Taxi Companies Manipulating Official Working Hours to Lower Wages... Supreme Court: "Invalid as Act of Evasion"

Supreme Court Division 2 Overturns Lower Court Ruling and Orders Retrial

The Supreme Court has put a stop to the long-standing practice among taxi companies in Ulsan of circumventing the minimum wage by manipulating payment methods.

On May 14, the Supreme Court's Division 2 (Presiding Justice Kwon Youngjun) overturned a lower court's ruling that had sided with taxi companies in a wage claim lawsuit filed by taxi drivers and sent the case back to the Busan High Court for retrial.

The case originated when the law changed to require that only the "base salary" be used to calculate taxi drivers' minimum wage, excluding "the amount left after deducting daily quotas (base amount)." Faced with the burden of having to raise the base salary, companies adopted a workaround: they drastically reduced the official working hours (contractual working hours) on paper, while leaving the drivers' actual working hours unchanged. Since the minimum wage is calculated by dividing wages by hours worked, reducing the denominator—the number of hours—allowed companies to meet the legal minimum wage on paper.

The Supreme Court ruled that such tactics are acts of evasion that undermine the intent of the Minimum Wage Act. Notably, the Court held that not only agreements to reduce working hours, but also cases in which a short working time had been established from the outset, are invalid.

The Supreme Court panel pointed out that the company's claim of having contracted for only two hours of work per day was "unrealistic" because it differed too much from the drivers' actual working hours. The Court indicated that setting working hours at a level comparable to "ultra-short-time workers"—to the extent that ordinary employees would not even be eligible for national welfare benefits—defies common sense. Furthermore, the Supreme Court determined that, even compared to other taxi companies in Ulsan, the two-hour standard was excessively short, making it clear that the intent was to pay less than the minimum wage.

This content was produced with the assistance of AI translation services.