[1] Whether Article 44-2 of the Labor Standards Act, which provides a joint and several liability for wage payment of an immediate contractor, is a mandatory provision (affirmative)

[2] In a case where a construction worker claims an employment relationship with the other party and claims a wage, the fact-finding court which examines the claim shall observe the principle of good faith

[1] Article 44-2 of the Labor Standards Act provides that where a subcontract has been made two or more occasions in a construction business, if a subcontractor who is not a constructor under Article 2-7 of the Framework Act on the Construction Industry fails to pay wages to his/her workers, an immediate upper tier contractor of the subcontractor shall be jointly and severally liable with the subcontractor to pay wages to workers employed by the subcontractor. Therefore, if the subcontractor who is not the constructor fails to pay wages to workers employed by the subcontractor, the immediate upper tier contractor of the subcontractor shall be jointly and severally liable with the subcontractor regardless of whether the subcontractor is responsible for the cause or whether the subcontractor has

This purport is to impose liability on a contractor when the risk was realized due to a subcontractor’s failure to pay wages due to an illegal act committed against a person whose financial capacity, etc. for a construction work is not verified due to a lack of registration of a construction business by a direct contractor. In addition, Article 109(1) of the Labor Standards Act provides that a criminal punishment shall be imposed on an immediate superior contractor who fails to perform his/her duty to pay wages in violation of Article 44-2 of the Labor Standards Act, and thus, Article 44-2 of the Labor Standards Act should be deemed a compulsory provision that does not apply by an individual’s intent, and therefore, the agreement is invalid even if a subcontractor agrees to exclude or avoid it, the agreement is not effective.

[2] The assertion on major facts should be deemed as having a major fact in the case where not only the party directly made it clear but also the party’s argument as a whole. The fact-finding court examining the construction worker’s claim for wage should carefully examine whether the purpose of holding a contractor liable as a direct contractor under Article 44-2 of the Labor Standards Act is included in the case where the construction worker claims an employment relationship with the other party, and whether the construction worker should be held liable as a direct contractor under Article 44-2 of the Labor Standards Act is included in the case where the construction worker temporarily established a labor relationship with the construction site as a result of several series of contracts. As such, even if the construction worker’s employment relationship with the other party is not acknowledged, the other party’s claim for wage should not be rejected solely on the ground that the pertinent construction worker’s employment relationship is not sufficiently included in the case where the construction worker claims an employment relationship with the other party.

[1] Articles 44-2 and 109(1) of the Labor Standards Act / [2] Article 203 of the Civil Procedure Act, Article 44-2 of the Labor Standards Act

[1] Supreme Court Decision 2018Do9012 Decided October 31, 2019 (Gong2019Ha, 2292) / [2] Supreme Court Decision 2017Da865 Decided September 12, 2017 (Gong2017Ha, 1952)

Plaintiff

1.2.3

Incheon District Court Decision 2020Na55018 Decided February 4, 2021

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Mandatory provisions under Article 44-2 of the Labor Standards Act;

A. Article 44-2 of the Labor Standards Act provides that where a subcontractor who is not a constructor under subparagraph 7 of Article 2 of the Framework Act on the Construction Industry is unable to pay wages to workers employed by him/her, an immediate upper tier contractor of the subcontractor shall be jointly and severally liable to pay wages to workers employed by the subcontractor. Therefore, if a subcontractor who is not the constructor fails to pay wages to workers employed by the subcontractor, the immediate upper tier contractor of the subcontractor bears the responsibility to pay wages to workers employed by the subcontractor, regardless of whether it is attributable to himself/herself or whether the subcontractor has paid the price to the subcontractor (see Supreme Court Decision 2018Do9012, Oct. 31, 2019, etc.).

This purport is to impose liability on a contractor when the risk is realized due to a subcontractor’s failure to perform his/her duty to pay wages by doing an illegal act to a person whose financial capacity, etc. for a construction work is not verified because a construction business is not registered. In addition, Article 109(1) of the Labor Standards Act provides that a criminal punishment shall be imposed on a contractor in direct position who fails to perform his/her duty to pay wages in violation of Article 44-2 of the Labor Standards Act, and that Article 44-2 of the Labor Standards Act shall be deemed a compulsory provision that does not exclude the application of the Labor Standards Act, in full view of such legislative purport, content and form of the provision, etc., and thus, the agreement is not effective even if a subcontractor actually agrees to exclude or circumvent it.

B. Meanwhile, the assertion on major facts ought to be deemed as having a major fact in cases where the parties’ assertion is deemed to have been made by observing the parties’ arguments as a whole, as well as where the parties’ assertion is clearly made (see Supreme Court Decision 2017Da865, Sept. 12, 2017, etc.). A fact-finding court which examines a lawsuit on a construction worker’s wage claim is a mandatory provision to protect the construction workers as above. There are many cases where a construction project is conducted based on several contracts, and where it is necessary due to the nature of the construction project where a temporary labor relationship is established at the construction site, even if it is unclear who is a construction worker, and accordingly, it is often difficult to view that a construction worker is an employer who has a capacity to enter into an employment relationship with the construction worker, etc., and thus, it should not be deemed as having sufficiently included the other party’s claim as a matter of duty under Article 4-2 of the Labor Standards Act, even if such assertion is asserted within the other party’s employment relationship with the construction contractor.

2. Judgment on the grounds of appeal

The lower court determined that the Defendant, as a direct contractor under Article 44-2 of the Labor Standards Act, was jointly and severally liable to pay wages to the Plaintiff, who is an employee, with the Nonparty. Furthermore, the lower court rejected the Defendant’s assertion that “The Plaintiff, who is an employee, delegated the Nonparty the right to receive wages from the Nonparty, and thus the Defendant fulfilled the duty to pay wages under Article 44-2 of the Labor Standards Act by paying the Plaintiff’s subcontract amount, including the Plaintiff’s wage, to the Nonparty, on the ground that granting of the right to receive wages would result in the punishment of Article 44-2 of the Labor Standards Act which is a mandatory provision

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on Article 44-2 of the Labor Standards Act, without exhaust all necessary deliberations

3. Conclusion

The appeal is 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 Cho Man-sung (Presiding Justice)