion in labor costs that the Defendant spends annually.
③ The Defendant also holds a substantial amount of cash-equivalent assets each year; even taking the end of 2015, which is closest to the date of closing of the fact-finding hearing, as the reference point, such assets amounted to approximately KRW 80 billion, which is about 160 times the amount of the above additional statutory allowances that the Defendant would bear.
④ Looking at the Defendant's cash flow, the cash inflow from operating activities has been smooth since 2015, and it is difficult to find that the Defendant would face significant difficulty in securing the funds needed to pay the additional statutory allowances.
⑤ Even if, as found by the court below, the inclusion of the regular bonus in the ordinary wage would considerably increase the ordinary wage of the Defendant's employees compared to the agreed ordinary wage, thereby considerably increasing the total amount of wages the Defendant must pay and thus imposing a new financial burden that was not originally anticipated, in light of the scale of the additional statutory allowances noted above, such circumstances cannot constitute sufficient grounds for finding that the payment of the additional statutory allowances would directly cause serious managerial difficulties to the Defendant or threaten the survival of its enterprise.
(3) Nevertheless, the court below, based solely on circumstances such as the Defendant's financial situation as stated in its reasoning, determined that the claims for unpaid statutory allowances by the remaining plaintiffs excluding Plaintiff 21 et al. could not be permitted as violating the principle of good faith, and accordingly determined that the claims for unpaid retirement pay by the plaintiffs listed in Attachment 5, premised on the inclusion of the additional statutory allowances in the average wage, likewise could not be permitted. Such determination by the court below contains an error of misapprehending the legal principles concerning the principle of good faith and the calculation of retirement pay, or of exceeding the bounds of the principle of free evaluation of evidence in violation of the rules of logic and experience. The ground of appeal pointing this out has merit.
B. As to ground of appeal No. 3
The court below, ① having rejected, for the reasons stated in its judgment, the assertion of some plaintiffs that the average wage forming the basis for calculating unpaid leave allowances should include unpaid statutory allowances, then ② determined that the Defendant is obligated to pay to some plaintiffs the difference between the leave allowance already paid and the leave allowance recalculated on the basis of the average wage equivalent to the specified ordinary wage amount, as stated in its judgment.
The ground of appeal asserting that the court below erred by proceeding on the premise that some plaintiffs had claimed unpaid leave allowances by including unpaid statutory allowances in the average wage, when in fact they had made no such assertion, and by rejecting the claim on that basis, is, even accepting the assertion as stated, not an assertion that the judgment below contains an error affecting the judgment, and therefore it is without merit, without need for further examination.
Furthermore, upon examining the record in accordance with the relevant legal principles, the remaining determinations of the court below contain no error, as alleged in the grounds of appeal, of misapprehending the legal principles concerning leave allowances or of exceeding the bounds of the principle of free evaluation of evidence in violation of the rules of logic and experience.
2. Judgment on the Defendant's grounds of appeal
The court below determined that ① where the amount calculated pursuant to Article 2, Paragraph 1, Item 6 of the Labor Standards Act (근로기준법) is less than the ordinary wage, the retirement pay and leave allowance must be calculated using the ordinary wage amount as the average wage pursuant to Article 2, Paragraph 2 of the Labor Standards Act, ② accordingly, the Defendant is obligated to pay to some plaintiffs the difference between the retirement pay and leave allowance already paid and the retirement pay and leave allowance calculated using, as the average wage, the ordinary wage amount recalculated to include the regular bonus at issue in this case, and then ③ rejected, for the reasons stated in its judgment, the Defendant's defense based on the principle of good faith against these claims for unpaid retirement pay and unpaid leave allowance.
Upon examining the record in accordance with the relevant legal principles, the above determination of the court below contains no error affecting the judgment, such as misapprehending the legal principles concerning the calculation of retirement pay and leave allowance and the principle of good faith, as alleged in the grounds of appeal, or exceeding the bounds of the principle of free evaluation of evidence in violation of the rules of logic and experience with respect to the specification of the amount of retirement pay already paid, or violating the duty to clarify or failing to conduct the necessary examination with respect to the scope of additional leave allowance payment.
3. Conclusion
Therefore, the part of the judgment below concerning the claims for unpaid statutory allowances by the remaining plaintiffs listed in Attachments 1, 2, and 4, excluding Plaintiff 21 et al., and the part concerning the claims for unpaid retirement pay by the plaintiffs listed in Attachment 5, are reversed, and this part of the case is remanded to the court below for further hearing and determination; the Defendant's appeal and the remaining appeals and incidental appeals of the plaintiffs listed in Attachments 1, 2, and 4 are without merit and are all dismissed; and the costs of the appeal incurred between the plaintiffs listed in Attachment 3 and the Defendant shall be borne by the Defendant, the losing party. This Judgment is rendered in accordance with the unanimous opinion of the participating Justices, as stated in the Order.
[Attachment 1] List of Plaintiffs: Omitted
[Attachment 2] List of Plaintiffs: Omitted
[Attachment 3] List of Plaintiffs: Omitted
[Attachment 4] List of Plaintiffs: Omitted
[Attachment 5] List of Plaintiffs Whose Claims for Unpaid Retirement Pay Are Reversed: Omitted
Justice Lee Ki-taek (Presiding Justice), Kwon Soon-il (Justice in Charge), Park Jung-hwa