Wage and severance pay claims lawsuit, Law firm Veat led to the victory of the corporation.

Law firm Veat successfully represented Company A, which develops new drugs utilizing quantum computing and artificial intelligence (hereinafter referred to as "the client"), in a wage and retirement pay claim lawsuit filed by a former executive who resigned, winning a complete victory.

​The plaintiff, a former executive of the client, claimed that some of his wages were unpaid until his departure and that he should be recognized as having a right to retirement pay due to his tenure as an executive, and brought a claim for unpaid wages and retirement pay against the company after his departure.

​In response, Law firm Veat actively argued that the plaintiff's wage and retirement pay claims lacked a legal basis, based on legal analysis and review of the company's internal documents, and demonstrated that the matter could not be legally recognized. As a result, the court sided with Veat and the client, and dismissed the plaintiff's claims entirely.

The Court's Ruling on the Claim for Unpaid Wages

Regarding the unpaid wage claim raised by the former executive, Law firm Veat presented objective evidence proving the completion of wage payments through a thorough review of the facts and materials. In particular, salary payment records, employment contracts, and internal records that could prove that payments were completed up to the date of departure were submitted, and the court dismissed the plaintiff’s claim based on this.

It is essential for companies to manage clear records of wage payments and other materials in order to win disputes with retirees. Therefore, all companies should thoroughly maintain employment contracts and records of salary payments to be prepared to respond quickly in the event of future disputes.

The Court's Ruling on the Retirement Pay Claim pursuant to Article 388 of the Commercial Code

While general employees are obligated to receive retirement pay under the Labor Standards Act, executives are compensated as determined by Article 388 of the Commercial Code, and the same legal principles apply to retirement pay.

​▶ Article 388 of the Commercial Code and the Determination of Executive Compensation

Article 388 of the Commercial Code

"The compensation of a director shall be determined by a resolution of the shareholders' meeting if not stipulated in the articles of incorporation."

That is, the compensation and retirement pay of an executive are determined by the articles of incorporation or a resolution of the shareholders' meeting, and if determined by the board of directors, it must be done by specifying the specific amount or delegating the total amount or limit amount.

​▶ Non-existence of the Client’s Obligation to Pay Retirement Pay

​Law firm Veat discovered that there was no provision clearly stipulating the payment of retirement pay to the plaintiff by analyzing the client’s articles of incorporation and shareholders' meeting minutes. Furthermore, it actively argued that no resolution had been made by the company’s shareholders' meeting or board of directors regarding the plaintiff’s retirement pay.

The court ruled, based on the legal principle that “retirement pay for a director is deemed compensation for a director and that a claim for payment cannot be recognized unless stipulated in the articles of incorporation or a resolution of the shareholders' meeting," and dismissed the plaintiff's claim for retirement pay.

This case emphasizes the need for all companies to clearly define and manage provisions related to executive compensation and retirement pay, and clearly illustrates how Article 388 of the Commercial Code is applied in practice.

Companies should clearly define the standards for payment of executive compensation and retirement pay in the articles of incorporation to prevent unnecessary disputes. Furthermore, compensation and retirement pay matters should be decided in advance through resolutions of the shareholders' meeting and board of directors and through formal procedures. When an executive retires, a thorough record of the wage and retirement pay settlement and related supporting documentation should be retained to be prepared for potential disputes. Finally, it is important to negotiate the terms of retirement pay and document them through legal experts when entering into an executive contract to establish clear standards.

Law firm Veat provides strategic legal services to support companies in effectively responding to legal disputes such as lawsuits related to unpaid wages and retirement pay, based on its in-depth legal interpretation in the field of commercial law and abundant litigation experience. This case, like the one above, is one of the important issues in corporate management, and requires prior legal review and response strategies to resolve it. We will continue to strive to provide strategic legal services that resolve corporate legal disputes and, moreover, prevent them.

The case study can also be viewed on the Law firm Veat blog below.

- Successfully Led Veat to Client’s Victory in a Lawsuit for Claims of Unpaid Wages and Retirement Pay

Thank you.

Law firm Veat