"Retirement Age Regulation Changed Without Board Resolution"... Supreme Court Rules "Cannot Terminate Employment Retroactively"

Published 16 Dec.2024 14:07(KST)

A ruling has been made that whether retirement age has been reached should be judged based on the retirement age valid at the time of the dispute, and that a retroactively applied retirement age cannot be used as the standard. The Supreme Court Special Division 1 (Presiding Justice Shin Sook-hee) overturned and remanded the lower court's ruling that dismissed the lawsuit filed by Mr. Lee against the Chairperson of the Central Labor Relations Commission seeking cancellation of the retrial decision on unfair dismissal (2024Du41038).

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[Case Overview]

Mr. Lee was an employee of social welfare foundation A and continued working even after exceeding the retirement age of 60 (June 24, 2017). Foundation A revised its employment rules on September 8, 2020, extending the retirement age to 64, but did not go through the board of directors' resolution process at that time. On June 25, 2021, Foundation A processed Mr. Lee's retirement based on the 64-year retirement rule, and on March 24, 2022, decided through the board's subsequent review and resolution to apply the revised employment rules retroactively.

Mr. Lee filed for a retrial with the Central Labor Relations Commission (CLRC), arguing that "changing the retirement age from 60 to 64 without a board resolution as stipulated in the articles of incorporation and retroactively applying it to process retirement is unfair." When the CLRC dismissed his claim, Mr. Lee filed a lawsuit.

The key issue was whether the retirement age to be used as the standard when disputing retirement should be the "retirement age valid at the time (60 years)" or the "retroactively applied retirement age (64 years)."

[First and Second Instance Judgments]

The first instance court ruled in favor of Mr. Lee. The court stated, "Foundation A's retroactive application of the revised employment rules to change the retirement age to 64 without the board's review and resolution is invalid," and "the retirement age valid on June 25, 2021, was 60 years, and since Mr. Lee had already exceeded the retirement age and continued working, it cannot be considered a legitimate termination of the employment relationship."

The second instance court overturned the first instance ruling and ruled against the plaintiff. The court pointed out, "The revised employment rules are not a disadvantageous change but aim to extend the retirement age, so there is no need to obtain consent from the group of employees," and "if there was a board review and resolution on March 24, 2022, the retroactively applied retirement age is valid, and the employment relationship ended according to the 64-year retirement age."

[Supreme Court Judgment]

The Supreme Court overturned the second instance ruling and remanded the case to the Seoul High Court.

The court stated, "Whether retirement has been reached should be judged based on the retirement age valid at the time of dispute, and the retroactively applied retirement age cannot be used as the standard." It further explained, "At the time of the retirement notice on June 25, 2021, the revised employment rules had no effect as they had not undergone the board's review and resolution," and "the retirement age valid at that time should be considered 60 years, and the termination of the employment relationship based on the retroactively applied 64-year retirement age cannot be recognized." The court added, "From the time of the board's review and resolution on March 24, 2022, the revised employment rules are valid," and "Mr. Lee's employment relationship should be considered terminated according to the 64-year retirement age from that point."