[Defendant] Defendant
[Appellant] Defendant
[Defense Counsel] Attorney Lim Kwang-gyu
[Judgment Below] Ulsan District Court Decision 2000No130, decided January 18, 2002
[Order]
The appeal is dismissed.
[Reasoning]
We examine the grounds of appeal submitted by defense counsel (and, insofar as it supplements the grounds of appeal, the defendant's supplementary brief on grounds of appeal, which was submitted after the deadline).
1. As to Ground No. 1
A. Where the human organization of some production division of an existing enterprise has been separated into a distinct enterprise known as a so-called "sosajang enterprise (small-owner enterprise)," in order to regard a person who, while employed by such sosajang enterprise, engages in the production work of the existing enterprise at the existing enterprise's place of business, as an employee of the existing enterprise, it must be established that the sosajang enterprise to which he belongs lacks independence as a business owner or lacks autonomy such that it may be equated with a mere department of the existing enterprise, so that its existence is nothing more than formal and nominal, and that the employee concerned can, in fact, be evaluated as being in a relationship of employment and subordination with the existing enterprise (see Supreme Court Decision 78Da1530, decided July 10, 1979; Supreme Court Order 99Ma628, dated July 12, 1999; Supreme Court Decision 97Nu19946, decided November 12, 1999, etc.).
B. According to the evidence adopted in the judgment of the court of first instance, which was upheld by the court below, the following facts may be established.
The defendant, as the representative director of Non-Indicted Company 1 Co., Ltd. (hereinafter "Non-Indicted Company 1"), on January 1, 1997, under the pretext of rationalizing management through enhanced productivity, had Non-Indicted Company 1 fully invest capital of KRW 50 million each to establish four so-called "sosajang corporations," namely Non-Indicted Company 2 Co., Ltd., Non-Indicted Company 3 Co., Ltd., Non-Indicted Company 4 Co., Ltd., and Non-Indicted Company 5 Co., Ltd., corresponding to each production item. He then had the employees who had been engaged in production activities in the relevant production divisions of the ○○ Factory located in Ulsan Metropolitan City submit letters of resignation and enter into employment contracts with the newly established corporations, while promising to guarantee them wages equivalent to those previously received. At the same time, he appointed executives and staff members who had worked at Non-Indicted Company 1 as representative directors called "sosajang (small owners)" and as executive staff in charge of production, and operated the sosajang corporations through them.
The method of operation was as follows: Non-Indicted Company 1 held shares equivalent to 98% of the total issued shares of the sosajang corporations (in fact, the remaining approximately 2% of shares, which were nominally held by the sosajang and others, also belonged to Non-Indicted Company 1). Personnel exchanges between the executives and staff of Non-Indicted Company 1 and those of the sosajang corporations took place frequently. When the sosajang corporations sought to hire employees, they requested Non-Indicted Company 1 to place recruitment advertisements in its own name, and even at interviews, the factory manager of the ○○ Factory belonging to Non-Indicted Company 1 participated and exercised influence. Furthermore, the sosajang corporations had no departments or staff to handle personnel affairs, accounting, and management—matters ordinarily essential to a corporate organization—but instead entrusted these matters entirely to Non-Indicted Company 1 for processing. They also did not possess their own production facilities but instead leased the ○○ Factory of Non-Indicted Company 1 or part of its production facilities, entered into subcontract processing agreements with Non-Indicted Company 1, established production plans in accordance with its orders, and merely engaged in production activities by processing raw materials purchased and provided by Non-Indicted Company 1, without securing any other business partners or recording any sales performance (there is no trace in the record indicating that any such attempt was even made).
As a result, some of the sosajang, even several months after assuming their positions, did not even know the amount of the rent for the factory and production facilities. Moreover, at the time of concluding the subcontract processing agreements, it was arranged that Non-Indicted Company 1 would make up for any shortfall in employees' wages. Furthermore, Non-Indicted Company 1, having been entrusted collectively with the accounting and other affairs of the sosajang corporations, paid processing fees to the sosajang corporations, but instead used these funds to directly pay wages to the employees belonging to the sosajang corporations and to settle payments for subsidiary materials and other goods purchased by the sosajang corporations for their production activities. Labor management was also carried out through concrete and direct control and supervision—from confirming attendance and departure to approving leave—by the factory manager belonging to Non-Indicted Company 1 and the department dedicated to managing the sosajang corporations, called the "Employee Service Team."
C. In light of the legal principles set forth above and these circumstances, the sosajang corporations lacked independence as business owners or lacked autonomy such that they were no different from a mere department of Non-Indicted Company 1, so that their existence was nothing more than formal and nominal. Accordingly, it cannot but be concluded that the employees belonging to them were, in fact, under the management and supervision of Non-Indicted Company 1, providing labor to Non-Indicted Company 1 and receiving wages from Non-Indicted Company 1, in a relationship of employment and subordination.
Therefore, the defendant, as the representative director of Non-Indicted Company 1, also stood in the position of employer with respect to the employees belonging to the sosajang corporations. In the same vein, the measure taken by the court below in upholding the judgment of the court of first instance, which found the defendant guilty on all of the facts charged in this case, is justified and acceptable, and there is no illegality therein, such as misapprehension of facts in violation of the rules of evidence, or misunderstanding of the legal principles concerning employees and employers as defined in the Labor Standards Act (근로기준법) or concerning fundamental rights under the Constitution.
The ground of appeal disputing this point is not accepted.
2. As to Ground No. 2
The offense of violating the duty to pay wages, retirement allowances, etc. within the due date, as provided in Articles 112, 36, and 42 of the Labor Standards Act (근로기준법), is exempted from liability only where it is recognized that the employer made his utmost effort to make such payment but was unable to do so within the due date due to unavoidable circumstances, such as financial difficulties resulting from poor management. Liability cannot be avoided merely because the employer was under financial pressure due to poor management and thus was unable to make the payment (see Supreme Court Decision 97Do1490, decided September 30, 1997).
Upon examination of the record, it is not recognized that the defendant made his utmost effort to pay the wages, retirement allowances, etc., given that he asserted, among other things, that he had no obligation to make such payments. Accordingly, the measure taken by the court below, which, in the same vein, rejected the defendant's assertions that there was no possibility of expecting lawful conduct or that the case constituted an act of necessity, is acceptable, and there is no illegality therein arising from a misunderstanding of the legal principles concerning grounds for exclusion of responsibility.
The ground of appeal disputing this point is likewise not accepted.
3. Conclusion
Accordingly, the appeal is dismissed, and this Judgment is rendered as set forth in the Order, by the unanimous opinion of the Justices participating in this decision.
Justice Yoon Jae-sik (Presiding Justice), Song Jin-hoon (Justice in charge), Byun Jae-seung, Lee Kyu-hong