JIPYONG LLC

[Case No. Ulsan District Court Decision 2019GaHap17597 dated July 8, 2020]

In this case, the court found that the notice of ipso facto retirement by Ulju-gun Facility Management Corporation (the “Defendant”) to the employee who was hired through bribery was lawful even if the employee did not have the knowledge of the bribery.

The plaintiff applied for the “First Competitive Recruitment by Experience in 2014” of the Defendant and was hired at Grade 6. However, it was uncovered that the plaintiff was hired because of bribery.

Ulju-gun Governor SHIN Jang Yeol (the “Governor”) who had the authority to direct and supervise the Defendant and to appoint the chairman of the board of directors, called the director general BYUN (the “Director General”) in February 2014 and asked to “look into the application submitted by the daughter of the governor of a town (eup) (the “Plaintiff”) to the competitive recruitment.” The Director General then reported to the chairman PARK (the “Chairman”), and the Chairman directed the Director General to look after the Plaintiff.

The Director General participated in the hiring procedures as the interviewer, and followed the Chairman’s directions to give the Plaintiff the score of 92, which was higher than the score originally assigned to the Plaintiff. Despite this score, the Plaintiff’s score fell below the passing score, and the HR officer arbitrarily modified the score given by another interviewer from outside the corporation from 80 to 92. Without becoming aware of this change, the external interviewers decided to hire the Plaintiff by a written resolution.

The improper hiring activity was eventually uncovered. The officers and employees of the Defendant, including the Governor SHIN, Chairman PARK, and Director General BYUN were charged for interfering with the business activities related to the recruitment of employees of the corporation. They were found guilty and sentenced to imprisonment for interference with the business activities and improper conduct after acceptance of bribes. The Defendant therefore notified the Plaintiff of ipso facto retirement in accordance with the HR policy. According to the provisions of the HR policy of the Defendant, an employee found to be hired in violation of the law shall be disqualified and subject to ipso facto retirement.

The Plaintiff then filed a claim arguing that “the ipso facto retirement shall be declared invalid.” The Plaintiff argued that “since the accusation that the Plaintiff’s father improperly solicited employment from the officers and employees of the Defendant was not objectively verified and the Plaintiff did not engage in the manipulation of the score, the Defendant’s conclusion of the Plaintiff as hired in violation of the law and the notification of ipso facto retirement was illegal.”

However, the court explained that “the person found to be hired in violation of the law, who is subject to ipso facto retirement under the HR policy of the Defendant, refers to the person hired due to any types of illegal activities related to recruitment which may undermine, or threaten to undermine, the fairness of the hiring procedures.” The court held that “regardless of whether the applicant engaged in the illegal activity or a person who is closely related to the applicant engaged in the illegal activity on behalf of the applicant, including in case the applicant who would benefit from the illegal activity did now have the knowledge of the illegal activity, the applicant, who cannot be evaluated as the person fairly selected due to any such illegal activities, should be deemed the employee hired in violation of the law.”

The court also found that the employment of the Plaintiff could be evaluated as unfair by the fact of the illegal activity in the hiring procedures itself which seriously undermined the fairness in the recruitment of a public institution and the trust of the general public, and thus, the ipso facto retirement would be valid in this case once it was verified at the time of the ipso facto retirement that the employment of the Plaintiff was unfair resulting from benefit from the illegal activity of improper solicitation by the Plaintiff’s father even if the Plaintiff was not involved in the illegal activity.

The Plaintiff alternatively argued that “processing the ipso facto retirement on the grounds of disqualification which were not announced at the time of announcement for recruitment would be in violation of the principles of good faith.” The court, however, rejected this argument and found that “the lack of announcement would not constitute a violation of the principles of good faith.”