A Supreme Court ruling has determined that if corporations receive employment retention subsidies from the government on the condition of placing employees on leave, they must return the full amount of said subsidies if they have made any employees report to work even for a single day during that period. Previously, the lower courts had ruled that the amount of subsidy corresponding to the actual days worked was all that was required to be returned, but the Supreme Court overturned this decision.
The employment retention subsidy is a system where the government supports a portion of the leave pay when business owners facing management difficulties maintain employment through layoffs or leaves of absence instead of dismissing workers.
The Supreme Court's second division (Chief Justice Oh Kyung-mi) announced on the 9th that it has overturned the second trial's ruling in a lawsuit filed by Global Contents Group, which operates a CGV cinema in Chuncheon, Gangwon Province, asking for an annulment of the order to return the full amount of the employment retention subsidy issued by the Gangwon Regional Employment and Labor Office.
Global Contents Group reported to the labor office that it would place some employees on leave from March to May 2020 and received a total of 30,247,760 won in employment retention subsidies over five instances. This was during a period when theater operations were difficult due to the effects of the novel coronavirus disease (COVID-19).
However, the labor office demanded that Global Contents Group return 19,101,210 won and pay an additional 38,202,420 won in November of the same year. It has been reported that an investigation by the labor office confirmed that the company had made employees report to work from a minimum of one day to a maximum of eight days during the period it was supposed to place them on leave. The Ministry of Employment can order the return of subsidies received illegitimately by corporations, and as a form of sanction, it can collect up to five times the amount of improperly paid funds.
In response, the company filed a lawsuit against the labor office asking for the annulment of the subsidy return order.
The first trial ruled that the labor office's order to return the entire subsidy was incorrect and annulled the action. The court stated, 'The amount of leave pay paid for the actual days worked should be calculated, and only that amount should be considered as improper receipt and returned.' However, as the exact number of days that employees actually reported to work was not determined, the court canceled the order altogether because there was no basis for calculating improper receipt. The labor office appealed, but the second trial court dismissed the appeal.
However, the Supreme Court determined that Global Contents Group did not initially meet the requirements for receiving employment retention subsidies as defined in the Enforcement Ordinance of the Employment Insurance Act, and therefore must return the entire amount. Article 19, Section 1, Clause 3 of this ordinance states that 'corporations must grant leave for more than one month in order to receive employment retention subsidies.' This means that a continuous leave of more than one month is required, and the company failed to meet this criterion by making employees report to work in between.