Korean Insurance Agents Labor Union (“KIALU”) belonging to the Korean Confederation of Trade Unions (“KFTU”) announced through the media that it would file litigation against insurance companies in June 2019 to claim payment of remaining fees that are not paid to insurance agents after termination of insurance agents. The KIALU, notwithstanding having never received a certificate of labor union establishment, has been active since 2013.
The KIALU is planning to bring together insurance agents who did not receive the remaining fees after being terminated and file lawsuits on their behalf. The insurance agents will be represented by the KIALU legal office during litigation.
Insurance agents once filed a similar lawsuit in the past. However, at that time the Supreme Court dismissed their claim, ruling that an insurance company’s failure to pay fees to its terminated insurance agents was not in violation of the Act on the Regulation of Terms and Conditions and the Civil Act, because, whether or not to pay fees is a matter to be determined by the concerned parties depending on the circumstances. Since the remaining fees are paid to insurance agents as compensation for their maintenance and management of insurance contracts, the insurance company is not required to pay such fees to those who have been terminated and do not perform such maintenance and management.
However, the KIALU claims that since insurance companies do not pay any fees to the insurance agents who have been performing maintenance and management of the insurance contracts, the remaining fees that are not being paid are in actuality fees paid for the solicitation of insurance contracts. As such, the KIALU intends to reverse the previous Supreme Court decision.
Depending on the specific facts, a court may render a decision that is different from the Supreme Court decision. As the amount at stake may be significant, companies facing potential litigation relating to this matter should give the case sufficient attention.
Related Topics