Exclusive
"Failed to Keep 3-Year Employment Promise": Former Booyoung Housing Executive Wins Partial Damages Suit Against Chairman Lee Joong-keun

[비즈한국] A BizHankook investigation has confirmed that Booyoung Group Chairman Lee Joong-keun and Booyoung Housing recently lost a partial damages lawsuit filed by a former Booyoung Housing executive, who claimed that the company failed to guarantee the promised working conditions and compensation. The former executive, who filed the lawsuit, had signed a written commitment with Chairman Lee to work as an executive managing director at Booyoung Group for three years. After actually working at Booyoung Housing for one year, the executive filed the suit, arguing that Chairman Lee and Booyoung Housing failed to fulfill their obligation to ensure he could work for the agreed three-year period under the stipulated conditions.

On April 24, the Seoul Central District Court (Presiding Judge Jung Hoe-il) ruled in a damages lawsuit filed by the former Booyoung Housing executive, Mr. A, against Chairman Lee Joong-keun and Booyoung Housing, ordering Chairman Lee to pay 303.3 million KRW and Booyoung Housing to pay 52.82 million KRW to Mr. A. Previously, Mr. A had filed the suit seeking 514.24 million KRW in unpaid compensation and severance pay, arguing that despite an obligation under the written commitment to employ him at Booyoung Housing for three years with an annual salary of 180 million KRW, the two parties had failed to honor the agreement.

Booyoung Group Chairman Lee Joong-keun signed a letter of commitment regarding working conditions with Mr. A in February 2023. The agreement stipulated that starting in March of that year, Mr. A would work for three years at Booyoung and its affiliates as an executive managing director with an annual salary of 180 million KRW. It is reported that Chairman Lee, looking for someone with experience and knowledge in civil engineering, was introduced to Mr. A through an acquaintance. Mr. A actually signed a one-year commission contract with Booyoung Housing in March 2023 and worked as an executive managing director there from that month until February of last year. The salary stipulated in this commission contract was also 180 million KRW per year, including salary and bonuses.

However, the promise was not kept. Two months into the contract, in May 2023, Booyoung Housing issued a personnel order mandating Mr. A to work from home and reduced his compensation. While Booyoung Housing paid the salary stipulated in the commission contract from March to May 2023, after that point until the contract expired in February last year, they only paid the basic salary, excluding bonuses (a portion of which was paid in June) and business expenses. After the commission contract ended, they did not renew the contract with Mr. A. No other Booyoung affiliate signed a new commission contract with him either.

Mr. A filed the damages lawsuit in October 2023, alleging that Chairman Lee Joong-keun and Booyoung Housing failed to guarantee the promised work and treatment. The essence of the claim was that the two parties were obligated to ensure he worked at Booyoung Housing for three years at an annual salary of 180 million KRW, but failed to do so, and that he suffered financial losses as only partial compensation was paid following the personnel order. Mr. A requested that Chairman Lee and Booyoung Housing be held jointly liable for the 514.24 million KRW in unpaid compensation and severance pay.

The Seoul Central District Court determined that Booyoung Group Chairman Lee Joong-keun had violated his obligations under the letter of commitment. The court ruled, "Even though Chairman Lee Joong-keun agreed to ensure Mr. A could work at Booyoung affiliates such as Booyoung Housing for three years according to the letter of commitment, he failed to guarantee the remaining two years by not extending the contract with Booyoung Housing or having other affiliates sign a contract with him after the commission contract ended; therefore, it is reasonable to conclude that there was a breach of contract regarding the letter of commitment." The court added, "Due to Chairman Lee's violation, Mr. A suffered a loss equivalent to the compensation he would have received had he been able to work at Booyoung affiliates for those two years."

The court also determined that Booyoung Housing did not properly pay the salary stipulated in the commission contract. In the lawsuit, Booyoung Housing argued that it issued the personnel order based on auxiliary clauses in the contract because Mr. A lacked the competence to lead the apartment construction department, and that it ceased paying bonuses and business expenses because he subsequently failed to perform his duties. However, the court dismissed Booyoung Housing's argument, stating there was no basis for it. The court noted, "It is reasonable to view that Booyoung Housing caused Mr. A to suffer a loss equivalent to the compensation he would have earned had he continued to provide delegated services, as the company issued personnel orders contrary to the contract and arbitrarily reduced his pay."

However, the court decided that Booyoung Housing was not required to fulfill the obligations under the letter of commitment signed between Chairman Lee and Mr. A. In this lawsuit, Mr. A claimed that Booyoung Housing, along with Chairman Lee, had violated the obligations of the letter of commitment. However, the court ruled that because Booyoung Housing was not a party to that specific letter, a breach of contract could not be established. It also found Mr. A’s claim unfounded as he failed to provide specific arguments or evidence regarding illegal acts by Booyoung Housing. The judgment regarding Booyoung Housing's breach of duty was limited solely to the one-year commission contract signed directly with Mr. A.

Meanwhile, the defendants—Chairman Lee Joong-keun and Booyoung Housing—as well as the plaintiff, Mr. A, filed appeals last month, dissatisfied with the ruling.

Booyoung Group is South Korea’s 28th-largest business conglomerate, centered on the construction industry. It has 21 subsidiaries, including Booyoung Housing, which accounts for about 80% of the group's revenue. As of May this year, the group's total fair assets amounted to 21.452 trillion KRW. Chairman Lee Joong-keun, the founder, established the company in 1983 and grew the business through rental housing projects. The holding company, Booyoung, recorded 2.4877 trillion KRW in consolidated revenue and 362.8 billion KRW in operating profit in 2020, but it has faced three consecutive years of operating losses, recording 632.5 billion KRW in revenue and a 127.7 billion KRW operating loss last year.