The Supreme Court has ruled that workers reaching retirement age can hold a legitimate expectation of being rehired, even without any rule requiring it, as long as an established company practice has built a relationship of trust between employer and employee.
The Supreme Court's Second Division, presided over by Justice Eom Sang-pil, overturned a lower court ruling that had favored a company identified as A and sent the case back to the Daejeon High Court, legal sources said on the 13th. The company had sued the chairman of the National Labor Relations Commission seeking to cancel a review decision that found it had unfairly dismissed workers.
A, a passenger transport operator, states in its employment rules that workers must retire upon reaching the age of 61. The dispute arose when two bus drivers hit that age. They asked the company to rehire them as fixed-term contract workers, but the company ended their employment without a substantive response. The drivers, denied rehiring, filed for relief with the Jeonnam Regional Labor Relations Commission. The regional commission sided with the drivers, saying it was unjust for the company to refuse rehiring without reasonable grounds when the drivers held a legitimate expectation of being rehired on contract. After the National Labor Relations Commission reached the same conclusion and found unfair dismissal, the company filed suit.
The central issue was whether retiring workers hold a legitimate expectation of being rehired on a fixed-term contract. The first and second trials reached opposite conclusions.
The trial court found that such an expectation existed. It cited the fact that the company's employment rules provide a basis for rehiring and that 19 of 25 workers who reached retirement age since 2021 were rehired. On that basis, the court concluded that a practice of rehiring workers who met certain conditions had become established, creating a relationship of trust between the company and its employees.
The appeals court, by contrast, sided with the company. The employment rules state that a worker "recognized as specially necessary for business operations may be employed as a contract worker after retirement." The appeals court held that the phrase "may be employed" did not impose an obligation to rehire. It also cited the fact that only 18 of the 38 workers who reached retirement age in 2021 and 2022 were actually rehired as grounds for reversing the trial court.
The Supreme Court, however, found that the appeals court had misapplied the legal principles governing expectation of rehiring after retirement. Even without a provision in a collective agreement or elsewhere requiring that retiring workers meeting certain conditions be rehired as fixed-term employees, the top court said, such an expectation can be recognized where a rehiring practice has become established. Courts must weigh a range of circumstances, including how and for how long rehiring has been carried out and the share of workers rehired, it said.
"It can be seen that a relationship of trust had formed between the company and its bus drivers, under which workers could be rehired as fixed-term employees if they met certain conditions even after reaching retirement age," the Supreme Court said. "The company's employment rules provide a basis for rehiring, and apart from the workers in this case and one other worker, all were rehired without exception."
The court also found that the company had no reasonable grounds for refusing to rehire the two bus drivers. "The expectation of rehiring is grounded in the relationship of trust with the company," the Supreme Court said. "The mere fact that the 2017 collective agreement had lapsed cannot justify giving no response at all to the workers' requests to be rehired on contract."
