Section 1: Parties and Need for Remedy
Chapter 3: Entity Eligible for Remedy and Need for Remedy, etc.
5. Business Closure and Need for Remedy
5.3 Extinction of Need for Remecy upon Dissolution of Business Owner's Legal Personality after Substantial Business Closure
| Supreme Court, December 24, 1991, Decision No. 91nu2762 | |||||
| * Plaintiff, Appellant: Baek ○○
* Defendant, Appellee: Chairman of the Central Labor Commission * Intervenor Defendant: Park ○○ 1. Facts: a. The plaintiff was the union chairman at Anyang Electronics (hereinafter referred to as the "company"), where the intervenor was the CEO. The union and the company engaged in collective bargaining nine times from April 3 to May 2, 1989, but negotiations failed, leading to the union filing dispute notifications with relevant authorities on May 3 and June 14. In response, the company declared a workplace closure on May 17. b. Negotiations continued between the union and the company until October 27, 1989, without reaching a compromise. During this period, union members orchestrated mass walkouts, tardiness, and absenteeism, and the plaintiff engaged in union activities linked with members of other company unions in July and August. c. On July 1,1989, 18 management and technical staff of the company resigned unilaterally, with some establishing a separate subcontractor called Ashin Electronics. The company had been thriving in 1987 and 1988, growing to the extent of having subcontractors due to a favorable export environment for electronic products. d. However, in 1989, due to a sharp decline in productivity from labor disputes, a shortage of technical staff, and deteriorating profitability due to currency appreciation, the company lost motivation to manage. On October 23,1989, a general meeting of shareholders resolved to dissolve the company, appointed the intervenor as the liquidator, and announced on November 2,1989, that severance pay, one month's wage equivalent as dismissal compensation, and living allowances would be paid. Those employees who accepted were paid, but for 37 employees who did not, the funds were deposited at the Suwon District Court on November 30. The company completed the liquidation process by September 18,1990. e. Meanwhile, the former CEO of the company, Han ○○, left in September 1988 and established a company called Woorim Corp., beginning an electronics manufacturing business similar to that of the original company. 2. Court Judgment: a. If the facts are as stated, the company has indeed ceased operations substantially and its corporate entity has been dissolved. Furthermore, Han ○○ had already established and was managing Woorim Corp. and some managers were independently operating Ashin Electronics before the labor disputes at the original company became intense. It is therefore not feasible to consider Woorim Corp. or Ashin Electronics as the same business entity as the original company. At this point, with no substantial business entity available for the plaintiff to return to, there is no benefit in pursuing a remedy for unfair labor practices. b. Dismissing employees by way of a sham closure clearly constitutes an unfair labor practice. A sham closure refers to a situation where a business is dissolved not with a genuine intent to cease operations, but as a means to disrupt or dissolve the union or deter union activities, by dismissing all union members and then continuing business activities through a new entity while excluding union members, thus maintaining the essence of the business despite the purported dissolution. c. The CEO of Company A had established Company B long before the labor disputes at Company A led to significant declines in productivity and a loss of managerial will, which resulted in the closure of Company A. There is no evidence that Company A funded the establishment of Company B. Moreover, amid intensifying labor disputes and subsequent workplace closures at Company A, some technical staff unilaterally resigned and established a separate subcontractor, Company C. However, it is difficult to regard Company B or Company C as the same entity as Company A; therefore, the dissolution and closure of Company A are not considered a sham closure. d. If the circumstances of the company's closure are as acknowledged by the lower court, then it cannot be deemed invalid as an abuse of the freedom of occupational or business choice. Given that Company A has substantively ceased operations and neither Woorim Corp. nor Ashin Electronics are recognized as essentially the same entities that succeeded Company A, and the closure of Company A cannot be deemed invalid, there is also no benefit in filing a remedy application for unfair labor practices that aims to maintain the adversarial relationship between labor and management, premised on the existence of the company. |
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