Cassation judgment No. 12/2006/LD-GDT dated July 4, 2006 on dispute over unilateraltermination of labor contract

COUNCIL OF JUSTICES OF THE SUPREME PEOPLE’S COURT

CASSATION JUDGMENT NO. 12/2006/LD-GDT DATED JULY 4, 2006 ON DISPUTE OVER UNILATERALTERMINATION OF LABOR CONTRACT

On July 4, 2006, the cassation trial was conducted at the office of the Supreme People’s Court to hear the case of dispute over unilateral termination of labor contract between:

- Plaintiff: Mr. Tae Man Song, born in 1948; nationality: Korea;

Mailing address: Mr. Lee Seong Hui, Lot 49, Zone B, Street 2, Binh Tan Dock, Vinh Nguyen Ward, Nha Trang City, Khanh Hoa Province.

- Defendant: Huyndai-Vinashin Shipyard Limited Liability Company (hereinafter referred to as Hyundai-Vinashin company); headquartered at: 1 My Giang, Ninh Phuoc, Ninh Hoa, Khanh Hoa province; represented by Lee Sung Woo, General Director.

DEEMING THAT

Mr. Tae Man Song had been recruited to work as a captain of Hyundai-Vinaship from March 11, 1999 for several 1-year labor contracts; in specific:

- The labor contract signed from March 11, 1999 to March 10, 2000,

- The labor contract signed from March 11, 2000 to March 10, 2001,

- The labor contract signed from March 11, 2001 to March 10, 2002,

- The labor contract signed from March 11, 2002 to March 10, 2003,

- The labor contract signed from March 11, 2003 to March 10, 2004,

- The labor contract signed from March 11, 2004 to March 10, 2005.

The contractual monthly salary is 3,700,000 Won (equivalent to VND 51,800,000).

During the above working time, Mr. Tae Man Song only held a foreign work permit valid from March 11, 2001 to March 10, 2002.

On April 27, 2004, Huyndai-Vinashin company assigned Mr. Tae Man Song as Captain, Mr. Lee Seong Hui as Chief Engineer to operate a tugboat to tow Chi Linh ship from dry dock to harbor so as to tow Harackle ship and the buoy of Dai Hung rig into the dry dock, so that the production team to carry out repairs as planned.  Mr. Tae Man Song and 3 other Korean workers failed to follow the dispatch instruction of the company and then leave the working place.          

On April 29, 2004, the General Director of Hyundai-Vinashin Company met with the Executive Board of Internal Trade Union, discussing the fact that Mr. Tae Man Song voluntarily quit his job and issued a notice terminating the labor contract with Mr. Tae Man Song, for the reason that Mr. Tae Man Song committed a breach of the labor contract. On May 3, 2004, Mr. Tae Man Song received a notice of termination of the labor contract.

On December 1, 2004, Mr. Tae Man Song filed a lawsuit against Hyundai-Vinashin Company for unilaterally terminating the labor contract illegally. Mr. Tae Man Song asked Hyundai-Vinashin company to accept him to return to work, if the contract was still effective, it must pay compensation for the period over which he cannot work and pay severance allowance as prescribed in Article 41, Article 42 of the Labor Code.

Hyundai-Vinashin Company did not accept Mr. Tae Man Song’s request, and filed a counterclaim, requesting that Mr. Tae Man Song had to jointly compensate for failing to follow the dispatch instruction with total damages of USD 60,860.50.

In the First Instance Labor Judgment No. 03/2005/LDST dated May 27, 2005, the People’s Court of Khanh Hoa province judged:

Pursuant to Article 133, Clause 3 of Article 166, Article 41, Article 42 and Article 87 of the Labor Code, Articles 14, 15 and 16 of the Government's Decree No. 44/2003/ND-CP dated May 9, 2003, Decree No. 105/2003/ND-CP of September 17, 2003 of the Government; the labor contract signed between March 11, 2004 and March 10, 2005, between Mr. Tae Man Song and Hyundai-Vinashin Company was declared wholly null and void.

- Accept a part of Mr. Tae Man Song’s request to pay damages to Mr. Tae Man Song totaling: VND 465.336.662.

- Rebut the defendant’s counterclaim, requesting Mr. Tae Man Song to pay damages totaling USD 60,860.50 because there is no legal basis.

Hyundai-Vinashin Company has to pay VND 20.239.995 of court fee for rejected counterclaim, less VND 11,476,000 paid in advance; it has to pay VND 8,817,995.

In addition, the judgment also announced the right to appeal of the litigants.

After the first-instance trial, on June 4, 2005, Mr. Tae Man Song filed an appeal, requesting re-calculation of the exchange rate between Won and VND at the time of first instance trial and forcing Hyundai-Vinashin Company to fully compensate him salaries, severance and job loss allowance as prescribed.

On June 8, 2005, the defendant wholly appealed the first instance judgment.

In the appellate labor judgment No. 03/2005/LDPT dated October 28, 2005, the Appellate Court of the Supreme People’s Court of Da Nang judged:

Pursuant to Clause 2 Article 275; Clause 1 Article 276 of the Civil Procedure Code; amend the First Instance Judgment.

Pursuant to Article 133; Clause 4, Article 166; Article 41 and Article 42 of the Labor Code.  

- Huyndai-Vinashin Shipyard Limited Liability Company has to compensate Mr. Tae Man Song for salaries and severance allowances totaling: VND 736,423,268.

- Rebut the counterclaim of Huyndai-Vinashin Shipyard Limited Liability Company, requesting Mr. Tae Man Song to pay damages totaling USD 60,860.50 because there is no legal basis.

Uphold other decisions of the First Instance Judgment.

In addition, the judgment also decided the appellate labor court fee.

After the appellate hearing, the General Director of Hyundai-Vinashin Company filed several appeals against the Appellate Judgment.

In Decision No. 01/KN-LD dated March 23, 2006, the Chief Judge of the Supreme People's Court protested the Appellate Judgment No. 03 dated October 28, 2005 of the Appellate Court of Supreme People’s Court in Da Nang, requesting the Judges' Council of the Supreme People's Court to overturn the First Instance and Appellate Judgments and hand over the case files to the People's Court of Khanh Hoa province for re-trial of case according to the first-instance procedures.

In Conclusion No. 09/KL-ALD dated May 29, 2006, the Chief Procurator of the Supreme People's Procuracy considered that the protest of the Chief Justice of the Supreme People's Court was necessary and proposed to the Council of Judges of the Supreme People's Court, pursuant to Clause 3, Article 297 of the Civil Procedure Code, overturn the Appellate Judgment No. 03 dated October 28, 2005 of the Appellate Court of the Supreme People's Court in Da Nang and the First Instance Judgment No. 03/2005/LDST dated May 27, 2005 of the People's Court of Khanh Hoa province; hand over the case file to the People's Court of Khanh Hoa province for re-trial in the first instance proceedings.  At the cassation hearing, the representative of the Supreme People's Procuracy upheld the above point of view.

CONSIDERING THAT

Article 4 of the labor contract stipulates:  "Party B's working time depends on the situation of Party A's work". Article 9 of the labor contract also stipulates that Party A has the right to terminate the labor contract with Party B if Party B does not follow Party A's order instructions”.

Based on the agreement in the labor contract as mentioned above, the fact that Mr. Tae Man Song did not follow the towing order on April 27, 2004, is a breach of labor contract, therefore, Hyundai-Vinashin Company has the right to terminate the labor contract, but there is a breach of the advanced notice period.

However, according to the presentation of the parties and the results of verification by the People's Court of Khanh Hoa province, while working at Hyundai-Vinashin Company under the labor contracts, only the working time from March 11, 2001 to March 10, 2002, Mr. Tae Man Song was permitted to work by the Department of Labor, Invalids and Social Affairs of Khanh Hoa province.

Pursuant to Article 133 of the Labor Code and Article 6 of the Decree No. 105/2003/ND-CP dated September 17, 2003 on guidelines for the Labor Code regarding the recruitment and management of foreign laborers working in Vietnam, the first instance court and appellate court had sufficient legal basis when declaring that the labor contract signed between Hyundai-Vinashin Company and Mr. Tae Man Song from March 11, 2004 to March 10, 2005 was null and void.   However, the first instance court and appellate court were wrong when declaring that Hyundai-Vinashin company’s unilateral termination of the labor contract with Mr. Tae Man Song was illegal, thus forcing Hyundai-Vinashin to compensate Mr. Tae Man Song unpaid salaries from the termination date until the expiry of the labor contract, plus two months of salaries under Clause 1, Article 41 of the Labor Code.

As the labor contract between the parties is invalid, pursuant to Article 16 of the Decree No. 44/2003/ND-CP dated May 9, 2003 of the Government on guidelines for the Labor Code concerning labor contracts and laws in force, Mr. Tae Man Song only enjoy the rights of employees as agreed by the parties in the contract to the date of Mr. Tae Man Song quit the job, not until the end of the contract.

Regarding the defendant's counterclaim:  Hyundai-Vinashin has made a request for a compensation of USD 60,860.50 from Tae Man Song, including: the cost of hiring a tug boat and employees of the maritime service company, revenue lost due to not releasing the dock and wharf for lease, penalties for late delivery of ships to customers and labor costs for laborers who have to be off work.

The documents in the case file show that:  Because Mr. Tae Man Song did not tow the ship; therefore, Hyundai-Vinashin Company had to hire the tugboat MASC 3 of Nha Trang Marine Service Company to tow the ship on April 28 and April 29, 2004, at a cost of VND 176,139,936.

The fact that Mr. Tae Man Song not towing the train slowed progress of repairs of Chi Linh ship. Accordingly, based on the ship repair contract, Hyundai-Vinashin Company was fined for delaying delivery of the Chi Linh ship with the amount of USD 698,978.00. According to calculations of Hyundai-Vinashin Company, the fine of 02 days is USD 66,569.34.

The above evidence shows that there has been a loss of assets and benefits for Hyundai-Vinashin Company; that damage arises from the breach of Mr. Tae Man Song.  The courts were supposed to consider all the evidence, and determine the actual damage that has occurred and the faults causing the damage to settle the case in accordance with the law.

The first instance court and the appellate court had not considered evidence provided by Hyundai-Vinashin Company comprehensively when wholly rebutting the damage claim made by Hyundai-Vinashin Company.

According to the above-mentioned consideration, the Judges' Council of the Supreme People's Court recognizes the need to accept the protest of the Chief Justice of the Supreme People's Court, overturn the Appellate Judgment No. 03 dated October 28, 2005 of the Appellate Court of the Supreme People's Court in Da Nang and the First Instance Judgment No. 03/2005/LDST dated May 27, 2005 of the People's Court of Khanh Hoa province, handing over the case file to the People's Court of Khanh Hoa province for trial according to the first instance proceedings.

According to facts and matters, pursuant to Clause 3 Article 291, Clause 3 Article 297 and Clause 2 Article 299 of the Civil Procedure Code;

HEREBY DECIDES

Overturn the Appellate Judgment No. 04 dated October 28, 2005 of the Appellate Court of the Supreme People’s Court in Da Nang and the First Instance Judgment No. 03/2005/LDST dated 27 May 2005 of the People's Court of Khanh Hoa province; hand over the case file to the People's Court of Khanh Hoa province for first instance re-trial in accordance with the provisions of law.

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- Grounds for overturning the First Instance Judgment and Appellate Judgment:

1. The first instance court and appellate court’s determination that Hyundai-Vinashin Company unilaterally terminated the labor contract with Mr. Tae Man Song is unlawful;

2. The first instance court and the appellate court had not considered evidence provided by Hyundai-Vinashin Company comprehensively when wholly rebutting the damage claim made by Hyundai-Vinashin Company.

- Reasons for overturning the First Instance Judgment and Appellate Judgment:

1. Nonconformities in application of law to deal with null and void contracts;

2. Inadequacies in examination and assessment of evidence.