[1] The meaning of "total property of an employer" subject to preferential rights to payment of wages under Article 30-2 (2) of the former Labor Standards Act

[2] In a case where a subcontractor was unable to pay wages to workers due to a cause attributable to the immediately preceding contractor and the immediately preceding contractor was jointly and severally liable for wages to workers of the subcontractor pursuant to Article 36-2 (1) of the former Labor Standards Act, whether workers of the subcontractor may claim the right to preferential payment of wages to workers of the immediately preceding contractor (negative)

[1] Article 30-2 (2) of the former Labor Standards Act (amended by Act No. 5309 of Mar. 13, 1997) provides for partial restriction on the effect of general security rights and preferential rights to wage claims in the public interest request to guarantee the minimum living of workers. In light of the legislative intent, the term "total property of an employer" refers to the whole property of an employer, who is a party to a labor contract, and is the primary employer, who is a party to a wage obligation.

[2] Where a project is executed based on several subcontractings, a subcontractor is unable to pay wages to workers due to a cause attributable to the immediate upper contractor, and even if the immediate upper contractor is jointly and severally liable to pay wages to workers of the subcontractor pursuant to Article 36-2 (1) of the former Labor Standards Act, it cannot be deemed that the immediate upper contractor constitutes an employer whose right to preferential payment of wages is recognized in relation to workers of the subcontractor. Therefore, in the compulsory execution procedure for the property owned by the immediate upper contractor, workers of the subcontractor shall not claim the right to preferential payment of wages on the ground that the subcontractor's workers constitute the whole property

[1] Article 30-2 (2) (see current Article 37 (2)) of the former Labor Standards Act (amended by Act No. 5309, Mar. 13, 1997) / [2] Articles 30-2 (2) (see current Article 37 (2)) and 36-2 (1) (see current Article 43 (1)) of the former Labor Standards Act (amended by Act No. 5309, Mar. 13, 1997)

[1] Supreme Court Decision 95Da719 delivered on February 9, 1996 (Gong1996Sang, 894)

Dongsung Bank (Attorney Lee Jae-hoon, Counsel for the defendant-appellant)

Defendant 1 and 58 others (Attorney Han-soo, Counsel for the defendant-appellant)

Busan High Court Decision 95Na6885 delivered on November 17, 1995

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

The defendants' attorney's grounds of appeal are examined.

1. Article 30-2 (2) of the former Labor Standards Act (amended by Act No. 286 of May 10, 195 and repealed by Act No. 5305 of March 13, 1997) provides that "wages, retirement allowances, and accident compensation for the last three-month wages of workers shall be paid in preference to claims secured by pledges or mortgages on the whole property of the employer, taxes, public charges, and other claims." This is an exceptional restriction on the effect of general security rights in the public demand to guarantee the minimum living of workers, and it provides for the right to preferential payment of wage claims. In light of the legislative intent, the term "total property of the employer" refers to the whole property of the employer, who is a party to an employment contract, and is the employer who is the primary debtor liable for wage obligations (see, e.g., Supreme Court Decisions 95Da719, Feb. 9, 1996; 93Da30938, Jan. 11, 1994).

Therefore, as the subcontractor is unable to pay wages to workers due to the reasons attributable to the immediate upper contractor, even if the immediate upper contractor is jointly and severally liable for the payment of wages to workers of the subcontractor pursuant to Article 36-2 (1) of the above Act, it cannot be deemed that the immediate upper contractor constitutes an employer under the above Article where the right to preferential payment of wage claims is recognized in relation to workers of the subcontractor. Therefore, in the compulsory execution procedure for the property owned by the immediate upper contractor, it shall be deemed that workers of the subcontractor constitute the whole property of the employer and thus, it shall not be allowed to claim the right to preferential payment of wages.

2. According to the reasoning of the judgment below, in the auction procedure for the real estate owned by the non-party corporation (hereinafter referred to as the "non-party corporation"), which was commenced upon the plaintiff's request as a collateral security right based on macroscopic evidence, the court below judged that the defendants, workers of the non-party construction industry, who were employed in the non-party construction industry, were unable to receive wages from the above new construction industry due to the bankruptcy of the non-party company. Thus, the non-party company constitutes a direct upper-tier contractor under Article 36-2 (1) of the above Act and made a demand to pay wages to the defendants on the premise that they are liable for payment of wages, and on the premise that they are responsible for payment of wages under Article 30-2 (2) of the above Act, the above provision of Article 30-2 (2) of the above Act, which recognizes the right to preferential payment of wages, does not include the right to preferential payment of the non-party company's property under Article 36-2 (1) of the above Act. Accordingly, the judgment below is justified.

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Song Jin-hun (Presiding Justice)