Minimum Wage Act | Supreme Court Judgment Holding That the Setting of Contractual Working Hours Under the Taxi One-Person-One-Vehicle System Is Void If Intended to Circumvent the Minimum Wage

The court of first instance granted part of the plaintiff drivers' claims, but some plaintiffs, particularly Plaintiff 8, lost or prevailed only in part.

The court of first instance held that even if the setting of the contractual working hours under the one-person-one-vehicle system was somewhat short, it was difficult to conclude that it was legally void.

It did, however, recognize the fact that the minimum wage had not been met for certain periods of employment.

The appellate court (Daegu High Court) made the following determinations.

It held that the one-person-one-vehicle setting (1.5 hours) was valid.

Because this was the first time a new work arrangement had been set after the special provision took effect, the court held that it could not be regarded as an agreement to shorten hours.

It held, however, that the agreement to shorten hours under the alternate-day system (the setting of 3 hours) was void because it was intended to circumvent the minimum wage.

Accordingly, in calculating the minimum wage, the court computed the shortfall by including all 16 hours per day and the portion exceeding 13 full attendance days per month.

Ultimately, the lower court recognized the claims of some drivers and dismissed the rest.

The Supreme Court held that even for a new work arrangement, contractual working hours of 1.5 hours were void if they markedly diverged from the actual work and were intended to circumvent the Minimum Wage Act.

This constitutes an act in evasion of the law that circumvents the mandatory provisions of the Minimum Wage Act, and the court held that it must supplement the intent of the parties to the employment relationship and determine valid contractual working hours.

The court further pointed out that, considering the work arrangements of taxi companies near Gumi (two shifts of six hours and forty minutes or more), the defendant company's setting of 1.5 hours was clearly unreasonable.

The Supreme Court held that working hours exceeding the standard of 8 hours per day and 40 hours per week, and working hours on days exceeding the monthly contractual working days (13 days), are in principle excluded from the calculation of the minimum wage.

Accordingly, the court held that the lower court's use of all 16 hours per day as the basis for calculation was a misapprehension of the law.

As a result, Plaintiff 8's final appeal was rejected; the claims of some plaintiffs (relating to the period of employment under the one-person-one-vehicle system) were found to have merit and were reversed; and the portion of the defendant's loss relating to the calculation of the minimum wage was also reversed, and the case was remanded to the Daegu High Court.

Drawing on this judgment, Daeryun Law Firm presents the following practical strategies for businesses.

▶Verification of the actual working hours

▶Review of employment contracts and wage agreements

▶Litigation response strategy

▶Corporate risk management

A business that needs legal advice regarding the Minimum Wage Act is welcome to make a 🔗legal consultation reservation at any time.