CEO claims unfair dismissal due to ‘management corruption’… Court: “There is no reason to file a claim”

Detection of irregularities such as embezzlement of public funds
Sudden lawsuit filed two years after voluntary resignation
Law “Does not qualify as an employee under the law…
“The statute of limitations for severance pay has expired in 3 years.”

The former CEO, who voluntarily resigned due to management corruption, filed a lawsuit against the company claiming unfair dismissal, but it was not accepted.

On the 17th of last month, the Tongyeong Branch of Changwon District Court (Presiding Judge Seung-won Lee) ruled that the plaintiff, Mr. A, a former CEO of a transportation company, lost the lawsuit to confirm invalidity of dismissal against the company. In addition, claims for severance pay amounting to 260 million won were also dismissed.

In April 2002, Mr. A took charge of all administrative affairs, including general affairs, personnel, and accounting, at the company, and became a shareholder in March 2004 when he acquired shares along with the company's conversion to a corporation.

Afterwards, Mr. A served as an internal director and was inaugurated as CEO in 2015. Mr. A performed the position and role of CEO for the originally appointed term, but resigned as CEO in 2021 after misconduct, including embezzlement of public funds, was revealed.

However, Mr. A suddenly filed a lawsuit about two years later, claiming unfair dismissal. At the same time, he requested severance pay for the period of time he worked as an employee before taking office as CEO. He also mentioned the provisions of the collective agreement that say retired workers can be re-employed as commissioned workers, and said that they should be paid additional wages that they would have received while working as commissioned workers.

The company countered that it began raising issues about unfair dismissal when Mr. A was investigated by investigative agencies on charges of business embezzlement and other charges.

The court ruled in favor of the company. Chief Judge Lee dismissed the claim, saying, “Because the plaintiff was not in a dependent employment relationship with the defendant during the period during which he served as CEO and the period immediately before his resignation and dismissal, he cannot be considered an employee as specified in the Labor Standards Act. Even if his status as an employee was acknowledged when he worked as an executive or employee before serving as a director, there is no data showing the average wage of the plaintiff at that time, and his claim was extinguished because he did not claim severance pay within 3 years from the date of retirement.”

Attorney Jo Ik-cheon of Daeryun Law Firm, the company's legal representative, explained, "At the time of his resignation, Mr. A had never applied for relief from unfair dismissal or filed a lawsuit to confirm invalidity of dismissal with the Labor Relations Commission, and after two years had passed, he suddenly claimed unfair dismissal. However, Mr. A resigned voluntarily and it should be seen that there was an indication of intention to terminate the delegation contract in the relationship between the management and executives."

He added, “Accordingly, there is no reason for Mr. A to be entitled to an amount of wages or severance pay,” and added, “The company’s regulations also acknowledged that there was no history of severance pay being paid to the CEO, so the claim was dismissed.”

Digital Content Team

[View full article]
CEO claims unfair dismissal due to ‘management corruption’… Court: “There is no reason to file a claim” (Shortcut)