[1] In a case where the labor and management agreed to exclude a regular bonus from the ordinary wage and set the wage level on the premise thereof, whether an employee’s assertion that the labor-management agreement becomes null and void and claims an additional statutory allowance calculated by including a regular bonus in the ordinary wage violates the principle of trust and good faith, and whether an employee’s additional statutory allowance claim violates the principle of trust and good faith, and whether the employee’s additional statutory allowance claim may cause serious

[2] In a case where the claim for additional legal allowances by Gap, a worker Eul, etc., belonging to Gap corporation, is against the principle of good faith, the case holding that the claim by Eul, etc. cannot be deemed to be in violation of the principle of good faith on the ground that the additional legal allowances are paid in light of all circumstances, and thus, it cannot be readily concluded that

[1] The principle of trust and good faith (hereinafter “the principle of trust and good faith”) refers to an abstract norm that a party to a legal relationship should not exercise a right or perform an obligation in a manner that violates the principle of trust and good faith, taking into account the other party’s interest. In order to deny the exercise of a right on the ground that it violates the principle of trust and good faith, it should have been given to the other party or objectively deemed that the other party has a good faith. The exercise of a right against the other party’s trust and good faith should reach such a level that is not acceptable in light of the concept of justice.

If the contents of a labor-management agreement, such as a collective agreement, are null and void in violation of the Labor Standards Act’s compulsory provisions, it would result in denying the legislative intent of the labor-management agreement that violates the principle of good faith. Therefore, such assertion is not a violation of the principle of good faith. However, the application of the principle of good faith is not excluded without exception to the assertion that the labor-management agreement is null and void on the ground that the contents of the labor-management agreement violate the compulsory provisions of the Labor Standards Act. Not only is it necessary to satisfy the general requirements for applying the principle of good faith but also exceptional cases where there are special circumstances to accept the preferential application of the principle of good faith despite the compulsory nature of the Labor Standards Act, the assertion that the labor-management agreement is null and void cannot

Under the premise that a regular bonus in a labor-management agreement does not per se constitute ordinary wages, if the labor-management agreement agrees to exclude a regular bonus from the calculation standard of ordinary wages and sets the level of wages on the premise thereof, the labor-management agreement’s demand for the payment of additional statutory allowances based on the regular bonus added to ordinary wages, thereby causing serious managerial difficulties or endanger the existence of the company, may be substantially contrary to the concept of justice and equity.

However, when determining whether to preferentially apply the principle of good faith rather than the mandatory provisions governing labor relations, it is necessary to fully consider the legislative intent of the Labor Standards Act, etc. that intends to set the minimum standard of working conditions and guarantee and improve the basic livelihood of workers. Moreover, since the management status of an enterprise may change from time to time according to various economic and social circumstances inside and outside the company, it may result in the actual transfer of risks arising from the management of an enterprise to an employee, if rejection of a worker’s additional statutory allowance claim based on ordinary wage is made for the reason that the company’s additional legal allowance claim would cause serious managerial difficulties or endanger the existence of the enterprise. Therefore, it is necessary to carefully and strictly determine whether the worker’s additional statutory allowance claim is contrary to the principle of good faith

[2] In a case where the claim for additional statutory allowances of Eul, etc., who is an employee of Gap corporation, is in violation of the good faith principle, the case holding that the judgment below erred by misapprehending the legal principles on the ground that the additional statutory allowances of Eul, etc., for which other employees of Gap corporation, who did not institute a lawsuit in the future, are merely 2-4% of the annual sales of Gap corporation, 5-10% of the gross personnel expenses of the pertinent year, and the amount of additional statutory allowances in light of the earned surplus of the pertinent year of Gap corporation, it appears that Gap corporation could be able to repay a considerable portion of the additional statutory allowances, and Gap corporation recorded the additional statutory allowances for five consecutive years in the pertinent year, and the net income is continuously generated during the pertinent year, and the continuous increase in sales, and thus, it cannot be concluded that the claim of Eul et al., which did not violate the good faith principle.

[1] Article 2(1) of the Civil Act; Articles 1, 2(1)5, 15, 5, 56, and 60 of the Labor Standards Act; Article 6(1) of the Enforcement Decree of the Labor Standards Act / [2] Article 2(1) of the Civil Act; Articles 1, 2(1)5, 15, 55, 56, and 60 of the Labor Standards Act; Article 6(1) of the Enforcement Decree of the Labor Standards Act

[1] Supreme Court en banc Decision 2012Da89399 Decided December 18, 2013 (Gong2014Sang, 236)

Plaintiff (Appointed Party) (Attorney Kim-soo et al., Counsel for the plaintiff-appointed party-appellant)

Si Young Transportation Co., Ltd. (Law Firm A&S et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2014Na2033671 decided April 29, 2015

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. The principle of trust and good faith (hereinafter “the principle of trust and good faith”) refers to an abstract norm that a party to a legal relationship shall not exercise a right or perform an obligation in a manner that violates the principle of trust and good faith, taking into account the other party’s interests, by taking into account the other party’s interest. Here, in order to deny the exercise of such right on the ground that it violates the principle of trust and good faith, it should have been given to the other party or objectively deemed that the other party has a good faith, and the exercise of the right against such other party’s trust should have reached such a level as to be unacceptable

If the contents of a labor-management agreement, such as a collective agreement, are null and void in violation of the Labor Standards Act’s compulsory provisions, it would result in denying the legislative intent of the labor-management agreement that violates the principle of good faith, and thus, such assertion is not in violation of the principle of good faith. However, the application of the principle of good faith is not excluded without exception to the assertion that the labor-management agreement violates the compulsory provisions of the Labor Standards Act, on the ground that the contents of the labor-management agreement do not violate the principle of good faith. Not only is it necessary to satisfy the general requirements for applying the principle of good faith but also exceptional cases where there are special circumstances to accept the application of the principle of good faith prior to the application of the principle of good faith despite the compulsory provisions of the Labor Standards Act

Under the premise that a regular bonus in a labor-management agreement does not per se constitute ordinary wages, in cases where the labor-management agreement agrees to exclude a regular bonus from the standard for calculating ordinary wages and setting wage level on the premise thereof, an employee’s side demands the employer to pay an additional statutory allowance based on the ordinary wage by adding a regular bonus to ordinary wages, thereby causing serious managerial difficulties or endanger the existence of an enterprise, which would be remarkably contrary to good faith in light of the concept of justice and equity (see Supreme Court en banc Decision 2012Da89399, Dec. 18, 2013).

However, in determining whether to preferentially apply the principle of good faith rather than the mandatory provisions governing labor relations, it is necessary to fully consider the legislative intent of the Labor Standards Act, etc. that intends to set the minimum standard of working conditions and guarantee and improve the basic livelihood of workers. Moreover, the employer is an employer, and the corporate management status may change from time to time according to various economic and social circumstances inside and outside the company. Thus, if a claim for additional statutory allowances by an employee based on ordinary wage disposal is rejected on the ground that it causes serious managerial difficulties or it threatens the existence of the company, it may result in the actual transfer of risks arising from the management of the company to workers. Therefore, it should be carefully and strictly determined whether the worker’s additional statutory allowances claim is contrary to the principle of good faith by causing serious managerial difficulties

2. Examining the following circumstances revealed by the reasoning of the lower judgment and the record in light of the aforementioned legal doctrine, it cannot be readily concluded that the additional statutory allowance would cause serious managerial difficulties to the Defendant or endanger the existence of the company. Therefore, the Plaintiff’s claim in this case does not violate the good faith principle.

A. The lower court calculated the total amount of the additional statutory allowances incurred from August 1, 2011 to November 11, 2012 by the employees belonging to the Defendant as equivalent to KRW 782,650,053. However, if the part of the additional statutory allowances, other than the Plaintiff (Appointed Party) and the designated parties, which had already been completed at the time of the closing of argument in the lower court, is deducted from the part of the additional statutory allowances for the employees who did not institute a lawsuit, the additional statutory allowances for which the employees belonging to the Defendant may claim against the Defendant would be estimated to be approximately KRW 40

B. The above additional statutory allowances are merely 2-4% of the annual sales of the Defendant, and 5-10% of the total labor cost in 2013.

C. Even if the Defendant’s earned surplus in 2013 exceeds KRW 300 million, it seems that the above additional statutory allowances can be repaid.

D. Since 2009, the Defendant recorded black income for five consecutive years, and continuously generated net income, and the sales have also increased.

E. The Defendant seems to be able to operate a business in a stable manner, barring special circumstances, since it is subject to the bus completion system.

3. Nevertheless, solely based on its stated reasoning, the lower court determined that the Plaintiff’s claim was not permissible as it violated the principle of good faith, solely on the grounds that the total amount of statutory allowances to be additionally borne by the Defendant reaches approximately KRW 782,650,053. In so doing, the lower court erred by misapprehending the legal doctrine on the principle of good faith or by misapprehending the principle of free evaluation of evidence against logical and empirical rules, thereby adversely affecting the conclusion

4. 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.

[Attachment] List of Appointeds: Omitted

Justices Noh Jeong-hee (Presiding Justice)