Where an employer calculates and pays the wages for the period that has already expired retroactively to an employee due to such reasons as unfairly refusing to receive labor for the employee, whether national pension contributions, national health insurance contributions, and employment insurance premiums can be deducted (negative)

Article 21(2)1 of the Framework Act on National Taxes, Article 127(1) of the Income Tax Act, Article 88-2(1) of the National Pension Act, Article 79(1) of the National Health Insurance Act, Article 16-2(1) of the Act on the Collection of Insurance Premiums, etc. for Employment Insurance and Industrial Accident Compensation Insurance.

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Plaintiff (Counter-Defendant, Appointed Party, et al., Counsel for the plaintiff-appellant)

Daily Call Taxi Co., Ltd.

Seoul Eastern District Court Decision 201Na13427, 13434, 1341, 13458 decided August 13, 2012

Of the part against the Plaintiff (Appointed Party and Counter-Defendant) as to the principal lawsuit of the lower judgment, the part against the Plaintiff (Appointed Party, Counter-Defendant), 3, and 5 and the part against the Defendant (Counterclaim Plaintiff) as to the counterclaim is reversed, and that part of the case is remanded to the Panel Division of the Seoul Eastern District Court. All remaining appeals by the Plaintiff (Appointed Party and Counter-Defendant) and the Defendant (Counterclaim Plaintiff) are dismissed.

The grounds of appeal are examined.

1. As to the ground of appeal by the Plaintiff (Appointed Party and Counter-Defendant)

A. As to the first ground for appeal

According to the reasoning of the judgment of the court below, the court below held that the above plaintiff is liable to pay the remainder after deducting the national pension premium, national health insurance premium, and employment insurance premium from the amount calculated by adding excess transport income to the fixed amount pay, in calculating the amount of excess transport income in accordance with the attached Table 3 of the judgment of the court below, due to illegal refusal of and refusal to work by the defendant (Counterclaim Plaintiff; hereinafter "the defendant") against the plaintiff (designated party, counterclaim defendant; hereinafter "the plaintiff") and the designated party 3 and the designated party 5.

However, the above determination by the court below is difficult to accept for the following reasons.

In principle, the obligation of a person liable to collect income tax withheld at source is established when the amount of income is paid and the corresponding recipient’s obligation is established. Thus, the payer cannot collect or deduct the source tax prior to the payment date of the above amount of income, and the scope of income per se is the income subject to withholding, and the scope of income does not automatically reduce the source tax amount (see, e.g., Supreme Court Decision 94Da23180, Sept. 23, 1994). Such legal principle likewise applies to the collection and deduction of national pension contributions, national health insurance premiums, and employment insurance premiums under Article 88-2(1) of the National Pension Act, Article 79(1) of the National Health Insurance Act, Article 16-2(1) of the Act on the Collection of Insurance Premiums, etc. for Employment Insurance and Industrial Accident Compensation Insurance.

Therefore, it is not possible to deduct national pension premiums, national health insurance premiums, and employment insurance premiums when the employer calculates and pays retroactively the wage for the period already passed to a worker due to the reason such as unfairly refusing to receive the provision of labor.

Nevertheless, the lower court determined that the national pension premium, national health insurance premium, and employment insurance premium should be deducted in calculating the aforementioned retroactive wage of the Plaintiff, 3, and 5. In so determining, the lower court erred by misapprehending the legal doctrine on the collection and deduction of social insurance premium in calculating the retroactive wage, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

The remainder of the grounds of appeal is merely an error of the selection of evidence and fact-finding, which belong to the lower court’s exclusive jurisdiction, and cannot be deemed a legitimate ground of appeal.

B. Regarding ground of appeal No. 2

1) Retirement pay of the plaintiff and the selected person 3

Examining the reasoning of the judgment below in light of the records, the court below is just to have rejected the plaintiff and the designated person 3's claim for retirement allowance on the ground that the period of continuous employment does not constitute one year or more, and contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending the legal principles as to the calculation of the period of continuous employment by exceeding

(ii) 5 retirement allowances of the selected parties;

Examining the reasoning of the judgment below in light of the records, it is just for the court below to have rejected the designated parties 5's assertion that the agreement that the designated parties 5 did not raise any objection in the future while receiving interim settlement and retirement allowances from the defendant is invalid or erroneous as an unfair legal act, and thus should be revoked. In so doing, contrary to the allegations in the grounds of appeal, there were no errors of misapprehending the legal principles as to the interpretation and application of Articles 103 and 109 of the Civil Act, contrary to what is alleged in the grounds of appeal.

2. As to the Defendant’s ground of appeal

According to the reasoning of the judgment of the court below, the “calculated wages during the period of employment” from August 2009 to December 2009 is KRW 339,259. However, during the same period, the Defendant’s amount paid as wages is KRW 406,962, and the “paid wages during the period” in June 2009 and July is KRW 606,548, but the amount paid by the Defendant as wages during the same period is KRW 851,274, and the “over-period payment” is 24,726.

According to these facts, from June 2009 to December 2009, in relation to the counterclaim claim that the defendant sought the return of the amount paid by the Appointor 6 to the Appointor 6, the Appointor 6 is obligated to pay the defendant 312,429 won (=(406,962 won - 339,259 won) + 244,726 won) and damages for delay.

Nevertheless, under Table 10 of the lower judgment, the lower court: (a) deducted only KRW 651,688, and deducted only KRW 651,688, which added the amount of the “paid wage during the period of employment” to KRW 339,259,00,000 plus KRW 606,548,00,000; (b) KRW 406,962,00,000 from August 2009 to December 2009 plus the amount of the “paid wage” to KRW 851,274,00; and (c) rejected the Defendant’s claim for counterclaim against the designated person 6 on the ground that there was no excess of the paid wage by the Defendant. In so determining, the lower court erred by misapprehending the legal doctrine on the calculation of unjust enrichment, thereby adversely affecting the conclusion of the judgment. This part of the ground of appeal assigning this error is with merit.

The remainder of the grounds of appeal is merely an error of the selection of evidence and fact-finding, which belong to the lower court’s exclusive jurisdiction, and cannot be deemed a legitimate ground of appeal.

3. Conclusion

Therefore, among the part against the plaintiff as to the principal lawsuit of the judgment of the court below, the part against the plaintiff, 3, 5 and the part against the defendant as to the counterclaim 6 are reversed, and this part of the case is remanded to the court below for a new trial and determination. The remaining appeals by the plaintiff and the defendant are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Attachment] List of Appointeds: Omitted

Justices Min Il-young (Presiding Justice)