Section 2: Individual Labor Relations
Chapter 5: Corporate Change
4. Incorporation, etc According to Regulation of Law and Administrative Measure, and Employment Relation
4.4 Contractual Transfer Decision for Insolvent Financial Institution and Employment Succession
| Supreme Court Decision on May 30, 2003, Case 2002du23826 | |||||
| * Plaintiff, Appellant (Selected Party): Park ○○ and 5 others
* Defendant, Appellee: ○○ Bank Co., Ltd. 1. Facts a. Gyeonggi Bank, due to the deterioration of its asset quality from major corporate loan defaults, reached a point where normalization of operations was impossible. Consequently, on June 29, 1998, the Financial Supervisory Commission implemented a decision to suspend operations, suspend the duties of its executives, appoint a conservator, and transfer its contracts, according to the old Financial Industry Restructuring Act. b. According to the contract transfer document, as of the transfer date, Gyeonggi Bank's banking and credit card businesses, including related assets and liabilities and the contractual statuses that formed their basis, were to be transferred to the defendant. However, certain assets necessary for the payment of wages and severance to employees hired by Gyeonggi Bank, such as severance provision funds, remained with Gyeonggi Bank. c. Meanwhile, the defendant acquired separate office properties and various business fixtures and other fixed assets owned by Gyeonggi Bank through a separate sales agreement. Subsequently, Gyeonggi Bank had its banking license revoked and was declared bankrupt. d. The defendant hired just over 40% of Gyeonggi Bank's employees as contract staff for the defendant. These employees resigned from Gyeonggi Bank and then signed employment contracts with the defendant, were completely reassigned to various branches according to the defendant's new employee placement plan, and the conservator of Gyeonggi Bank issued dismissal orders for the remaining employees, effectively dismantling Gyeonggi Bank's human organization. 2. Court Judgment a. The transfer of a business implies transferring an organized entity, the human and material organization as a whole with a specific business purpose, maintaining its identity. When such a business transfer occurs, the employment relationships of the involved employees are, in principle, comprehensively succeeded by the acquiring company. b. Whether a business transfer has occurred is not determined merely by how much business property has been transferred but also by whether the original business organization is maintained and can function in whole or as a significant part thereof. Therefore, even if only part of the business assets is reserved and the business facilities are transferred, if it is socially acknowledged that the transferred portion still maintains the original organization, it is regarded as a business transfer. Conversely, even if all business assets are transferred but the organization is dismantled in the process, it cannot be considered a business transfer. c. The decision to transfer contracts issued by the Financial Supervisory Commission under Article 14, Paragraph 2 of the old Financial Industry Restructuring Act (before amended as Law No. 5549 on September 14, 1998) is an administrative action that brings about legal effects in civil law by transferring the contractual status in financial transactions based on the unilateral decision of the Financial Supervisory Commission. This method involves selectively transferring only some of the assets and liabilities of distressed financial institutions to third-party acquiring financial institutions as a way to resolve these institutions. d. It cannot be said that the decision to transfer contracts under Article 14, Paragraph 2 of the old Financial Industry Restructuring Act (before amended as Law No. 5549 on September 14, 1998), which transferred only some of the healthier assets of the distressed financial institutions to other financial institutions for the protection of depositors and resolution of these institutions, resulted in a business transfer that includes employment succession. Furthermore, even though the defendant later acquired some remaining fixed assets of Gyeonggi Bank through a separate agreement and hired some of Gyeonggi Bank's employees to resume banking operations at some former branches of Gyeonggi Bank under the defendant's name, this took place during the process of dismantling the organization due to the cancellation of its banking license and thus cannot be considered a business transfer. |
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