Supreme Court: "No Expectation of Reemployment After Retirement Without Rules or Practices"

The Supreme Court has ruled that in order for an expectation right to be recognized that an employee will be reemployed through a contract worker (fixed-term) labor contract even after reaching retirement age, there must be provisions in the labor contract or employment rules, or an established practice equivalent to that in the workplace.

If there are no explicit provisions or practices, the decision to maintain the employment relationship with an employee who has reached retirement age generally falls within the employer's authority, and therefore, not reemploying the employee as a fixed-term worker cannot be regarded as unfair dismissal.

Supreme Court, Seocho-dong, Seoul.

According to the legal community on the 20th, the Supreme Court's Second Division (Presiding Justice Kwon Young-jun) overturned the lower court's ruling that dismissed the unfair dismissal relief retrial judgment cancellation lawsuit filed by a social welfare corporation operating a nursing home in Busan against the Central Labor Relations Commission, ruling in favor of the plaintiff and remanding the case to the Seoul High Court.

The court stated, "The lower court's judgment contained an error in the legal principles regarding the expectation right of reemployment after retirement, which affected the judgment."

Ms. A (63, female) had been working as a care worker at a nursing facility operated by the corporation under a one-year labor contract since March 2018. The labor contract dated January 1, 2020, when Ms. A reached the retirement age of 60, set the contract period from January 1, 2020, to July 31, 2020, and stated, "This contract shall naturally expire upon the expiration of the contract period. However, renewal, extension, or re-contracting may be made before the expiration of this contract."

Meanwhile, the corporation's employment rules and nursing home operation regulations stipulated that "the retirement age of employees is 60 years old, and employees retire at the end of the month in which they turn 60," and included provisions that the corporation could reemploy retirees as contract workers depending on business needs. However, there were no provisions imposing an obligation on the corporation to reemploy retirees as contract workers, nor were there any criteria or procedures established for reviewing contract worker reemployment.

One month before the contract period ended, in June, the nursing home notified Ms. A, who was both a care worker and the head of the labor union branch, that "since retirement age has been reached, the labor contract will be terminated."

Ms. A filed a relief application with the labor commission, claiming that the nursing home's unilateral termination of the contract and refusal to reemploy her constituted unfair dismissal.

In February 2021, the Central Labor Relations Commission accepted Ms. A's relief application, stating, "Ms. A has an expectation right to reemployment as a contract worker after retirement, and the nursing home had no reasonable grounds to refuse her reemployment, thus recognizing unfair dismissal."

The nursing home appealed the decision, but both the first and second instance courts upheld the labor commission's judgment and dismissed the nursing home's cancellation claim.

This was because there was a practice where two out of five employees who reached retirement age, including Ms. A, were reemployed as contract workers. The nursing home argued that it refused reemployment due to Ms. A's prior disciplinary action of a one-month suspension for 'workplace sexual harassment' after she danced and exposed her belly fat and underwear for 3-4 seconds in front of female residents and staff. However, the court ruled that the disciplinary action itself was unfair and thus could not be considered a valid reason for refusal.

However, the Supreme Court's judgment differed.

First, the Supreme Court cited a precedent it delivered in June this year.

Previously, the Supreme Court stated that ▲whether to continue the employment relationship with an employee who has naturally retired upon reaching retirement age by extending the retirement age or other means is generally within the employer's authority, and employees do not have the right to demand an extension of retirement age; however, ▲if there are provisions in labor contracts, employment rules, or collective agreements stipulating that employees who meet certain conditions after reaching retirement age must be reemployed as fixed-term workers, or ▲if a practice equivalent to this is established in the workplace, thereby forming a trust relationship between the parties that employees who meet certain conditions after reaching retirement age can be reemployed as fixed-term workers, then employees have an expectation right to reemployment after retirement.

The Supreme Court also stated that the existence of such a practice should be judged comprehensively by considering various factors such as the circumstances under which reemployment was implemented, the duration of such implementation, the proportion of employees reemployed after reaching retirement age in the relevant occupation or job field, and the reasons if any employees were refused reemployment.

The court said, "The plaintiff's employment rules and nursing home operation regulations stipulate retirement at age 60 at the end of the month in which the employee turns 60, and include provisions that the plaintiff may reemploy retirees as contract workers depending on business needs. However, there are no provisions imposing an obligation on the plaintiff to reemploy retirees as contract workers, nor are there criteria or procedures for reviewing contract worker reemployment."

It added, "Considering that the labor contract between the plaintiff and Ms. A set the contract period to end at retirement age, and that there are other employees who were treated as retired at retirement age, it is difficult to conclude that the plaintiff's retirement regulation was merely formal or did not apply to fixed-term workers like Ms. A."

In fact, including Ms. A, there were five employees who joined the nursing home before retirement age; among them, one resigned before reaching retirement age, two signed fixed-term labor contracts with the corporation again after reaching retirement age, but two, including Ms. A, had their labor contracts terminated due to reaching retirement age.

The court concluded, "Considering the above circumstances, there are no provisions in the labor contract or employment rules requiring reemployment of employees who have reached retirement age as fixed-term workers, nor is there an established practice of reemployment equivalent to that in the plaintiff's workplace. Therefore, it is difficult to recognize an expectation right for Ms. A to be reemployed as a contract worker after reaching retirement age by signing a contract worker labor contract with the plaintiff."

It further stated, "The fact that Ms. A was a fixed-term worker even before retirement does not change this conclusion."

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