[1] The validity of interim settlement of retirement pay pursuant to the case where an interim settlement of interim settlement of retirement pay was not made according to the employee's active demand but was made according to the employee's free will (effective)

[2] In a case where Eul et al., a worker of Eul et al., submitted a resignation notice to serve in the military in accordance with the company's policies, and thereafter re-entered after the retirement, the case affirming the judgment below holding that the act of submission of a resignation notice and the subsequent disposition for retirement and re-admission is null and void, and that the period until the date prior to the military service period of Eul et al. and the date

[3] In a case where Gap corporation stated that "the rate of interim payment of retirement allowances after interim settlement of retirement allowances shall follow the retirement allowance fraction system" while implementing the interim settlement provision of retirement allowances, and that employees Eul, etc. were subject to the progressive retirement payment system under the rules of employment at the time of employment, the case affirming the judgment below holding that the above provision is invalid for employees Eul, etc. as it constitutes a disadvantageous change to the rules of employment

[4] Where an interim settlement agreement is reached for some of the continuous period of employment before the interim settlement of retirement pay, the time when the claim for retirement pay for the period for which no interim settlement agreement was reached occurs (=the time when the final retirement was made) and the starting point of extinctive prescription

[5] Where the interim adjustment of retirement allowances under Article 34(3) of the former Labor Standards Act was made only for some of the continuous employment periods prior to interim adjustment, whether the interim adjustment of retirement allowances can be calculated by calculating the continuous employment period by adding the remaining employment period prior to interim adjustment and the interim adjustment period and applying the interim adjustment of retirement allowances to the total period (negative in principle)

[1] Article 34(3) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005) provides, “Where a worker makes a request, an employer may, notwithstanding the provisions of paragraph (1), pay a retirement allowance for the period in which the worker has continued to work before his/her retirement. In this case, the number of years of continuous employment for the calculation of the retirement allowance after the previous settlement of accounts shall be newly calculated from the settlement of accounts.” However, in full view of the legislative intent of the interim settlement of accounts system and the nature of the retirement allowance, the interim settlement of accounts is not valid only when the worker demands the interim settlement of accounts actively, and if the interim settlement of accounts was made at the free will of the individual worker, the interim settlement of accounts of retirement allowance shall be deemed valid

[2] In a case where Eul et al., a worker of Eul et al., submitted a resignation in accordance with the company policy for military service and retired from office after the retirement, and thereafter re-entered after the retirement, the case affirming the judgment below that the period of military service of Eul et al. and the period of continuous work for the calculation of retirement benefits by the day immediately preceding the date when the retirement period of Eul et al., was included in the period of continuous work for the calculation of retirement benefits in light of various circumstances, such as this, since the act of submitting a resignation for military service of Eul et al. and the subsequent retirement and re-admission disposition of Gap et al. violated Article 69 (2) of the former Military Service Act (wholly amended by Act No. 3696 of Dec. 31, 1983) and the subsequent refusal of the intention of retirement by Eul et al.,

[3] In a case where Gap corporation stated that "the rate of interim payment of retirement allowances after interim settlement of retirement allowances shall follow the retirement allowance fraction system," and that " Eul, etc., who had been subject to the progressive retirement payment system under the rules of employment at the time of employment, was an unfavorable change to the rules of employment, the case affirming the judgment below that the above provision constitutes an unfavorable change to the rules of employment, and that the above provision was not effective for employees, including Eul, since Gap did not obtain consent by collective decision-making method, since it did not apply

[4] Where an interim settlement is established only for some of the continuous employment periods before the interim settlement of a retirement allowance, there is no room to claim an interim retirement allowance for the period during which there is no agreement on interim settlement of a retirement allowance, and a claim for retirement allowance for that period occurs at the time of the final retirement, and the extinctive prescription for this matter also runs from the time of the final retirement

[5] The latter part of Article 34(3) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005) provides that the period of continuous employment for the calculation of retirement allowances after interim settlement of accounts shall be newly calculated from the time of interim settlement of accounts. Thus, barring any separate provision between an employer and an employee, the period of continuous employment after interim settlement of accounts is terminated. In a case where interim settlement of accounts is made only for some of the period of continuous employment in a workplace which has adopted the system of interim settlement of accounts, it may be deemed that the period of interim settlement of accounts is to be calculated from the time after the commencement of the initial settlement of accounts, or that the period of interim settlement of accounts is to be included in the period of continuous employment for a certain period of interim settlement of accounts, unless the period of interim settlement of accounts is defined to be included in the period of continuous employment after interim settlement of accounts, it may not be applied to the continuous employment system by adding the remaining period of interim settlement of accounts and the period of interim settlement of accounts.

[1] Article 34(3) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005) (see current Article 8(2) of the Guarantee of Workers' Retirement Benefits Act) / [2] Article 69(2) of the former Military Service Act (amended by Act No. 3696 of Dec. 31, 1983) (see current Article 74(1) of the Military Service Act), Articles 107 and 108 of the Civil Act, Article 34(1) (see current Article 8(1) and (3) (see current Article 8(2) of the Guarantee of Workers' Retirement Benefits Act) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005) / [3] Article 8(2) of the former Guarantee of Workers' Retirement Benefits Act (amended by Act No. 7379 of Jan. 27, 2005; / [3] Article 48(2) of the current Act

[1] Supreme Court Decision 2003Da48891 Decided December 26, 2003 / [4] Supreme Court Decision 2006Da20542 Decided February 1, 2008 (Gong2008Sang, 291)

Plaintiff 1 and five others (Law Firm citizens, Attorneys Kim Ba-soo et al., Counsel for the plaintiff-appellant)

East Asia Pharmaceutical Co., Ltd. (Law Firm Squa, Attorneys Jeju-do et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 201Na80939 decided April 13, 2012

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiffs’ appeals are dismissed.

We examine the grounds of appeal.

1. Regarding the plaintiffs' grounds of appeal

A. Regarding ground of appeal No. 1

(1) Article 34(3) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005; hereinafter the same) provides, “Where an employer requests a worker, the employer may, notwithstanding the provisions of paragraph (1), settle and pay a retirement allowance for the period in which the worker has continued to work before his/her retirement. In this case, the period of continuous employment for the calculation of the retirement allowance after the previous settlement of accounts is newly reckoned from the settlement of accounts.” In full view of the legislative intent of the interim settlement system and the nature of the retirement allowance, etc., the interim settlement of the retirement allowance is not valid only when the worker actively demands the interim settlement of accounts, and if the interim settlement of the retirement allowance was made according to the individual free will of the worker, the interim settlement of the retirement allowance shall be deemed valid (see Supreme Court Decision 2003Da48891, Dec. 26, 2003).

(2) According to the reasoning of the judgment below, the court below rejected the plaintiffs' assertion that the interim adjustment of retirement pay in this case is invalid on the ground that the plaintiffs' application for interim adjustment of retirement pay was insufficient to recognize that it was made by coercion or intimidation of the defendant. Rather, in full view of the circumstances as stated in the decision that can be known by the evidence of employment, the plaintiffs' application for interim adjustment of retirement pay in this case

Examining the records in light of the aforementioned legal principles, the above determination by the court below is just and acceptable. In so doing, the court below did not err by misapprehending the legal principles regarding the requirements for interim settlement of retirement allowances under the former Labor Standards Act, or by exceeding the bounds of the principle of free evaluation

B. Regarding ground of appeal No. 2

The plaintiffs asserted that the retirement allowance shall be applied to the calculation of the amount of retirement allowance for the portion of which the interim settlement was not made during the period from the date of the initial employment to the date of the final retirement. However, the latter part of Article 34(3) of the former Labor Standards Act provides that the period of continuous employment for the calculation of the retirement allowance after the interim settlement of the retirement allowance shall be newly calculated from the time of the settlement of accounts. In light of the records, there is no evidence to support that the plaintiffs and the defendant determined the amount of retirement allowance after the interim settlement of the retirement allowance at the time of the interim settlement of the retirement allowance at the time of the instant interim settlement of accounts by the same manner as

2. As to the Defendant’s ground of appeal

A. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, the court below held that the act of submitting the plaintiffs' written resignation for military service and the act of retirement and re-admission against the plaintiffs as well as the act of submitting the plaintiffs' retirement and re-admission to the defendant's retirement constitutes a violation of Article 69 (2) of the former Military Service Act (wholly amended by Act No. 3696 of Dec. 31, 1983), and that the plaintiffs' expression of intention of retirement through the submission of the plaintiffs' resignation constitutes a case where the plaintiff was aware that he was not the other party due to false indication or false declaration of intention. In light of the records, the judgment of the court below is just, and it did not err by misapprehending the relevant legal principles or by failing to exhaust all necessary deliberations

B. Regarding ground of appeal No. 2

Examining the reasoning of the judgment below in light of the records, the decision of the court below that the plaintiffs' period of military service and the period of continuous service for the calculation of retirement allowance was included in the period of continuous service for the purpose of calculating the period of continuous service, is just, and there is no error in the misapprehension of the legal principle as to inclusion of the period of continuous service

C. Regarding ground of appeal No. 4

According to the reasoning of the judgment below, the court below held that the payment rate of retirement pay after interim settlement of retirement pay pursuant to the interim settlement provision of retirement pay implemented by the defendant on October 1, 2000 constitutes a disadvantageous modification of the rules of employment to the employees who were employed before June 30, 1979 subject to the progressive retirement payment system under the defendant's rules of employment as well as the employees who were employed before June 30, 1979, which was governed by the defendant's rules of employment. As to the above, the defendant did not obtain consent from the employees in collective decision-making method, and therefore, the judgment of the court below is just, and there

D. Regarding ground of appeal No. 3

(1) Where an agreement on interim settlement of accounts is reached only for some of the continuous period of employment before the interim settlement of accounts, there is no room to claim interim retirement allowances for the period during which there is no agreement on interim settlement of accounts, and a claim for retirement allowances for that period occurs at the time of the final retirement, and the extinctive prescription for this matter also runs from the time of the final retirement, not from the time of interim settlement of accounts (see Supreme Court Decision 2006Da20542, Feb. 1,

(2) According to the reasoning of the lower judgment, the lower court determined that the Plaintiffs’ claim for retirement benefits for the period from the date of their initial employment to the date of their initial retirement date, for which there was no agreement on interim adjustment of the retirement benefits in this case during the period of their continuous employment before the interim adjustment of the retirement benefits occurred on the date of their final retirement date, and thus, the extinctive prescription has not been completed. In light of the above legal principles, the lower court’s aforementioned determination is justifiable. In so doing, it did

(3) However, in light of the fact that the Plaintiffs’ claim for retirement benefits for the period from the date of their initial employment to the date of their early retirement and the claim for retirement benefits for the period from the date following the date of their interim settlement to the date of their final retirement are generated only on the date of their final retirement, and that the continuous employment period cannot be deemed to mean only the continuous employment period, the lower court’s determination that the aforementioned two periods should not be applied separately by each of the above periods, but should be applied by adding the progressive employment rate to the above two periods

As seen earlier, the latter part of Article 34(3) of the former Labor Standards Act provides that the period of continuous service for the calculation of retirement benefits after interim settlement of accounts shall be newly calculated from the time of interim settlement of accounts. Thus, unless otherwise specified between an employer and an employee, the period of continuous service before and after interim settlement of accounts is severed. Thus, where interim settlement of accounts is made only for some of the period of continuous service before interim settlement of accounts at a workplace which adopts the system of early settlement of accounts, it may be deemed that a part of the period of interim settlement of accounts is to be the period after the commencement of the first settlement of accounts, or that a new period of continuous service is to be calculated from the date when the settlement of accounts is made, as in the case where a part of the period of interim settlement of accounts is a partial period from the time of commencement of the first interim settlement of accounts, unless it is the case where the remaining period of employment before interim settlement of accounts is included in the period of continuous service after interim settlement of accounts for a certain

However, in the case of this case, there is no evidence to deem that the plaintiffs and the defendant determined differently with the provisions of the latter part of Article 34(3) of the former Labor Standards Act concerning the calculation of the period of continuous service after interim settlement of retirement pay. Rather, according to the facts established by the court below, the plaintiffs agreed to newly add the period of continuous service for the calculation of the period of interim retirement pay after interim settlement of the retirement pay. Thus, the plaintiffs' period of interim settlement of retirement pay after interim settlement of accounts should be separately calculated with the period of continuous service before interim settlement of accounts. Since the period from the date of interim settlement of accounts was omitted from the date of interim settlement of accounts to the date of interim settlement of accounts, it cannot be calculated by applying the interim retirement pay system by adding the omitted period of continuous employment to the period of interim payment of retirement pay after interim settlement of accounts.

Nevertheless, the lower court, solely based on its stated reasoning, accepted the Plaintiffs’ claim by applying the progressive rate to each of the above periods by applying the average wage at the time of the final retirement to the calculation of the unpaid retirement allowance more than the amount of the unpaid retirement allowance calculated based on the average wage at the time of the final retirement. Such a determination by the lower court is subject to the interpretation and application of the latter part of Article 34(3) of the former Labor Standards Act.

3. Conclusion

Therefore, the part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Plaintiffs’ appeals are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)