Article 28-I of the Labor Standards Act provides, “In the case of an employer winding up or liquidating his or her business or being adjudicated bankrupt, the worker shall have a preferred right to payment of wages which are payable under the labor contracts and which have been overdue for a period not exceeding six months.” And, the first half of Paragraph II thereof provides, “An employer shall make a monthly deduction at a fixed rate of the insured wages of workers and deposit the same in an "arrear wage advance fund" created for the purpose of paying the arrear wages referred to in the preceding paragraph.” The foregoing provisions are set forth by the Government for the purposes of protecting the rights and interests of workers, relieving the financial predicament of laborers, and furthering social stability and economic development. They are designed to prevent a worker from suffering damages due to non-payment of wages which are payable under the labor contracts resulting from the employer’s poor operation, bankruptcy or malicious shutdown. Under the said provisions, an employer must deposit a certain amount in the Arrear Wage Advance Fund at a fixed rate and, in the case of an employer winding up or liquidating his or her business or being adjudicated bankrupt, a worker shall be entitled to payment of wages out of the said fund which have been overdue for a period not exceeding six months so as to guarantee the payment of the worker’s wages to that extent.
Article 28-IV of the aforesaid Act provides, “Where a worker is not paid arrear wages after having requested payment from the employer, the arrear wages shall be disbursed from the said arrear wage advance fund, whereupon the employer shall reimburse the said fund within the prescribed time limit.” Furthermore, the first half of Article 14-I of the Advance Regulations, which is established pursuant to the aforesaid Article 28, provides, “The Bureau of Labor Insurance, after making advances of arrear wages that should have been paid by an employer according to Article 28 of the said Act, may exercise the first-priority claim for wages in subrogation under its own name.” Accordingly, the payment advanced by the Bureau of Labor Insurance is, in essence, a private debt owed by the employer to the worker, i.e., wages. Despite the fact that the Arrear Wage Advance Fund is established and managed by the central competent authority, the source of such fund derives from payments made by employers. The authority’s act of making advances is not a payment made under any public law to the people out of treasury funds, but instead is the provision of the fund collected from business owners to workers of a poorly operated business to ensure that such workers receive the aforesaid arrear wages. The Bureau of Labor Insurance, after making advances of arrear wages to the workers, will be entitled to make a first-priority claim for wages in subrogation. The scope, content and nature of such claim are identical to those of the original claim for wages under private law. In addition, while exercising the said claim in subrogation for the purpose of the Arrear Wage Advance Fund, the Bureau of Labor Insurance is essentially placing itself in the shoes of the worker. The nature of such claim does not change because the Arrear Wage Advance Fund is managed by a commission established by the central competent authority, or because the matters concerning the collection and custody of contributions to the said fund are managed by the labor insurance agency (See Article 28-V of the Labor Standards Act), or because the Arrear Wage Advance Fund is established in the interest of the public. In other words, the transfer of the original claim for wages from the workers to the Bureau of Labor Insurance is a transfer of claim pursuant to statutory provisions, and the private nature of such claim should not be changed because it is exercised by a state organ. Therefore, an ordinary court shall have jurisdiction over a private dispute arising in connection with the aforesaid claim. As regards an employer’s breach of duty to make contributions to the said fund, a monetary fine shall be determined and imposed under Article 79 (i) of the Labor Standards Act as amended and promulgated on December 25, 2002. Since the said act is a breach of duty under public law, the applicable procedures for administrative litigation should be followed.As an additional note, this matter has been brought to the attention of this Court because the agency filing the petition at issue was of a different opinion from other agencies as to the jurisdiction over legal actions arising in connection with the provisions of Article 28 of the Labor Standards Act and Article 14 of the Regulations Governing the Appropriation and Advances of Arrear Wages. Thus, a petition for uniform interpretation in that respect has been initiated. It should also be noted that, since the connotations of the right of instituting legal proceedings under Article 16 of the Constitution, as well as the respective provisions of the Code of Civil Procedure and of the Code of Administrative Procedure, are not the subject matters of the petition at issue, this Interpretation is not intended to cover the same.