The Supreme Court has ruled that an individual Korean Federation of Community Credit Cooperatives (KFCC) branch may impose discipline on its executives and employees differently from what the KFCC chairman demands. This is because, after the revision of the KFCC Act, the chairman can no longer directly sanction executives and employees of individual KFCC branches.
The Supreme Court's Second Division (presiding Justice Chun Dae-yup) on Feb. 26 overturned a lower court ruling that had ruled against a person surnamed Lim in a lawsuit seeking confirmation that their dismissal from the A KFCC branch was invalid, and sent the case back to the Suwon High Court.
Earlier, in Dec. 2021, the KFCC central association demanded that A branch dismiss Lim for improper handling of loan processing and appraisal work. However, in Apr. 2022, A branch imposed a one-month suspension on Lim.
When Lim returned to work after the one-month suspension, the central association again demanded dismissal from A branch. It also warned, "If Lim is not dismissed, we will revoke the branch's authorization." A branch then resolved in Feb. 2023 to dismiss Lim.
Lim filed suit, arguing that the "dismissal" amounted to double punishment and was invalid. The first and second trials sided with A branch. They held that the one-month suspension was invalid because it violated the chairman's sanction demand, making the dismissal lawful.
The Supreme Court found that, under the current KFCC Act, the earlier one-month suspension cannot be deemed invalid, and that the dismissal constitutes double punishment.
Under the former KFCC Act, the central association chairman could directly impose sanctions on executives and employees of individual branches. The law was revised in Dec. 2017, removing the legal basis for the chairman to directly impose sanctions. The chairman may only demand that measures such as improvement, suspension from duty, reprimand, or warning be taken against executives and employees of individual branches.
The Supreme Court said, "For problems arising when an individual branch does not comply with the chairman's demand for measures, separate control mechanisms have been established through ex post administrative sanctions," adding, "When the chairman demands that sanctions be imposed on executives and employees of an individual branch, imposing a sanction different from the demand cannot be deemed immediately invalid."