"I Returned as a Rank-and-File Employee After Resigning"...Former Transport Company CEO Who Filed Hundred-Million-Won Wage and Severance Suit Loses Appeal

A transport company CEO, after resigning, filed a hundred-million-won lawsuit against his former workplace but lost at the appellate level following his loss at the first instance. He demanded a guarantee of retirement age and severance pay, claiming that he had returned as a rank-and-file employee after resigning, but the court did not accept it.

According to the legal community on the 8th, the Changwon Division of the Busan High Court in April dismissed the plaintiff's appeal in the appellate proceedings of a lawsuit for confirmation of invalidity of dismissal and claims for wages, etc., filed by Mr. B, the former CEO of transport company A, against the company.

Mr. B joined Company A in the early 2000s and worked there before serving as CEO from 2016. He submitted a resignation letter in 2021, and the company notified Mr. B of a dismissal disposition. However, Mr. B argued that the dismissal was invalid because, immediately after resigning as CEO, he returned as an ordinary worker and performed duties such as vehicle dispatch.

Mr. B also argued that the company should pay 260 million won in compensation. According to the collective agreement concluded between Company A and the labor union in 2017, the retirement age is 60, and thereafter, the right to be re-employed as a contract worker and remain employed until age 65 is guaranteed. On this basis, Mr. B claimed wages premised on contract-worker employment, and severance pay for the period from his time as a rank-and-file employee through his tenure as CEO.

However, the court found that there was no evidence to view that Mr. B had newly concluded an employment contract with the company after resigning as CEO, and did not accept his claim that the dismissal disposition was invalid. Although Mr. B submitted, as evidence of employment, a vehicle-dispatch status document printed with his name, the court found that since this document bore no seal, it could not serve as material to recognize the fact of actual work.

The court also did not accept the severance pay claim for the period of his tenure as CEO. Under the Commercial Act and Company A's articles of incorporation, a director's severance pay is determined by a resolution of the general meeting of shareholders, but there was no evidence to recognize that a general meeting of shareholders was held to determine Mr. B's severance pay. The court judged that Mr. B's right to claim severance pay for his time as a rank-and-file employee arose in 2016 when he took office as CEO, and had extinguished as more than the 3-year statute of limitations had passed.

Attorney Jo Ik-cheon of Daeryun LLC, who represented Company A, said, "Mr. B was an employer who exercised substantive management rights, yet after resigning he selectively asserted only the advantageous status of a worker," adding, "By meticulously applying the principle of executive severance pay payment under the Commercial Act, the criteria for judging worker status, and the legal principles of the statute of limitations, we were able to draw out a good result."

Reporter Jeong Cheol-wook

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"I Returned as a Rank-and-File Employee After Resigning"...Former Transport Company CEO Who Filed Hundred-Million-Won Wage and Severance Suit Loses Appeal (Go to link)