[1] The meaning of "a serious managerial necessity" among the requirements for layoff and the standard point of time to determine whether there was "a serious managerial necessity" (=at the time of reorganization dismissal)

[2] The meaning of "shall make every effort to avoid dismissal" among the requirements for layoffs

[3] The method of determining whether the requirements for layoff are “reasonable and fair criteria for layoffs”

[1] Article 24(1) of the Labor Standards Act / [2] Article 24(2) of the Labor Standards Act / [3] Article 24(2) of the Labor Standards Act

[1] [2] [3] Supreme Court Decision 2001Da29452 Decided July 9, 2002 (Gong2002Ha, 1901)/ [1] [2] Supreme Court Decision 2003Du11339 Decided January 15, 2004 (Gong2004Sang, 363)

Plaintiff 1 and 13 others (Attorney Gyeong-dae, Counsel for the plaintiff-appellant)

East Industries Co., Ltd. (Attorneys Son Ji-yol et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2010Na54803 decided July 8, 2011

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

1. On the first ground for appeal

According to Article 24(1) of the Labor Standards Act, where an employer intends to dismiss a worker for managerial reasons, there is an urgent administrative necessity. Here, urgent administrative necessity is not always limited to the case of avoiding corporate bankruptcy, but includes cases where the reduction of the number of employees is deemed reasonable in view of objective and reasonable in order to cope with future crisis in advance (see Supreme Court Decision 2001Da29452, Jul. 9, 2002). In addition, whether there was an urgent administrative necessity among the requirements for layoff should be determined based on the circumstances at the time of layoff.

The lower court determined that: (a) the Defendant’s capital was 3 billion won or 2008 earned surplus in 200 billion won; (b) the Defendant maintained net income except for the year 2003 through 2006 and year 2008; (c) the Defendant’s independent competitiveness and profitability at the time of the instant layoff is not likely to be lost due to the high technical capacity and quality of products than other domestic competitors; (d) the Defendant’s sales have continuously increased around January 2009; (b) since April 2009, immediately after the instant layoff, there was an increase in remaining business from 1.9 to 209 to 1.5 billion won; (c) the Defendant’s net income was generated from the Defendant’s 1.5 billion won for a short time after the instant layoff; (d) the Defendant’s annual decrease in the sales revenue in 2008 to 208 to 208 to 208 to 208 to 208 to 2008 to 3.

However, among the circumstances revealed by the court below, since January 2009, the Defendant’s sales revenue has continuously increased, and since April 2009, since the date of the instant layoff, the remaining business has started to increase since April 2009, the net income of KRW 1.9 billion occurred in the year 2009, the Defendant distributed KRW 4.5 million to shareholders in the year 2009, the total amount of the Defendant’s total loans in the year 2009, and the total amount of the Defendant’s total loans in the year 2008, etc., are reduced to more than the total amount of the loans in the year 2008, which are the circumstances after the instant layoff, and such circumstances cannot be directly based on the judgment on the legitimacy of the layoff, beyond the extent of the indirect factors which determine

Furthermore, in light of the following circumstances known by the evidence rejected by the lower court, it is difficult to accept the said determination by the lower court. In other words, it is also supported by the opinion that at the time of the instant layoff, the automobile industry had been faced with the overall depression, and accordingly, the Defendant, who mainly produces automobile engine parts such as ston, has decreased production and sales, and the price competition has deepened and caused serious liquidity shortage. This is expected to spread more than the economic crisis in 2009 due to the financial crisis that occurred in the U.S. around February 2009, when it was anticipated that the economic crisis would have occurred in 209 due to the financial crisis that occurred in the U.S., and the difficulty of automobile parts manufacturers was much more serious than the financial crisis. In addition, it is also difficult to view that the Defendant had been faced with the business crisis of the Plaintiff at the time of the instant layoff, and that there was considerable room to view that there was a considerable need to reduce the number of employees to implement the instant measure such as reasonable surplus training, etc.

On the other hand, the accumulated earned surplus in the accounts of the defendant in 2008 was mostly invested in the facility assets, which could not help solve the cash liquidity essential at the time of the layoff in this case, and the direct cause of the decrease in sales was actually the decrease in the supply amount for the modern automobiles and the two automobiles, and there is no ground to deem that the genetic company intentionally reduced sales in order to create a managerial crisis of the defendant.

On the other hand, the court below rejected the appraisal results conducted at the request of the court without any reasonable explanation, despite the fact that the appraisal results are considerably consistent with the defendant's argument and the very specific grounds have been presented.

In full view of all the above circumstances, there is considerable room to regard the instant layoff as an urgent administrative necessity. However, the lower court erred by misapprehending the legal doctrine regarding “abrupt managerial necessity” among the requirements for layoff, or by failing to exhaust all necessary deliberations.

2. On the second ground for appeal

Of the requirements for layoff, “an effort to avoid dismissal” means that an employer takes all possible measures to minimize the scope of layoff, such as rationalization of management policies or work methods, prohibition of new employment, temporary retirement, utilization of temporary retirement and voluntary retirement, etc. The method and degree of such measures vary depending on the degree of management crisis of the relevant employer, management reasons for which the layoff is conducted, business size and scale, personnel status by class, etc. (see Supreme Court Decision 2003Du11339, Jan. 15, 2004).

The court below determined that the evidence presented by the defendant alone is insufficient to recognize that the defendant has taken all feasible measures to overcome the managerial difficulties facing the defendant.

However, in order to overcome the managerial crisis, the defendant applied for new employment, employment maintenance training, placement conversion, monthly leave, employment reduction, etc. Furthermore, on November 7, 2008, the FM group's restructuring policy, employment maintenance support system, and surplus human resources, which are major shareholders, requested cooperation on the plan for placement conversion. On November 14, 2008, the defendant discussed the request for cooperation on the implementation of voluntary retirement and the plan for employment maintenance. On November 28, 2008, the defendant explained the efforts to avoid dismissal and requested cooperation on December 18, 2008, and requested cooperation on the postponement of annual leave due to the reduction of the completion rate, and on December 23, 2008, the labor-management council made a request for cooperation on the postponement of payment of annual bonuses due to liquidity. The labor-management council and the labor-management union's collective efforts on December 23, 2008 seems to have been made in consultation with the two labor-management council.

Nevertheless, the lower court erred by misapprehending the legal doctrine or failing to exhaust all necessary deliberations regarding the requirements for layoff.

3. On the third ground for appeal

Of the requirements for layoffs, “reasonable and fair criteria for layoffs” is not final and conclusive, but vary depending on the intensity of the management crisis faced by the relevant employer, business reasons for which the relevant employer should implement layoffs, the contents of the business sector in which the layoffs were conducted, the composition of workers, and the social and economic situation at the time of the implementation of the layoffs (see Supreme Court Decision 2001Da29452, Jul. 9, 2002). Furthermore, the criteria for selecting a person subject to layoffs may be determined by taking into account not only the situation of the relevant worker, but also the circumstances related to the management interests of the employer as long as objective rationality is recognized.

The lower court determined that the evidence submitted by the Defendant alone is insufficient to recognize that the Defendant selected the person subject to dismissal in accordance with reasonable and fair standards, on the grounds that the instant layoff is limited to the employees of the production department who are union members, and that the Defendant set the criteria for the selection of the person subject to dismissal without any agreement with the labor union, as otherwise stipulated in Article 33(1) of the collective agreement, and that the Defendant’s selection of the person subject to dismissal is based on the number of labor force and the number

However, according to the records, at the 7th labor-management council on December 23, 2008, the defendant explained the problem of surplus human resources and the criteria for selection of dismissed workers to the labor union, but the labor union refused to do so, and thereafter, did not participate in the 8th labor-management council held on the 26th day of the same month. Accordingly, the defendant first determined the scope of the dismissed workers as a production worker where surplus human resources actually occurred, and then determined the criteria for selection to consider the job experience, the number and age of dependents, and the number of employer's considerations as consideration factors for the worker, and accordingly determined the person subject to dismissal. Since the defendant's collective agreement has a union shop provision, all of the production workers are union members, it is difficult to view that the above criteria for selection of dismissed workers are unreasonable or unfair. In consideration of all these circumstances, it is difficult to deem that the above criteria for the defendant's selection of dismissed workers are unreasonable or unfair.

Nevertheless, the lower court erred by misapprehending the legal doctrine regarding whether the criteria for the selection of persons subject to dismissal were fair and reasonable, or by failing to exhaust all necessary deliberations.

4. Conclusion

Therefore, the judgment of the court below that the instant layoff did not meet all the requirements is erroneous in the misapprehension of the judgment, which affected the conclusion of the judgment. The part against the defendant among the judgment below is reversed, and this part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent

Justices Kim Chang-suk (Presiding Justice)