Section 1: Parties and Need for Remedy
Chapter 2: Employer
1. Determination of the Existence of Employer Status under the Labor Standards Act
1.6 Determination of the Existence of a Person's Employer Status Who Has Actually Operated a Company
| Supreme Court Decision on November 11, 1997, Case 97do813 | |||||
| * Appellant: Prosecutor and Defendant
* Defendants: Defendant 1 and 3 others 1. Fact a. Company A was established on March 29, 1978, by Defendant 1 with the purpose of providing construction-related technical services. Defendant 1, as the de facto owner of the company, was registered as its representative director. Although he completed the resignation registration in July 1992 and further completed the resignation registration as a director in March 1995, he continued to directly manage the company as its chairman until around June 21, 1995, when the company went bankrupt. b. Defendant 1 appointed Defendant 2 as the representative director of the company on October 7, 1993, and then appointed him as the head of the Construction Business Division. On April 13, 1995, he appointed Defendants 3 and 4 as representative directors of the company, assigning Defendant 3 as the head of the Supervision Business Division and Defendant 4 as the head of the Engineering Business Division. Additionally, Defendant 1's brother-in-law, Non-Indicted Party 2, was appointed as the company's representative director on May 4, 1995, and was made the head of the Management Business Division. c. The Construction Business Division, Supervision Business Division, and Engineering Business Division of the company did not have departments responsible for personnel or accounting. Instead, the Management and Operations Departments within the Management Business Division handled all personnel and accounting affairs for all employees of the company. d. Furthermore, the task of securing service contracts was carried out by employees of the Operations Department within the Management Business Division. Once the Operations Department secured a contract, it was reported to Defendant 1 via Non-Indicted Party 2. Following Defendant 1's instructions, civil engineering work was handled by the Construction Business Division, supervision contracts by the Supervision Business Division, and design contracts by the Engineering Business Division. In the process of handling these tasks, financial disbursements were initiated by Non-Indicted Party 2, and finalized upon approval by Defendant 1. e. The money collected by each business division from transactions with clients was directly deposited into the Management Business Division, which then used these funds to pay wages to the company's employees. Thus, the responsibility for securing contracts, managing finances, and paying employee wages was under the jurisdiction of Defendant 1 and Non-Indicted Party 2. f. According to the company's delegation of authority regulations, matters such as employee recruitment, promotions, and salary calculations required the approval of Defendant 1, the chairman of the company. Consequently, Defendant 1 issued appointment letters under his name even to entry-level employees and personally issued personnel orders for executives at the director level or higher. For employees below the department head level, personnel orders were issued under the names of the respective representative directors based on internal delegation. Defendants 2, 3, and 4 did not own any shares in the company and, like the other employees, they were professional managers who carried out their assigned duties while receiving monthly salaries from Defendant 1.“ 2. Court Judgment a. According to Article 15 of the Labor Standards Act, the term "employer" refers to those who act on behalf of the employer regarding matters concerning the employer, business management executives, and other employees. Here, the term "business management executive" refers to individuals who assume responsibility for general business management and are delegated all or part of the business management by the employer, representing or acting on behalf of the business externally. The reason the Labor Standards Act extends the definition of "employer" beyond just the business owner to include business management executives is to ensure the effectiveness of each provision of the Labor Standards Act in the workplace through policy considerations. Therefore, business management executives are considered to have been institutionally granted the authority and responsibility to comply with each provision of the Labor Standards Act in accordance with relevant laws, as those who generally hold authority and bear responsibility for business management. However, it is not necessarily required for them to exercise such authority realistically. However, Article 389, Paragraphs 1 and 3, and Article 209 of the Commercial Act stipulate that the representative director of a corporation represents the company and has the authority to conduct all acts related to the company's business, both in and out of court. Moreover, the articles of incorporation of Company A also specify that the representative director represents the company and oversees its operations. Therefore, Defendants 2, 3, and 4 were appointed as representative directors of the company, thereby institutionally endowed with the authority and responsibility to comply with each provision of the Labor Standards Act. Even though Defendant 1 excluded himself from the payment of wages to employees, it cannot be said that the authority or responsibility for the payment of wages granted by the company as an employer has been extinguished. Therefore, Defendants 2, 3, and 4 are considered to be users who must bear responsibility for the violation of obligations, including the settlement of monetary claims, in this Case . b. Defendant 1, formally resigning from the positions of representative director and director of Company A as a shareholder, has effectively managed the company as its chairman. Tasks such as contracting services, financial management, and wage payments to employees fall under the purview of Defendant 1 and the managing director responsible for administration, Defendant 2. Additionally, the hiring, promotion, and salary calculations of employees are under Defendant 1's authorization as the chairman. Therefore, Defendant 1 is considered a user under Article 15 of the Labor Standards Act. However, if it is recognized that unavoidable circumstances, such as financial difficulties due to poor management, prevented the payment of wages or severance pay despite the best efforts, one cannot be held accountable for nonpayment of wages. However, based on the records, it does not seem evident that Defendant 1, despite exerting all efforts, could not prevent wage arrears or nonpayment both before and after the company's bankruptcy to a degree that would absolve him of further legal responsibility due to unavoidable circumstances (grounds for exemption from criminal liability under Article 36, Paragraph 2 of the law). Furthermore, regarding employees subject to the Labor Standards Act, they are individuals who receive remuneration for their labor from the user and provide labor to the user. Therefore, if directors of the company, besides handling duties delegated by the company, also assume certain responsibilities under the supervision of the president and receive remuneration, they can be considered employees under labor standards laws. Hence, it cannot be conclusively determined that being in the position of a director of the company excludes one from being considered an employee. Therefore, upon examining the evidence properly investigated and adopted by the first instance court, it is justifiable to apply Articles 109, 30, and 36 of the Labor Standards Act to the actions of Defendant 1, convicting him for failing to pay wages, bonuses, and retirement benefits to the employees of Company A as determined by the court. There is no legal misunderstanding or error in this regard. |
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