Section 2: Individual Labor Relations
Chapter 5: Corporate Change
4. Incorporation, etc According to Regulation of Law and Administrative Measure, and Employment Relation
4.3 Integration and Abolishment of Institutions Based on Administrative Agency Guidelines and Employment Relation
| Supreme Court Decision on December 27, 2007, Case 2007da51017 | |||||
| * Plaintiff, Appellant: A
* Defendant, Appellee: ㅇㅇㅇㅇ Tourism Research Institute Foundation 1. Facts a. The plaintiff was employed as a researcher by the Korea Culture Policy Development Institute (hereafter 'the Development Institute') starting September 1,1994, and had been working on a yearly contract basis from January 1,1999, until receiving a notice of non-reappointment on December 31,1999. Subsequently, the plaintiff filed an unfair dismissal complaint with the Seoul Regional Labor Commission on March 30,2000, and was reinstated to his original position after being acknowledged as unfairly dismissed. b. The Development Institute appealed to the National Labor Relations Commission, which, on December 12,2000, overturned the regional commission's decision, citing that the Development Institute had not abused its discretion. The plaintiff then filed a lawsuit to annul the Central Labor Commission's decision, and through the Seoul High Court, the Supreme Court eventually dismissed the Development Institute's appeal on July 8,2005, thus confirming the annulment of the Central Labor Commission's decision. c. Meanwhile, in 2002, while the plaintiff's lawsuit was ongoing, the Ministry of Culture and Tourism decided to merge the Development Institute with the Korea Tourism Research Institute Foundation (hereafter 'Tourism Research Institute'). Following this decision, the Development Institute held a board meeting on September 18,2002, resolved to dissolve, completed its dissolution registration on December 4,2002, and on the same day, the establishment registration of the defendant corporation was completed. d. The defendant corporation, established as an agency under the Basic Law on Management of Government-affiliated Agencies (repealed as of January 19, 2007, Law No. 8258), was created not by an enactment or amendment of law with equivalent effect but through an administrative measure by the Ministry of Culture and Tourism. Its articles of association or other regulations did not specifically address whether the employment relationships of employees from the dissolved Development Institute or Tourism Research Institute would be succeeded. 2. Court Judgment a. If a new corporation is established through internal policies or administrative measures of an administrative agency, absorbing the functions of a previous entity that performed identical functions and succeeding its rights and obligations while maintaining its identity and absorbing its human and material organization as a whole to fulfill a specific business purpose, so the original business organization is maintained, such that the organization can function in whole or as a significant part thereof, the employment relationships of the employees of the dissolved entity are, in principle, comprehensively succeeded by the new corporation unless there is a specific contrary agreement excluding some employment relationships from succession between the previous entity and the new corporation. If such a special agreement exists, the succession of employment relationships might not occur according to that agreement. However, such special agreements are substantively equivalent to dismissal, so under Article 30, Paragraph 1 of the former Labor Standards Act (before the full revision on April 11,2007, as Law No. 8372), a justifiable reason must exist for such agreements to be valid. b. While the defendant corporation appears to have taken over the business, property, and rights from the Development Institute and the Tourism Research Institute, maintaining the material organization required for the previous business as a whole, it formally adopted a procedure of dismissal and special recruitment, assuming that it would not succeed the employment relationships of the employees from these institutes. However, in reality, it rehired most of the employees who had worked for the previous corporations without undergoing new hiring procedures and assigned them to positions corresponding to their previous ranks to continue performing their former duties. Considering these circumstances, it is reasonable to conclude that the human organization related to the previous corporations' business was also succeeded by the defendant corporation, maintaining its identity. Therefore, unless there are special circumstances, the employment relationships of the employees belonging to the dissolved Development Institute and Tourism Research Institute were in principle comprehensively succeeded by the newly established defendant corporation. Moreover, although a final judgment confirming the existence of a valid and effective employment relationship between the plaintiff and the Development Institute was only established after the establishment of the defendant corporation, given the course of litigation, including the remedial orders recognizing the plaintiff's non-reappointment as unfair dismissal, a retrial decision, and the plaintiff's victories in the first and second instance administrative lawsuits, it is clear that the defendant corporation was aware that the employment relationship between the plaintiff and the Development Institute validly continued at the time of its establishment. Therefore, it should be concluded that the employment relationship between the plaintiff and the Development Institute was also succeeded by the defendant corporation. c. Nevertheless, the court of first instance judged that the defendant corporation did not succeed the employment relationships of the employees who worked at the Development Institute and the Tourism Research Institute for the same reasons stated in that judgment. This judgment contains a legal error in understanding the principles of employment relationship succession following a business transfer, which affected the outcome of the decision. |
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