Supreme Court: "Employers Cannot Hold Workers Liable for Damages from Illegal Strikes"

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The Supreme Court has ruled that if factory production lines stop due to union strike actions causing losses, the company cannot hold individual union members who participated in the strike liable for damages.

This case drew attention as it touches on the key issue of the so-called Yellow Envelope Act, which limits corporate claims for damages against striking union members. By siding with the workers, the Supreme Court effectively acknowledged the intent of the Yellow Envelope Act to restrict individual workers' liability for strike actions as much as possible, which is expected to give momentum to the legislation of the Yellow Envelope Act.

The Supreme Court's Third Division (Presiding Justice No Jeong-hee) on the 15th overturned the lower court ruling that recognized the liability of union members in the appeal case filed by Hyundai Motor Company against members of the in-house subcontractor union (non-regular workers branch) and sent the case back to the appellate court.

Hyundai Motor filed a lawsuit claiming damages after the Metal Workers' Union Hyundai Motor Non-Regular Workers Branch occupied Ulsan Plant Lines 1 and 2 from November 15 to December 9, 2010, causing production to halt for 278 hours.

Additionally, in July 2013, the non-regular workers branch occupied Ulsan Plant 3, halting operations for 63 minutes, and Hyundai filed a damage claim lawsuit in August 2013 against the union members who participated in the strike.

In the case related to the occupation of Ulsan Plant Lines 1 and 2, the first trial court ruled that "occupying the plant and stopping the production line was an antisocial act beyond socially acceptable limits" and ordered Hyundai to be compensated for the full 2 billion KRW claimed.

Subsequently, Hyundai withdrew lawsuits against 25 members who decided not to pursue regular employment conversion lawsuits, and the appellate court ordered the remaining four members to pay 2 billion KRW plus interest.

Regarding the occupation of Ulsan Plant 3, the first trial court ruled in favor of five workers due to insufficient evidence of illegal strike. However, the appellate court judged that "the workers are jointly liable as co-perpetrators for damages caused by illegal strike actions," recognized the occurrence of fixed cost damages corresponding to the claimed production stoppage period, applied a 50% liability limitation, and ordered the five workers to pay a total of approximately 23 million KRW to the company, partially ruling in favor of the plaintiff.

However, the Supreme Court judged that equating the scope of damage liability between the labor union, which decided and led the illegal strike actions, and individual union members could undermine the constitutionally guaranteed rights of workers to organize and take collective action.

It also held that if the fixed cost damages caused by production stoppage due to illegal strike actions were offset by additional production after the strike ended, the workers cannot be held responsible for revenue losses due to reduced production.

The court stated, "The extent of liability limitation for individual union members should be comprehensively determined by considering their status and role within the union, the circumstances and degree of participation in the strike, and the degree of contribution to the damages."

Furthermore, it ruled, "If, after the strike ends, the shortage in production caused by the strike is fully or partially compensated through additional production within a reasonable period that does not cause a decrease in sales, considering the nature of the product and production and sales methods, it is difficult to recognize the occurrence of sales decrease and fixed cost damages due to production stoppage within that scope unless there are special circumstances."

This content was produced with the assistance of AI translation services.