Hanan Industrial Complex Daycare Center Loses Lawsuit Over Operating Expenses... "No Evidence of Support Promise"

Claim for Industrial Complex Operating Expenses Rejected by Court:
"No Obligation to Provide Support"
Management Difficulties After Subsidy Suspension, Operations Halted in February

The director who operated a daycare center within an industrial complex, after government and local subsidies were cut off, lost a lawsuit filed against the industrial complex management corporation demanding a share of operating expenses. The court ruled, "It is difficult to recognize that there was a promise to support operating expenses."

According to the legal community on July 6, Chief Judge Chae Seungwon of the Gwangju District Court Civil Division 1 ruled against the plaintiff in a lawsuit filed by an individual referred to as A against the Gwangju Hanan Industrial Complex Management Corporation, seeking operating expenses and other claims. The court stated, "There is no evidence to support the plaintiff's claim that the corporation deceived them into signing the contract by making it appear as though operating expenses would be provided."

Starting from January last year, A signed an agreement with the corporation to be entrusted with operating the daycare center within Hanan Industrial Complex for three years. The agreement included a clause stating that "a portion of the necessary operating expenses may be supported within the scope of Gwangju City's subsidies." Based on this, A claimed 136.1 million won in operating expenses from the corporation.

The claimed amount was calculated by applying the 50% employer contribution standard for workplace daycare centers under the Enforcement Decree of the Infant Care Act. The daycare center had been operating as an affiliated facility of the Hanan Industrial Complex Workers' Welfare Center since being approved as a workplace childcare facility in 2009.

However, in 2010, the labor authorities determined that "the tenant companies had not been involved in the installation or operation of the daycare center," and thus denied its status as a workplace childcare facility. As a result, the daycare center was excluded from eligibility for workplace childcare support, and previously paid subsidies were also subject to recovery.

Afterwards, the management corporation used part of the subsidies it received from Gwangju City for the operation of the welfare center as funding for the daycare center. However, the city subsidies, which had been around 60 to 80 million won annually, were suspended from last year, when A took over operations, due to budget tightening.

The daycare center, which continued to operate without the expected support, faced difficulties due to a decrease in the number of children and financial hardship, and eventually suspended operations in February this year. Although A argued that "the corporation had in effect promised to provide financial support when the operation was entrusted," the court did not accept this claim.