In cases where the Korea Workers' Compensation and Welfare Service pays part of the wages and retirement allowances entitled as a substitute payment to an employee under the former Wage Claim Guarantee Act, and exercises vicariously the claims such as the wages of the employee corresponding thereto in the distribution procedure, the order of dividend among the claims such as the wages, etc. which are subrogated by the Korea Workers' Compensation and Welfare Service and other workers who have not

Articles 7, 8, and 27 of the former Wage Claim Guarantee Act (Amended by Act No. 13047, Jan. 20, 2015); Article 24(2) of the Enforcement Decree of the Wage Claim Guarantee Act; Article 482(1) of the Civil Act

Supreme Court Decision 94Da21160 Decided February 23, 1996 (Gong1996Sang, 1031) Supreme Court Decision 2008Da13623 Decided January 27, 201 (Gong2011Sang, 383)

Korea Workers' Compensation and Welfare Service (Law Firm LLC, Attorneys Park Jeon-young et al., Counsel for the plaintiff-appellant)

Defendant 1 and eight others (Attorneys Kim J-jin et al., Counsel for the defendant-appellant)

Chuncheon District Court Decision 2013Na5562 decided March 25, 2014

The judgment of the court below is reversed, and the case is remanded to the Gangnam Branch Branch Court Panel Division.

The grounds of appeal are examined.

1. Where the Plaintiff entrusted with the authority of the Minister of Employment and Labor pursuant to Article 27 of the former Wage Claim Guarantee Act (amended by Act No. 13047, Jan. 20, 2015; hereinafter “Act”), and Article 24(2) of the Enforcement Decree of the Act, paid a substitute payment to workers on behalf of the employer, the said employee shall subrogate the relevant employer’s right to the wages, etc. to the extent of the amount paid (Article 8(1) of the Act). In such cases, the right to preferential payment recognized as the employee’s right to wage, etc. continues to exist as above (Article 8(2) of the Act).

In the case of a substitute payment on behalf of a creditor with an erroneous repayment of another person's obligation and subrogated to the creditor, the obligee's claim is legally transferred to the person performing the obligation (Article 482(1) of the Civil Act), and Article 8(2) of the Act confirms that this legal doctrine applies even in the case where the Plaintiff paid a substitute payment to a worker with the right of priority payment (see Supreme Court Decisions 94Da21160, Feb. 23, 1996; 2008Da13623, Jan. 27, 201). The Plaintiff who paid a substitute payment to a worker with the right of priority payment is entitled to receive a substitute payment in preference to other creditors in the same order as the Plaintiff is recognized as the subrogated claim.

Therefore, where the Plaintiff pays part of the wages and retirement allowances which the Plaintiff has the right of preferential repayment to a certain employee as a substitute payment, and exercises vicariously his/her right to wages, etc., the Plaintiff’s subrogation claims shall be paid in the same order as those of other workers who have no right of preferential repayment. However, it cannot be deemed that the Plaintiff’s subrogation claims are paid lower than those of other workers who have not received a substitute payment solely on the ground that the Plaintiff’s subrogation claims have the character of public interest for the stabilization of workers’ livelihood.

2. Nevertheless, solely on the grounds indicated in its reasoning, the lower court determined that the instant distribution schedule was justifiable, solely based on the grounds indicated in its reasoning, that: (a) a substitute payment corresponding to a part of a claim, such as wages with the top priority repayment right, was made to an employee; and (b) the Defendants who did not receive substitute payments were entitled to receive it; (c) but (d) a substitute payment was preferentially distributed to the said employee. Therefore, the lower court erred by misapprehending the legal doctrine on the dividend order of the Korea Workers’ Compensation and Welfare

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)