[Plaintiff, Appellee]
[Defendant, Appellant] Chairman of the National Labor Relations Commission
[Intervenor for the Defendant] Korea-America Friendship Association (Korean: 사단법인 한미친선회) (Attorneys Lee Bong-gu and 1 other, Counsel)
[Judgment Below] Seoul High Court Decision 93Gu30572 dated November 17, 1994
[Order]
The judgment below is reversed, and the case is remanded to the Seoul High Court.
[Reasoning]
First, we jointly examine each of the grounds for appeal raised by the Defendant and by Sam Jeong Joint Law Office (Attorneys-at-Law), counsel for the Intervenor for the Defendant, as well as Ground of Appeal No. 3 raised by Attorney Lee Bong-gu, counsel for the Intervenor for the Defendant (including, to the extent it supplements the foregoing, the content of the supplementary brief on grounds of appeal submitted by the Intervenor for the Defendant after the period for submission of the grounds of appeal had expired).
1. In order for a so-called restructuring dismissal (정리해고), whereby an enterprise dismisses employees due to managerial necessity, to be held justified, it must be recognized, upon overall and comprehensive consideration of all relevant circumstances—including whether there existed an urgent managerial necessity, whether the employer made reasonable efforts to avoid the dismissal, whether the persons subject to dismissal were selected according to objective and reasonable criteria, and whether sincere consultation was held with the labor union or the employees, among other matters—that the dismissal in question possesses objective reasonableness and social propriety.
2. Turning to the present case, the record shows the following. The Intervenor for the Defendant, the Korea-America Friendship Association (hereinafter referred to only as "the Intervenor Association"), was established in 1975—at a time when the international situation was perceived as jeopardizing the security situation of the Republic of Korea, amid such developments as the communization and unification of Vietnam, U.S. President Carter's assertion of withdrawal of U.S. forces from Korea, and Kim Il-sung's visit to China—under the direction of the Blue House (Cheong Wa Dae) and under the leading involvement of the then Korean Central Intelligence Agency, for the purpose of strengthening ties with and promoting mutual understanding with the United States Forces Korea. During its early period of establishment and while former senior government officials served as its chairperson, its members participated quite actively in the Association's business activities, and payment of membership dues and the like proceeded relatively smoothly, with the government side providing indirect support as well. However, as the domestic and international situation changed from what it had previously been in the latter half of the 1980s, and as overseas travel became relatively free in accordance with the trend of internationalization, the members' perception of the national security situation and of the Intervenor Association changed substantially, while the government's indirect support also decreased. After 1989, when a person who was not a former senior government official assumed the chairperson's post, the members' degree of participation became markedly passive, some members came to wish to withdraw, and the number of members paying dues fell to less than half of the total membership. As a result, the Intervenor Association—which does not maintain any separate fund or income-producing property for the operation of the corporation but relies mainly on membership dues as its principal financial resource—has faced substantial financial difficulties. Accordingly, the Intervenor Association has not only reduced the type and scale of the projects it previously carried out but has also reduced the scale of its office operations. Meanwhile, in order to overcome these financial difficulties, Non-party 1, the full-time Vice Chairperson, continued from around November 1984 to freeze his own wages, and this wage freeze continued even after 1989. Moreover, between 1989 and 1992, when five employees retired on three separate occasions, the Intervenor Association filled only three of those vacancies, and only with female employees holding positions indispensable to carrying out the Association's work, thereby restraining new hiring of staff. In order to encourage members to pay their dues, the Association obtained, with the cooperation of the U.S. Eighth Army authorities, Eighth Army post passes and golf course passes beginning in the latter half of 1991, and issued these to members who paid their dues. In addition, as the shortfall in dues payments made it difficult even to secure the carry-over funds (이월금) needed to cover the Association's basic expenses such as staff salaries, the Association, from 1989 through 1992, continued each year to receive special contributions from the chairperson or officers, or support funds in the nature of advertising sponsorship fees that were essentially contributions, in order to continue covering the shortfalls caused by unpaid dues. Collection of dues by the Intervenor Association is in practice necessarily dependent on the voluntary payment by members, and, given the nature of the Association, payment of dues cannot in fact be compelled. However, in early 1993, when the Korea Foundation, which had provided a special contribution of KRW 25,000,000 in the preceding year, notified the Association that it could not continue to make contributions to the same project, and when the officers likewise notified the Association that special contributions from them would be difficult, the chairperson of the Intervenor Association, after consulting with the above Non-party 1, the full-time Vice Chairperson, determined that a reduction in personnel was unavoidable in light of the recurring annual financial difficulties. On March 22, 1993, having first set the criteria as those whose workload was light, whose job performance ability was inferior, whose wage level was high, and non-regular employees, the Association decided to reduce staff by one person from among the General Affairs Department employees and one person from among the Business Department employees. It accordingly informed Non-party 2, who was working as a contract employee (촉탁직원) attached to the General Affairs Department, of the Association's difficult circumstances and recommended that she resign, and, having obtained her consent, had her resign in April of that year. The Association then determined that it had no choice but to dismiss the Plaintiff, who was then working as the head of the Business Department, was relatively well aware of the above-described difficulties facing the Intervenor Association, and was considered to lack sufficient English-language ability necessary for contact with the U.S. forces in Korea and others. On May 18 of that year, the Association informed the Plaintiff that he would be dismissed, and decided that the duties handled by the head of the Business Department would thereafter be directly overseen by the Secretary-General, thereby minimizing the organization to only the four staff members indispensable to carrying out its work: one Secretary-General, indispensable for the promotion of the projects themselves; one Chief of the General Affairs Section, a position requiring proficient English-language ability for contact with the U.S. forces and others; one female employee in charge of accounting and general affairs; and one female employee in charge of the practical work of the Association's home-visit hospitality project (가정초대사업). When the Plaintiff objected to this, the Intervenor Association, on May 31 of that year, gave the Plaintiff notice that he would be dismissed effective June 30 of that year. These facts can be established.
In light of the above-established facts, the Intervenor Association—which does not maintain any separate fund or income-producing property for the operation of the corporation, but relies mainly on membership dues paid by its members as its principal financial resource—found itself, from 1989 onward, in a situation in which, year after year, due to members' failure to pay dues, it was unable even to properly pay staff salaries without financial support in the form of special contributions from the chairperson or officers or advertising sponsorship fees that were essentially contributions. Given that, in early 1993, it was notified by the officers, among others, of the discontinuation of such financial support as special contributions, and thereafter reduced its staff, this reduction must be regarded as based on an urgent operational necessity. The carry-over funds referred to in the judgment below were merely funds set aside to prevent inability to pay, or delay in payment of, salaries and the like that must be paid within statutory deadlines, owing to the shortfall in dues collection, and cannot be regarded as surplus profit arising from the Intervenor Association's business operations. Accordingly, even if the Intervenor Association carried over, as found by the court below, funds intended to cover the following year's basic expenses such as staff salaries, this does not warrant a different conclusion. Furthermore, in light of the fact that the Intervenor Association, in order to overcome its continuing financial difficulties, reduced the type and scale of its projects and the scale of its office; obtained and issued Eighth Army post passes and golf course passes to members who paid their dues, in order to encourage payment of dues; requested special contributions and the like from the chairperson and officers, while at the same time continuing to freeze the wages even of the full-time Vice Chairperson, an officer of the Association; had the contract employee recommended to resign first; that collection of dues by the Intervenor Association is in practice necessarily dependent upon the voluntary payment of members and, given the nature of the Association, payment of dues cannot in fact be compelled; and that, in light of the content of the duties and the personnel composition of the Intervenor Association's staff, it does not appear that the Association was in a position to carry out reassignment or to solicit voluntary retirees or temporary leave-takers—it must be said that the Intervenor Association made reasonable efforts to avoid dismissal prior to dismissing the Plaintiff. Moreover, considering the organizational composition of the Intervenor Association's staff and the fact that, given the nature of the Association's work, an employee who must make outside contact with the U.S. forces and others is required to have proficient English-language ability, it was also reasonable to select the Plaintiff, who was judged to lack sufficient English-language ability, as the person to be dismissed. Furthermore, in light of the Plaintiff's position and career, and considering that the Association was not in a position to consider reassignment or the like for the Plaintiff, and that even if consultation with the Plaintiff had been undertaken, it appears unlikely that any outcome other than dismissal could reasonably have been expected, the mere fact that, in this case—where the procedure of advance notice of dismissal, among others, was followed as described above—no procedure of prior consultation, etc. was undertaken with the Plaintiff, who was well aware of the Intervenor Association's difficult circumstances, cannot render the dismissal of the Plaintiff invalid. Taking all of these circumstances into overall and comprehensive consideration, there is room to view the dismissal of the Plaintiff as having objective reasonableness and social propriety, and thus as justified.
Even granting that, as found by the court below, the Intervenor Association raised staff wages by 10% each year from 1990 onward, paid special bonuses of over 100% in addition to the annual bonus of 500%, newly replaced its official vehicle in 1993, and increased the entertainment/discretionary expense budget (판공비) for that year, if, as the Intervenor asserts, the wage increases and special bonus payments were intended to raise the wage level of poorly-paid staff, such that even the increased salary level of the staff still fell short of 80% of the salary for the same rank at other companies; if the 1993 replacement of the official vehicle was carried out because the previous vehicle, having already traveled over 150,000 kilometers, had become worn and required substantial repair costs, such that the cost of vehicle replacement had been budgeted in the 1992 budget plan, approved by the regular board of directors' meeting and general assembly, and executed from the budget at the end of 1992; and if the increase in the entertainment/discretionary expense budget was merely a raise of KRW 100,000 per month after 14 years, an unavoidable measure taking into account the intervening rise in prices—then these must be regarded as measures necessary for carrying out the Intervenor Association's work, and moreover, the results thereof do not appear to be of such a degree as to render meaningless the Intervenor Association's above-described efforts to avoid dismissal. Accordingly, the mere existence of such facts cannot be taken as showing that the Intervenor Association failed to exert reasonable efforts to avoid dismissal.
Nevertheless, the court below, having found only the facts stated in its judgment, determined on the basis of those findings that the Intervenor Association's financial situation continued to show a surplus, such that there was no urgent managerial necessity requiring the dismissal of the Plaintiff; that the Association made no particular effort to avoid dismissal; that it is doubtful whether the Plaintiff even fell within the restructuring criteria presented by the Intervenor Association; that the failure to consider long service, which should receive greater protection from dismissal, in setting the restructuring criteria, lacked reasonableness and fairness; and that the Association failed to hold sincere consultation with the Plaintiff prior to the dismissal—and on these grounds concluded that the dismissal of the Plaintiff in this case was an unjust dismissal. In so holding, the court below either misapprehended the legal principles governing restructuring dismissal, or failed to exhaust its examination of all the circumstances relevant to determining the justifiability of the restructuring dismissal, thereby erring in its fact-finding regarding the justifiability of the restructuring dismissal in a manner that affected the judgment. Accordingly, the argument pointing this out has merit.
3. Therefore, without examining the remaining grounds of appeal, the judgment below is reversed, and the case is remanded to the court below, this Judgment being rendered pursuant to the unanimous opinion of the participating Justices, as set forth in the Order.
Supreme Court Justices: Cheon Gyeong-song (Presiding Justice), Ji Chang-gwon, Shin Seong-taek (Justice in Charge)