Seoul Administrative Court premises
Local government employees and a company rewrote contracts “formally” to be eligible for COVID-19 encouragement funds; the company, due to these contracts, had to pay several months’ worth of wages in wrongful dismissal.
Seoul Administrative Court Division 14 (Chief Judge Song Gak-yeop) ruled on a lawsuit filed by A Bus Company against a Central Labor Commission decision demanding monetary compensation for “wrongful dismissal of employees,” refusing to accept the plaintiff’s claim.
When A company hires bus drivers, they initially sign a one-year contract and later decide on contract renewal through the personnel committee. B, who joined in June 2021, also signed a one-year contract in this manner. However, in the personnel committee held in May 2022, B was deemed ineligible for contract extension among the fixed-term workers. B was notified by the company that “the contract automatically expires in June as written in the contract.”
However, the contract between A company and B was not limited to the contract signed at the time of recruitment. There was another contract written in January 2022. Though the content was similar, the duration was until December 2022, and the salary was raised by about 60,000 won with additional benefits. B received the increased salary as per this contract after it was signed. B, who left the company in June 2022, claimed “wrongful dismissal” rather than “automatic termination” based on this contract.
A company argued that the second contract was merely formal for receiving COVID-19 encouragement funds and did not extend or modify B’s employment contract. However, the Seoul Administrative Court stated that since the second employment contract clearly specified the duration until December 2022 and the increased salary amount of 60,000 won, it should be deemed that the employment contract was validly concluded according to the contract terms unless there is credible evidence to deny the key employment conditions.
A company also claimed that B had been looking into other companies before being notified of the contract termination, suggesting that the termination was mutually agreed upon. However, the court did not accept this argument, stating that B’s application to another company the day before being notified was a decision made after learning the personnel committee results through a meeting with the labor manager, not an agreement-based termination of the employment contract. A company appealed against this court judgment.