[1] In a case where the rules of employment are revised to a disadvantage to an employee with a collective consent as stipulated in Article 94 of the Labor Standards Act, whether the content of the existing individual labor contract that sets more favorable terms and conditions of employment according to the revised rules of employment is modified (negative), and whether the content of the employment contract more favorable than the rules of employment is preferentially applied (affirmative)

[2] The case holding that the judgment below erred by misapprehending legal principles, in a case where Gap and Eul, an employer-employee, concluded a labor contract with an annual salary contract with the consent of the labor union organized by the majority of the workers belonging to Eul, and established and publicly announced the rules of operation of the wage peak system, which is the rules of employment, and the above rules of employment, determined the basic annual salary stipulated in the annual salary contract as the standard annual salary for the total annual salary added welfare expenses, and provided that 60% of the standard annual salary for the workers whose retirement age is less than 2 years, and 40% of the standard annual salary for the workers whose retirement age remains less than one year, and provided that Gap would not agree to the application of the wage wage peak system, but Eul paid Gap to Gap the wage reduced pursuant to the rules of employment even if the consent of the majority labor union was obtained with respect to the rules of employment, the existing employment contract remains valid, and the amount of the annual salary stipulated in the existing employment contract can not be reduced pursuant to the rules of employment

[1] Article 97 of the Labor Standards Act provides that “Any labor contract that provides for working conditions which fall short of the standards stipulated in the employment rules shall be null and void. In this case, the invalidated part shall be governed by the standards stipulated in the employment rules.” The above provision provides that if the working conditions stipulated in the employment rules fall short of the standards stipulated in the employment rules, the part which falls short of the employment rules in the employment contract shall be null and void by granting the mandatory and supplementary effect as the minimum standard to the employment rules, and the part thereof shall be in compliance with the standards stipulated in the employment rules, thereby preventing workers from being in subordinate position from taking into account the form of agreement between individual labor and management, thereby preventing workers from taking over the working conditions which fall short of the standards stipulated in the employment rules. In light of such provisions and legislative intent, if Article 97 of the Labor Standards Act is interpreted to oppose the above provisions, the individual labor contract that

Meanwhile, Article 94 of the Labor Standards Act provides, “An employer shall hear the opinion of a labor union with respect to the preparation or amendment of the rules of employment, if there is a labor union organized by the majority of workers at the relevant business or workplace, or if there is no labor union organized by the majority of workers, such consent shall be obtained.” The above provision stipulates that if an employer unilaterally amends the rules of employment to the disadvantage of workers, it shall obtain the above collective consent to protect workers in order to protect workers. In addition, Article 4 of the Labor Standards Act provides, “The working conditions shall be decided on the basis of free will in an equal status as the workers and the employer.” The above provision aims to protect workers by unilaterally stipulating that the employer shall not unilaterally determine the working conditions, and that the working conditions should be decided by the free agreement between the parties in a labor relationship. Considering the contents and purport of each provision, collective consent as prescribed by Article 94 of the Labor Standards Act is merely a requirement for effective modification of the rules of employment, and thus, the principle of freedom of employment prescribed under Article 4 of the Labor Standards Act should still be observed.

Therefore, even if the revised rules of employment to be disadvantageous to workers obtained collective consent, they cannot be deemed to take precedence over the existing individual labor contracts that set the more favorable terms and conditions of employment. In this case, the contents of labor contracts shall remain effective, the contents of labor contracts shall not be modified according to the revised rules of employment, and the contents of labor contracts which are more favorable than the rules of employment shall be applied preferentially, unless the employees

[2] The case holding that in a case where Gap and Eul, an employer, concluded a labor contract as an annual salary contract with the labor union organized by the majority of the workers belonging to Eul and established and publicly announced the rules of operation of the wage peak system, which is the employment rules, after obtaining the consent of the labor union organized by the majority of the workers belonging to Eul, the above rules of employment set the total annual salary calculated by adding welfare expenses to the basic annual salary stipulated in the annual salary contract as the standard annual salary, and stipulates that 60% of the standard annual salary for workers whose retirement age is less than 2 years, and 40% of the standard annual salary for workers whose retirement age remains less than one year, and stated that Gap would not consent to the application of the wage wage peak system, but Eul paid Gap to Gap, the above rules of employment are contents that reduce the amount of annual salary set in the labor contract with respect to Gap, who is the workers subject to the application of the wage peak system, and thus, Gap did not consent to the amendment of the existing rules of employment in accordance with the existing rules of employment, even if it did not consent to the existing rules of employment.

[1] Articles 4, 94, and 97 of the Labor Standards Act / [2] Articles 4, 94, and 97 of the Labor Standards Act

Plaintiff (Attorney Kim Young-deok, Counsel for the plaintiff-appellant)

Yeongdeungpo Leisure Co., Ltd. (Attorney Lee Young-chul, Counsel for the defendant-appellant)

Suwon District Court Decision 2017Na68660 decided December 7, 2017

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 97 of the Labor Standards Act provides that “Any labor contract that provides for working conditions which fall short of the standards stipulated in the employment rules shall be null and void. In such a case, the invalidated part shall be governed by the standards stipulated in the employment rules.” The above provision provides that if the working conditions stipulated in the employment rules fall short of the standards stipulated in the employment rules, the part which falls short of the employment rules in the labor contract shall be null and void by granting the mandatory and supplementary effect as the minimum standard to the employment rules, and that part shall be in compliance with the standards stipulated in the employment rules, thereby preventing workers from being in subordinate position from taking into account working conditions which fall short of the standards stipulated in the employment rules. In light of such provisions and legislative intent, if Article 97 of the Labor Standards Act is interpreted to oppose the above provisions, the individual labor contract that sets more favorable working conditions than the standards set in the employment rules shall be effective and

Meanwhile, Article 94 of the Labor Standards Act provides, “An employer shall hear the opinion of a labor union with respect to the preparation or amendment of the rules of employment, if there is a labor union organized by the majority of workers at the relevant business or workplace, or if there is no labor union organized by the majority of workers, such consent shall be obtained.” The above provision stipulates that if an employer unilaterally amends the rules of employment to the disadvantage of workers, it shall obtain the above collective consent to protect workers in order to protect workers. In addition, Article 4 of the Labor Standards Act provides, “The working conditions shall be decided on the basis of free will in an equal status as the workers and the employer.” The above provision aims to protect workers by unilaterally stipulating that the employer shall not unilaterally determine the working conditions, and that the working conditions should be decided by the free agreement between the parties in a labor relationship. Considering the contents and purport of each provision, collective consent as prescribed by Article 94 of the Labor Standards Act is merely a requirement for effective modification of the rules of employment, and thus, the principle of freedom of employment prescribed under Article 4 of the Labor Standards Act should still be observed.

Therefore, even if the revised rules of employment to be disadvantageous to workers obtained collective consent, they cannot be deemed to take precedence over the existing individual labor contracts that set the more favorable terms and conditions of employment. In this case, the contents of labor contracts shall remain effective, the contents of labor contracts shall not be modified according to the revised rules of employment, and the contents of labor contracts which are more favorable than the rules of employment shall be applied preferentially, unless the employees

2. A. According to the reasoning of the lower judgment and the record, the following facts and circumstances are revealed.

1) On March 2014, the Plaintiff and the Defendant, an employer, who is a class 1 employee, concluded an annual salary contract with the basic annual salary amounting to KRW 70,90,000 (hereinafter “instant employment contract”). When the said basic annual salary is converted into monthly, the monthly basic salary amount is KRW 5,908,330.

2) On June 25, 2014, the Defendant enacted and publicly announced the rules of employment operation (hereinafter “instant rules of employment”) with the consent of the labor union organized by a majority of the employees employed by the Defendant. The instant rules of employment stipulate that the total annual salary calculated by adding welfare expenses to the basic annual salary stipulated in the annual salary contract shall be the base annual salary for wage volume, and that 60% of the standard annual salary for wages shall be paid to workers whose retirement age remains less than two years, and 40% of the standard annual salary for wage volume shall be paid to workers whose retirement age remains less than one year.

3) The Defendant calculated the monthly basic salary of 3,545,00 won (==5,908,330 won x 0.6) on the ground that the Plaintiff remains below the retirement age of 1 year from July 1, 2015 to June 30, 2015, as prescribed by the instant employment rules (based on the basic annual salary under the annual salary contract, not based on the wage pay standard annual salary), and that the monthly basic salary remains below the retirement age of 2,363,30 won (5,908,330 won x 0.4) and paid wages in consideration of the reduction following the disposition of suspension.

4) On September 23, 2014, the Defendant notified the Defendant of the wage under the application of the wage peak system, and the Plaintiff expressed his/her intent not to consent to the application of the wage peak system to the Defendant. Meanwhile, the Plaintiff’s contents of business before and after the application of the instant rules of employment do not seem to have

B. Examining the above facts and circumstances in light of the legal principles as seen earlier, the instant rules of employment provide that the annual salary amount shall be reduced by 60% or 40% for the Plaintiff, who is an employee subject to the application of the wage peak system, and therefore, the instant employment contract is more favorable than the instant rules of employment regarding the annual salary amount. Therefore, since the Plaintiff did not consent to the modification of the instant employment contract in accordance with the criteria of the instant rules of employment, the instant employment contract that stipulates working conditions more favorable than the instant rules of employment shall be preferentially applied to the annual salary amount. Ultimately, even if the instant rules of employment obtained the consent of the majority trade union, the instant employment contract remains valid, and the amount of the annual salary under the instant employment contract cannot be reduced by the instant rules of employment.

3. Nevertheless, the lower court determined that the instant rules of employment were applied not only to the Plaintiff, but also to the Plaintiff, solely based on the circumstances indicated in its reasoning, including that the instant rules of employment were effective with collective consent. In so doing, the lower court erred by misapprehending the legal doctrine on the relationship between the rules of employment and the labor contract, and amendment to the disadvantage of the rules of employment

4. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jong-hee (Presiding Justice)