KEPCO 'Child Education Support'... Supreme Court Rules "Repayment Obligation Exists"

Court: "Loan agreement, student loan... includes repayment details"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that if you have filled out a loan application or promissory note with your company and received support for your child's tuition fees, you have an obligation to repay it.

The Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) announced on the 14th that it overturned the previous ruling, which partially favored the plaintiffs in a lawsuit filed by retirees of Korea Electric Power Corporation (KEPCO) against the company seeking confirmation of non-existence of debt, and remanded the case to the Seoul High Court.

KEPCO had been providing free tuition support for employees' children but changed it to a loan system from 1999 following recommendations from the Board of Audit and Inspection. KEPCO lent tuition fees interest-free to employees and deducted the repayment amount from wages and retirement benefits according to internal regulations, while the in-house labor welfare fund provided the same amount as a 'scholarship' to individuals like Mr. A.

The issue arose during the retirement process of Mr. A and others. KEPCO treated the previously supported tuition fees as 'loan money' and offset the amounts to be repaid by deducting them from wages and retirement benefits.

Mr. A and others filed a lawsuit claiming that the 'loan contract' between the company and employees was a 'simulated false declaration' (a false expression of intent agreed upon by both parties), and that in reality, the tuition fees were fully supported free of charge, so they could not return the money.

The Supreme Court held that employees have the obligation to fully repay the loan to the employer, and that the mere fact that welfare fund support was expected does not mean there was an agreement between the employer and employees to exempt repayment of the tuition loan.

The court stated, "Mr. A and others submitted loan applications or promissory notes to the company to borrow tuition fees," and "the loan applications or promissory notes included provisions that the plaintiffs would repay the full outstanding amount upon retirement."

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