Section 1: Parties and Need for Remedy
Chapter 1: Employees
2. Determination of the Existence of Executive's and Internal Subcontractor[so-sa-jang]'s Employee Status under the Labor Standards Act
2.2 Unregistered Executive
| Supreme Court Decision No. 2012DA10959, rendered on November 9, 2017 (Denial of Employee Status for Unregistered Executive) | |||||
| Plaintiff, Defendant, and Appellant: A Defendant, Appellant, and Appellee: MetLife Life Insurance Company Facts a. The defendant operated an executive system that distinguished executives from employees by establishing executive personnel regulations separate from employment regulations applicable to all other employees, thereby governing the appointment, dismissal, compensation, and treatment of executives, including both registered and unregistered executives. b. The plaintiff, while working as a manager at ○○○○ Bank, was appointed as an unregistered executive, a vice president, on December 15, 2003, overseeing the "Bancassurance and Direct Marketing" division as the Function Head. There was no separate employment contract between the plaintiff and the defendant. c. As an executive responsible for the "Bancassurance and Direct Marketing" division, the plaintiff exercised relatively broad authority in planning medium to long-term business strategies, setting performance evaluation criteria, executing sales promotion expenses related to operations, planning and coordinating telemarketing activities, and participating in decision-making processes regarding significant contracts or monthly reports, subject only to the approval of the CEO. Additionally, the plaintiff participated as a member of the Executive Committee, which handled matters such as the company's long-term and short-term business plans, sharing and discussing the overall and departmental management status, and deciding on major management issues requiring deliberation and resolution. d. According to the employment regulations and executive personnel regulations, the positions of executives and other employees of the defendant were strictly distinguished. When a staff member was appointed as an unregistered executive and subsequently retired as a staff member, they were considered to have retired as staff members and were paid retirement benefits accordingly. Unregistered executives received compensation and retirement benefits equivalent to those of registered executives as stipulated in the "Executive and Auditor Compensation and Retirement Benefits Payment Regulations," and all benefits, including fringe benefits, were provided in accordance with the regulations for registered executives. Consequently, the plaintiff received preferential compensation and differentiated fringe benefits such as company cars and sports club memberships equivalent to those of registered executives. e. The defendant dismissed the plaintiff from the position of Vice President of the "Bancassurance and Direct Marketing" division on July 30, 2007, due to poor business performance in the department, among other reasons, and placed the plaintiff on standby at the HR Support Team on August 3, 2007. Further, on May 22, 2008, the plaintiff was subjected to a two-month suspension from work due to reasons such as "① Lack of efforts to improve poor business performance (lack of efforts to strengthen cooperation with major banks), ② Absence of leadership (delays in decision-making leading to delays in product launches and insufficient promotion with major banks resulting in loss of business opportunities), ③ Lack of management skills (failure to prevent the departure of excellent employees and inhumane management practices), ④ Lowest performance evaluation grade (lowest performance evaluation grades for two consecutive years: Grade 2 in 2006, Grade 1 in 2007)," and subsequently dismissed on August 1, 2008, in accordance with Article 16, Paragraph 3 of the amended executive personnel regulations. Judgment a. Even if an executive of a company appears to be an employee under the Labor Standards Act due to receiving compensation in return for providing labor under the supervision or command of the CEO, if the nature of the entire range of tasks assigned to the executive and the actual performance of those tasks extend beyond merely providing labor under the supervision and control of the employer, and if the executive is responsible for overseeing specific areas independently while exercising considerable authority and responsibility, then it is difficult to consider such an executive as an employee under the Labor Standards Act. Especially in the case of executives in large-scale companies who are appointed specifically to oversee the management of specialized fields, independently oversee the operation of those areas, and participate in decision-making processes related to company management similarly to registered directors, and receive differentiated compensation and benefits compared to regular employees, it is necessary to consider these specific circumstances regarding the appointment process, assigned tasks, and treatment. b. In a case where the issue of whether an individual, dismissed from the position of unregistered executive at a large-scale financial company A, overseeing the "Bancassurance and Direct Marketing" division, qualifies as an employee under the Labor Standards Act is in question, considering various circumstances such as the size and organizational structure of company A, its unique characteristics as a large-scale financial institution, the circumstances surrounding the external appointment of the individual as an unregistered executive, the individual's professional abilities considered during the process, the correlation with the assigned position, the comprehensive authority and actual performance of duties, the degree of the individual's participation in decision-making and management of company A, the distinction and separate appointment of executives and employees at company A, the significantly preferential compensation and treatment received by the individual compared to regular employees, the circumstances of dismissal, and the purpose thereof, it is difficult to conclude that the individual qualifies as an employee under the Labor Standards Act, as the individual, appointed as an unregistered executive, exercised a considerable degree of independent authority and responsibility in overseeing the entire range of tasks related to a specific professional area, rather than merely providing labor under the direction and supervision of the CEO. |
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