In a case where a medical corporation agreed to waive retirement allowances between a medical corporation and a medical corporation and agreed to pay wage and salary income tax on behalf of the medical corporation, the case reversing the judgment of the court below that the agreement on the waiver of retirement allowances on the preferential payment of wage and salary income tax, etc. becomes null and void in violation of the Labor Standards Act, and thus becomes void retroactively

Article 34(1) of the former Labor Standards Act (amended by Act No. 7379 of Jan. 27, 2005) (see current Article 34 of the current Act; Article 8(1) of the Guarantee of Workers' Retirement Benefits Act); Article 741 of the Civil Act

Medical Corporation, Adong Medical Foundation (Law Firm, Kim & Lee, Attorneys Song Jin-hun et al., Counsel for the defendant-appellant)

Defendant (Attorney Kim-hee, Counsel for the defendant-appellant)

Daegu District Court Decision 2004Na15858 Delivered on June 1, 2005

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

The grounds of appeal are examined.

1. Determination as to the existence of an agreement to waive retirement allowances and an agreement to pay in advance, including wage and salary income tax

In light of the records, the court below held that there was an agreement between the plaintiff and the defendant that the plaintiff did not pay a separate retirement allowance at the time of retirement instead of paying a certain amount including the amount of retirement allowance as monthly salary, and that there was an agreement to substitute for the income tax and resident tax to be borne by the defendant, and there was no error of law by misunderstanding the legal principles on interpretation of legal act, or by

2. Determination as to whether an agreement on the payment of wage and salary income tax, etc. loses its validity retroactively as the part of the agreement on the waiver of a retirement allowance becomes void;

According to the reasoning of the judgment below, with respect to the primary claim, the court below decided that, on the basis that the plaintiff paid a certain amount of money equivalent to retirement allowances to the monthly salary paid to the defendant, the defendant paid the wage and salary income tax and resident tax to be paid by the defendant on the condition that he does not bear an obligation to pay a separate retirement allowance, and that the part of the agreement on the waiver (pre-payment) was null and void in violation of the Labor Standards Act, so long as the plaintiff should pay a separate retirement allowance to the defendant, it is reasonable to deem that the agreement on the payment of wage and salary tax and other income tax that the plaintiff paid to the defendant on the condition that he did not pay a separate retirement allowance, has retroactively lost its validity. Accordingly, the court below determined that the defendant is liable to pay the above amount as unjust enrichment to the plaintiff on the ground that the plaintiff paid the wage and salary tax

Upon examining the record, it is correct that the court below determined that the part of the agreement on the waiver of retirement pay (advance payment) is invalid on the premise that the defendant is a worker under the Labor Standards Act.

However, even after examining the record, in cases where the agreement on the waiver of retirement benefits and the agreement on the preferential payment of wage and salary income tax exist in its nature or on the basis of the agreement on the waiver of retirement allowances, and the agreement on the waiver of retirement allowances becomes null and void, the agreement on the preferential payment of wage and salary income tax cannot be found to retroactively lose its validity. Furthermore, if the agreement on the waiver of retirement allowances (pre-payment) becomes null and void as in the original judgment and the Plaintiff separately pays retirement allowances to the Defendant, the validity of the agreement on the preferential payment of wage and salary income tax, etc. is lost, and if it is deemed that the Defendant should return the wage tax, etc. paid by the Plaintiff to the Defendant as unjust enrichment, as in this case, it is impossible to file a claim for retirement allowances from a worker who entered into an agreement on the waiver of retirement allowances (pre-payment) contrary to the Labor Standards Act, and as a result, the legislative intent of the retirement allowance system under the Labor Standards Act, which provides that retirement allowances shall be paid to the retired employee.

Nevertheless, the court below held that the agreement on the waiver of retirement pay (pre-payment) has a quid pro quo relationship between the agreement on the payment of wage and salary income tax, and that the agreement on the waiver of retirement pay (pre-payment) was null and void in violation of the Labor Standards Act, and thus retroactively lost its validity, it erred in the misapprehension of the agreement between the plaintiff and the defendant, or by misunderstanding the facts contrary to the rules of evidence or incomplete deliberation, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is with merit.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, 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 Hong-hoon (Presiding Justice)