[Plaintiffs, Appellees] Plaintiff 1 and 2 others (Attorneys Kim Seon-su and 1 other, Counsel for the plaintiffs)
[Defendant] Chairman of the National Labor Relations Commission
[Defendant Intervenor, Appellant] Korea Omron Jeonjang Co., Ltd. (Attorneys Lee Yong-cheol and 5 others of Saegil Law & Patent Firm, Counsel for the defendant intervenor)
[Original Judgment] Seoul High Court Decision 99Nu13170 rendered on September 28, 2000
[Order]
The original judgment is reversed, and the case is remanded to the Seoul High Court.
[Reasoning]
1. A transfer of business refers to the transfer, as a unity while maintaining its identity, of an entity organized for a certain business purpose, i.e., a human and material organization; a transfer of only part of a business is also possible. Where such a transfer of business has occurred, the employment relationships of the relevant employees are, in principle, comprehensively succeeded to by the transferee company. Whether the business retains its identity is a question of fact to be determined according to general social conceptions; however, whether the conduct in question (the transfer agreement relationship) is recognized as a transfer of business should not be determined solely by how much and to what extent business assets were transferred, but rather by whether the former business organization is maintained such that the organization can function as a whole or as a significant part thereof. Thus, for example, even if all business assets are transferred, if the organization is dismantled in the process of transfer, it does not constitute a transfer of business; conversely, even if business facilities are transferred while a portion is withheld, if it is recognized under general social conceptions that the former organization is maintained solely by the transferred portion, this shall be considered a transfer of business (see Supreme Court Decision 99Du2680 rendered on July 27, 2001).
The court below, citing the judgment of the court of first instance, found the following facts: Donghae Co., Ltd. (hereinafter referred to as "Donghae") is a company that manufactures electrical machinery parts necessary for automobiles, such as relays, units, and car stereos; from around December 1986, it engaged in technical cooperation with Omron Corporation of Japan, and on December 12, 1991, established the defendant intervenor company (hereinafter "the Intervenor Company") with Donghae contributing 35% and Omron Corporation of Japan contributing 65% of the capital. Donghae's business divisions were divided into the Electrical Equipment (Jeonjang) Business Division, which produced automobile parts such as relays and units, and the Electronics (Jeonja) Business Division, which produced car stereos. From around 1996, Donghae began transferring the production line of the Electronics Business Division to Nanyang Company in China, and by around August 1996, all production employees of the Electronics Business Division had been reassigned to the Electrical Equipment Business Division; thereafter, only some materials department employees concurrently handled Electronics Business Division work for the purpose of supplying materials, and domestic production of car stereos was effectively suspended. As Donghae's business became difficult due to the foreign exchange crisis that began at the end of 1997, high interest rates, and decreased automobile demand, and it faced the risk of bankruptcy, on March 20, 1998, Donghae entered into an asset purchase agreement with the Intervenor Company to sell all assets related to Donghae's Electrical Equipment Business Division for 27.1 billion won. The main contents of the agreement were as follows: as the objects of sale, Donghae would sell to the Intervenor Company the land, buildings, machinery, tools and fixtures, vehicles, inventory assets, leased assets, transferred technology, and goodwill listed in Attachment 1 to the judgment below, and the Intervenor Company would purchase these from Donghae; provided, however, that even items directly related to the operation of the automotive electrical equipment business not listed in Attachment 1 would be included in the objects of sale. "Goodwill" meant the intangible property value pertaining to the automotive electrical equipment business, including customer relationships, business techniques, and consumer recognition acquired through Donghae's long-term operation of the automotive electrical equipment business division. "Transferred technology" included all intellectual property rights such as patent rights, utility model rights, and design rights related to the automotive electrical equipment business, as well as technology and know-how related to manufacturing, sales, and repair. Rights related to registration incidental to the objects of sale, and permits and licenses, were to be transferred together with the objects of sale. The Intervenor Company would not assume any of Donghae's liabilities, whether or not related to the automotive electrical equipment business; provided, however, that liabilities to financial institutions to which the objects of sale were provided as collateral, and obligations to pay lease fees to leasing companies, could be assumed by the Intervenor Company as part of the purchase price in consultation with the financial institutions and leasing companies pursuant to the terms of this agreement. With respect to various contracts related to product supply agreements with Hyundai Motor Company and Ssangyong Motor Company, the Intervenor Company would succeed to Donghae's position with the consent of those companies, and the Intervenor Company would determine the scope of contracts to be assumed by receiving disclosure of the contracts from Donghae before obtaining such consent. Donghae would survey employees belonging to the Electrical Equipment Business Division as to whether they wished to join the Intervenor Company, and would notify the Intervenor Company of the results together with personnel data necessary for the hiring process; the Intervenor Company would calculate the standard number of personnel necessary for operating the objects of sale through job analysis, and in filling the necessary workforce, would newly hire, through an open recruitment procedure, within the scope of the standard number of personnel, giving priority consideration, to the extent possible, to hiring applicants notified by Donghae prior to the takeover of the objects of sale. Donghae would, at its own expense and responsibility, terminate the employment relationship of those who passed the Intervenor Company's hiring process and settle all monetary matters, including severance pay, by April 30, 1998; however, the Intervenor Company would bear no obligation to take over Donghae's employees in connection with the takeover of the objects of sale. Except for Donghae's continued engagement in the electrical equipment business at the Intervenor Company's request, Donghae would not, for 10 years from March 20, 1998, unless otherwise agreed, engage in business activities of the same or similar kind as the business being transferred.
Upon learning of the conclusion of the above asset purchase agreement, the Donghae labor union held a labor-management council with Donghae on March 23, 1998, and demanded matters such as the continuation of employment relationships, succession of the union, and maintenance of the collective bargaining agreement; however, due to differences of opinion between labor and management, no agreement was reached and the negotiations broke down. On March 25, 1998, Donghae notified employees belonging to the Electrical Equipment Business Division, through an internal communication, to individually prepare and submit a document combining a letter of resignation from Donghae, an application for employment with the Intervenor Company, and a consent form for a 100% reduction of the Lunar New Year bonus that Donghae had failed to pay (hereinafter the "reemployment application"). The Donghae labor union again, on March 26 and 27, 1998, asserted that "it is unjust for Donghae to have employees individually apply for employment or unilaterally consent to resignation and bonus reduction," and demanded blanket succession of employment for all union members. Despite this demand from the labor union, Donghae received individual reemployment applications from a total of 176 employees by March 30, 1998, and notified the Intervenor Company thereof. The Intervenor Company received the reemployment applications submitted by the 176 employees from Donghae and, without any screening, newly hired all of them effective April 1, 1998. However, the plaintiffs, who were members of the Donghae labor union, along with 9 others, asserted blanket succession of employment and opposition to the bonus reduction, and did not submit their reemployment applications by the extended deadline of March 31, 1998, but only submitted them on April 4, 1998. Donghae returned all 9 applications, including those of the plaintiffs, on the ground that the submission deadline had passed, and as a result, the plaintiffs and the other 9 persons were unable to join the Intervenor Company. The court below further found that the Intervenor Company took over all assets of Donghae's Electrical Equipment Business Division pursuant to the above asset purchase agreement, and re-employed only Donghae's employees in the form of new hiring, assigning them to the same departments (with different names but identical duties) in which they had worked at Donghae, at the same rank, to continue performing their former duties; thereafter, the Intervenor Company changed Donghae's organizational structure of 2 divisions and 10 teams to 5 centers, 19 groups, and 1 team, and rearranged personnel, equipment, and offices, introducing a multi-item small-quantity production system, adding 70 items to the items previously produced by Donghae, for a total of 462 items being produced.
Based on the foregoing, the court below determined as follows: In this case, the Intervenor Company not only took over from Donghae all tangible and intangible property necessary for the operation of the Electrical Equipment Business Division, but also took over the position as a contracting party vis-à-vis business partners, such that it appears that combining this with Donghae's human organization would immediately form the same material and human foundation as the former business. Although, under the terms of this agreement, the Intervenor Company was to newly hire only a prescribed number of employees through a hiring screening process on the premise that it would not succeed to the employment relationships of Donghae's employees, and accordingly, Donghae's employees took the form of submitting letters of resignation and being newly hired, in reality, without going through substantive hiring procedures such as employment examinations, all of Donghae's employees who expressed intent to be hired within the prescribed deadline were hired. Of Donghae's 199 employees, 176 were re-hired by the Intervenor Company in the form of new hiring, meaning that most employees were re-hired; furthermore, the Intervenor Company hired only Donghae's employees in the form of new hiring and did not actually newly hire employees other than Donghae's employees through an open recruitment process. In light of the fact that Donghae's employees were given ranks at the Intervenor Company corresponding to their ranks at Donghae and continued to perform the same duties as before, it is reasonable to view that the human organization of Donghae's Electrical Equipment Business Division was also succeeded to by the Intervenor Company while maintaining its identity (the fact that some employees voluntarily resigned does not impede recognition of the identity of the human organization). Adding to these points the fact that the Intervenor Company is conducting business by maintaining, as a basis, the basic framework of the Electrical Equipment Business Division that Donghae had operated, using the material and human organization succeeded to from Donghae, the Intervenor Company shall be deemed to have acquired the business by comprehensively taking over, while maintaining its identity, the material and human organization unified for the business purpose of the Electrical Equipment Business Division from Donghae. Even if the Intervenor Company explicitly stated, in concluding this agreement with Donghae, that it would take over only assets and not the human organization, and even if it went through resignation and new hiring procedures in hiring employees, did not take over all claims and some liabilities, and some parts of the organization changed after the transfer of business, such facts alone are insufficient to conclude otherwise.
In light of the legal principles set forth above and the record, the court below's fact-finding and determination as above are justified, and there is no illegality therein, as alleged in the grounds for appeal, in violating the rules of evidence or misunderstanding the legal principles concerning transfer of business. The grounds for appeal disputing this point cannot be accepted.
2. Where a business is transferred, absent a special agreement to the contrary, the employment relationship between the transferor and the employee is, in principle, comprehensively succeeded to by the transferee. Where there is a special agreement between the parties to the transfer of business excluding part of the employment relationship from the scope of succession, the succession of the employment relationship may not take place in accordance therewith; however, since such a special agreement is substantively no different from dismissal, it is valid only if there is a justifiable reason as prescribed in Article 30(1) of the Labor Standards Act (근로기준법), and dismissing an employee solely on the ground of the transfer of business itself cannot be deemed to constitute a case where there is a justifiable reason (see, e.g., Supreme Court Decision 93Da33173 rendered on June 28, 1994).
The court below, citing the judgment of the court of first instance, determined as follows: Although it is true that the plaintiffs did not submit their reemployment applications by the designated deadline, this appears to be merely because the Donghae labor union, of which the plaintiffs were members, asserted that "it is unjust for Donghae to have employees individually apply for employment or unilaterally consent to resignation and bonus reduction" and demanded blanket succession of employment for all union members, and only submitted the applications after the deadline had passed when this demand was not accepted, rather than because the plaintiffs had no intention of seeking reemployment. If the substance of this agreement constitutes a transfer of business, asserting blanket succession of employment cannot be deemed unjust; moreover, there was no reasonable basis for linking the reemployment application with the bonus reduction, yet when Donghae attempted to use the opportunity of receiving reemployment applications to also obtain consent to the bonus reduction, the plaintiffs' failure to submit reemployment applications in protest thereof cannot be deemed attributable to the plaintiffs. Given that all those who submitted reemployment applications were re-hired, the submission of reemployment applications appears to have been merely a formal procedure. Comprehensively considering these circumstances, the court below determined that it was unjust to refuse succession of employment to the plaintiffs solely on the ground that they submitted their reemployment applications 4 days after the designated deadline. In light of the record, the court below's fact-finding and determination as above are justified, and it cannot be deemed that the plaintiffs, by failing to submit their reemployment applications within the designated deadline for the above reasons, refused succession of the employment relationship to the Intervenor Company or expressed intent to terminate the employment relationship. The grounds for appeal disputing this point also cannot be accepted.
3. Although the court below, based on the evidence it cited, found the fact that the plaintiffs each submitted letters of resignation to Donghae on and after April 6, 1998, after having submitted their reemployment applications on April 4, 1998, it nevertheless determined as follows: (1) Since the substance of this agreement constitutes a transfer of business, the plaintiffs' employment contract relationship with Donghae was transferred to an employment contract relationship with the Intervenor Company on April 1, 1998, when the Intervenor Company took over the business, absent special circumstances such as the existence of a justifiable ground for dismissal; therefore, even if the plaintiffs, having already acquired the status of employees of the Intervenor Company, subsequently submitted letters of resignation to Donghae, the plaintiffs cannot be deemed employees who had already resigned from Donghae prior to the transfer of business, and thus the plaintiffs cannot be excluded from the scope of the Intervenor Company's succession of employment. (2) Furthermore, in light of the following: there is no material to acknowledge that there were circumstances that would cause the plaintiffs to abandon their intention to seek reemployment immediately after submitting their reemployment applications to the Intervenor Company; the plaintiffs did not voluntarily submit their letters of resignation but did so at the urging of the Intervenor Company, and in particular, in the case of the younger Plaintiffs 3 and 2, it appears that they prepared and submitted their letters of resignation without properly understanding what submitting a letter of resignation meant, due to persuasion by the Intervenor Company that mobilized these plaintiffs' fathers; the plaintiffs consistently asserted automatic succession of employment while opposing the bonus reduction, up until the submission of their letters of resignation; and shortly after submitting their letters of resignation, on April 29, 1998, they filed a petition for remedy against unfair dismissal with the Seoul Regional Labor Relations Commission against the Intervenor Company, asserting succession of employment—the court below determined that the letters of resignation submitted by the plaintiffs could not be deemed to contain an intent to abandon their reemployment application to the Intervenor Company, and thereby rejected the Intervenor's assertion that the submission of the letters of resignation constituted grounds for refusing succession of employment.
While, upon a transfer of business, the employment relationship between the transferor and the employee is, in principle, comprehensively succeeded to by the transferee, an employee may, by expressing a contrary intention, remain with the transferor company instead of being succeeded to by the transferee company, or may retire from both the transferor company and the transferee company. Even if, in the course of the transfer of business, an employee once expressed intent to seek employment with the transferee company, if the succession of employment has not yet been finalized, it should be considered that the employee may express the above contrary intention by withdrawing the expression of intent to seek employment.
Examining the record on the premise of the above legal principles, it is difficult to accept the court below's determination that the plaintiffs' letters of resignation cannot be deemed to contain an intent to abandon reemployment with the Intervenor Company, for the following reasons.
According to the evidence adopted by the court below, the following facts can be ascertained: The plaintiffs submitted their reemployment applications on April 4, 1998, but these were returned on the ground that the submission deadline had passed, and while they had not received an offer of employment from the Intervenor Company, on April 6, when other employees hired by the Intervenor Company came to work and the factory began operations, Plaintiff 1, in a meeting on that day with Non-party 1, the person in charge of personnel affairs at the Intervenor Company, submitted a letter of resignation stating that he would look for another job to make a living; Plaintiff 2, while asserting succession of employment and continuing a sit-in with other union members at the labor union office, submitted a letter of resignation on April 7, 1998, after discussing the matter with his father, following Non-party 2, a section chief of the Intervenor Company's general affairs department, bringing this plaintiff's father to Seoul and urging him to take this plaintiff home to prevent him from participating in union activities; Plaintiff 3, who had not reported to work at either Donghae or the Intervenor Company since April 1, 1998, stated in a telephone conversation with Non-party 3, an employee of the Intervenor Company, that he no longer intended to work at either company, and when Non-party 3 visited this plaintiff's home on April 8 and delivered a letter of resignation form to this plaintiff's father, mailed to the Intervenor Company, two weeks later, a letter of resignation dated retroactively to March 31, 1998. The court below also found that the employees who received the letters of resignation from the plaintiffs were persons who had worked at Donghae and then been employed at the Intervenor Company in charge of personnel affairs, and that the plaintiffs received an additional retirement consolation payment equivalent to two months' salary from Donghae as a result of submitting their letters of resignation. In light of the timing and circumstances of the plaintiffs' submission of their letters of resignation, it is reasonable to view that, although the letters of resignation submitted by the plaintiffs were, in form, letters of resignation from Donghae, they substantively contained an intent to withdraw or abandon the reemployment application to the Intervenor Company as well as an intent to resign from Donghae. The circumstances cited by the court below, such as the fact that the plaintiffs asserted succession of employment to the Intervenor Company and even submitted reemployment applications, or that shortly after submitting their letters of resignation, the plaintiffs filed a petition for remedy against unfair dismissal against the Intervenor Company asserting succession of employment, do not warrant a different conclusion.
Therefore, the court below's determination that the plaintiffs' letters of resignation cannot be deemed to contain an expression of intent to abandon reemployment with the Intervenor Company is erroneous in that it violated the rules of evidence, thereby misapprehending the facts, or misunderstood the legal principles concerning succession of employment and resignation upon transfer of business, and it is clear that this error affected the outcome of the judgment. The grounds for appeal pointing out this error are with merit.
4. Therefore, the original judgment is reversed, and the case is remanded to the court below for further hearing and determination. This judgment is rendered as stated in the order by the unanimous opinion of the Justices participating in the decision.
Justice Yu Ji-dam (Presiding Justice), Cho Mu-je, Kang Sin-uk, Son Ji-yeol (Justice in Charge)