[Defendant]
[Appellant] Prosecutor and Defendant
[Defense Counsel] Attorney Song Du-hwan and one other
[Lower Court Decision]
Seoul District Court Decision 96No4161, decided February 25, 1997
[Order]
The part of the lower court's judgment concerning
Defendant 2,
Defendant 3, and
Defendant 4 is reversed, and this part of the case is remanded to a panel of the Seoul District Court.
Defendant 1's appeal is dismissed.
[Reasoning]
1. As to the Prosecutor's grounds of appeal.
According to the reasoning of the lower court's judgment, the lower court found the following facts: Non-indicted Company 1 was established on March 29, 1978 by
Defendant 1 for the purpose of conducting construction-related technical service business; while
Defendant 1, as the owner of the said company, was registered as its representative director, he completed the registration of resignation from that position around July 1992 and also completed the registration of resignation from his position as director in March 1995, but nonetheless directly managed the company as its chairman until around June 21, 1995, when the company went bankrupt; the company had departments including the Construction Business Division in charge of civil engineering construction, the Supervision Business Division in charge of supervisory services, the Engineering Business Division in charge of design of roads, harbors, bridges, etc., and the Management Business Division in charge of all financial matters as well as accounting and personnel affairs;
Defendant 1 installed
Defendant 2 as representative director of the company on October 7, 1993 and then appointed him as the head of the Construction Business Division; installed
Defendant 3 and
Defendant 4 as representative directors of the company, respectively, on April 13, 1995 and then appointed
Defendant 3 as the head of the Supervision Business Division and
Defendant 4 as the head of the Engineering Business Division; and installed
Non-indicted 2, Defendant 1's brother-in-law, as representative director of the company on May 4, 1995 and then appointed him as the head of the Management Business Division; the Construction Business Division, the Supervision Business Division, and the Engineering Business Division of the company had no departments handling personnel or accounting affairs, and the Management Department and Business Department under the Management Business Division were in charge of personnel and accounting affairs for all employees of the company; furthermore, the work of securing service contracts for the company was carried out by staff of the Business Department under the Management Business Division, and once the Business Department secured a service contract in this manner, it was reported to
Defendant 1 via the above
Non-indicted 2, and then, in accordance with
Defendant 1's instructions, civil engineering construction work was handled by the Construction Business Division, supervision contracts by the Supervision Business Division, and design contracts by the Engineering Business Division, each performing its assigned duties; in the course of business processing, the disbursement of funds was carried out by
Non-indicted 2 drafting proposals which
Defendant 1 approved, and money collected from client companies by each business division upon performing its duties was likewise deposited directly into the Management Business Division, from which the Management Business Division paid the wages of the company's employees; thus, matters concerning the securing of service contracts, management of funds, and payment of wages, etc. to employees were matters within the jurisdiction of
Defendant 1 and the above
Non-indicted 2; meanwhile, according to the company's delegation and approval regulations, matters such as hiring of employees, promotion, and calculation of salaries were subject to the approval of
Defendant 1, the chairman of the company, and
Defendant 1 accordingly issued letters of appointment in his own name even to the lowest-ranking employees, and directly issued personnel appointment orders in his own name for officers at the level of director or above, while for employees at the level of department head or below, personnel appointment orders were issued in the name of each of the above representative directors pursuant to internal delegation; and
Defendant 2,
Defendant 4, and
Defendant 3 held no shares whatsoever in the company and were themselves merely professional managers who received monthly salaries from
Defendant 1 while performing only the duties assigned to their respective positions. Based on these findings, the lower court held that even though
Defendant 2,
Defendant 3, and
Defendant 4 held the position of representative director of the company, they could not be regarded as persons in charge of business management bearing the obligation to pay wages, etc. to employees of the company, nor as persons acting on behalf of the company, the business owner, with respect to matters concerning the payment of wages, etc., and that it could not be concluded that they conspired with
Defendant 1 to commit the offenses in this case. On these grounds, the lower court acquitted
Defendant 2 and
Defendant 4 of the charge of violating the duty to settle monetary claims under Article 30 of the former Labor Standards Act (former Labor Standards Act, 근로기준법, abolished by Act No. 5305 on March 13, 1997; hereinafter the same), and acquitted
Defendant 3 of the charge of violating the duty to settle monetary claims and pay wages under Articles 30 and 36 of the former Labor Standards Act.
Upon examination of the record, the lower court's fact-finding itself is correct, and there is no illegality therein, such as a misapprehension of the rules of evidence resulting in a mistake of fact, or insufficient deliberation, as argued in the grounds of appeal.
However, Article 15 of the former Labor Standards Act provides that "employer" means the business owner or a person in charge of the management of the business, or other persons who act on behalf of the business owner in matters concerning employees; here, "person in charge of the management of the business" means a person who bears responsibility for business management in general as a person who has been comprehensively delegated authority over the whole or part of the business management by the business owner and who represents or acts as agent for the business externally
(see Supreme Court Decision 88Do1162, decided November 22, 1988).
Since the reason why the former Labor Standards Act expanded the scope of "employer," as the person obligated to comply with each provision of the said Act, beyond the business owner to include persons in charge of business management, etc., lies in policy considerations aimed at securing the practical effectiveness of each provision of the Labor Standards Act at the workplace, a person in charge of business management is, in principle, a person who holds authority over and bears responsibility for business management in general, and if such person has been institutionally granted the authority and responsibility to implement each provision of the Labor Standards Act pursuant to the relevant laws and regulations, that person falls under this category; it is not necessary that such person actually exercise such authority in practice.
Now, Article 389, Paragraphs 1 and 3, and Article 209 of the Commercial Act (상법) provide that the representative director of a stock company represents the company and has the authority to perform all judicial and extrajudicial acts concerning the company's business, and the articles of incorporation of Non-indicted Company 1 also provide that the representative director represents the company and oversees the company's business as a whole. Therefore,
Defendant 2,
Defendant 3, and
Defendant 4, by being appointed as representative directors of the company, were institutionally granted the authority and responsibility to implement each provision of the Labor Standards Act, and even if, as found by the lower court, they were excluded by
Defendant 1 from the work of paying wages, etc. to employees, it cannot be said that the authority or responsibility for the payment of wages, etc. granted to them by the company, the business owner, thereby ceased to exist. Accordingly,
Defendant 2,
Defendant 3, and
Defendant 4 must be deemed to fall under the category of "employer" who should bear responsibility for the violation of the duty to settle monetary claims, etc. in this case.
In the end, the lower court misapprehended the legal principles concerning "employer" as prescribed in the Labor Standards Act, and this affected the judgment; therefore, the ground of appeal pointing this out is well-founded.
2. As to Defendant 1's grounds of appeal.
According to what the lower court lawfully determined, Lee Tae-yang, as the owner of Samwoo Engineering Co., Ltd., formally resigned from the positions of representative director and director of the company, but in substance directly managed the company as its chairman, and matters concerning the securing of service contracts, management of funds, and payment of wages, etc. to employees were within the jurisdiction of Lee Tae-yang and Park Yong-hee, the representative director in charge of the Management Business Division, and matters such as hiring of employees, promotion, and calculation of salaries were also subject to the approval of Lee Tae-yang, the chairman. Accordingly, Lee Tae-yang falls under the category of "employer" as prescribed in Article 15 of the former Labor Standards Act
(see Supreme Court Decision 87Do2129, decided April 25, 1989).
However, as argued in the grounds of appeal, in cases where it is recognized that, although the employer made utmost efforts to pay wages, retirement allowances, etc., there existed inevitable circumstances such that the employer was unable to pay wages, retirement allowances, etc. due to financial difficulties arising from poor business performance, criminal liability for the delay in payment of wages, etc. cannot be imposed. However, according to the record, it does not appear that there existed inevitable circumstances such that, notwithstanding all sincerity and effort exerted by
Defendant 1 before and after the company's bankruptcy, he was unable to prevent the delay or non-payment of wages, etc. to a degree that would be socially acceptable, such that no further lawful conduct could be expected of the said defendant.
Furthermore, since an "employee" subject to the application of the Labor Standards Act refers to a person who provides labor to an employer and receives compensation for such labor from the employer, if a director, etc. of a company, in addition to handling affairs delegated by the company, performed certain duties under the direction and supervision of the president, etc. and received certain compensation therefor, such person may be regarded as an "employee" under the Labor Standards Act
(see Supreme Court Decision 91Nu11490, decided May 12, 1992, and Supreme Court Decision 92Da923, decided August 24, 1993),
and thus it cannot be concluded that a person is not an employee merely because that person held the position of director of the company.
Accordingly, upon comparing the evidence lawfully examined and adopted by the court of first instance with the record, it is proper that the lower court found the fact that
Defendant 1, the substantive manager of Non-indicted Company 1, failed to pay wages, bonuses, retirement allowances, etc. to the company's employees as stated in the judgment, and then applied Articles 109, 30, and 36 of the Labor Standards Act (근로기준법) to convict the said defendant; there is no illegality of misapprehension of legal principles as argued in the grounds of appeal.
Since the arguments of misapprehension of legal principles pointed out in the grounds of appeal are all without merit, it cannot be said that there is any illegality, such as misapprehension of the legal principles concerning matters subject to ex officio review, insufficient deliberation, or omission of judgment, merely because the lower court did not render a determination thereon ex officio. All the arguments are without merit.
3. Therefore, the part of the lower court's judgment concerning
Defendant 2,
Defendant 3, and
Defendant 4 is reversed, and this part of the case is remanded to the lower court; Defendant 1's appeal is dismissed. This judgment is rendered by the unanimous opinion of the participating Justices as stated in the Order.
Justice Lee Im-su (Presiding Justice), Choi Jong-young (Justice in Charge), Lee Don-hee, Seo Seong