In Gangnam, the 'Gyul Law'; in Gangbuk, the 'Taengja Law'?Different Court Rulings... Taxi Industry in COVID Crisis Faces Confusion Over 'Working Hours' Lawsuits

[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Yong-woo] #1. (Seoul) In October 2021, seven current and former corporate taxi drivers lost a lawsuit claiming about 100 million KRW in unpaid wages against their employer, A Transportation.

The statutory working hours for a ‘taxi’ driver had been 6 hours and 40 minutes per day since 2009 under the Minimum Wage Act, but A Transportation shortened the working hours three times by labor-management agreement, reducing it to 5 hours per day from February 2018.

The taxi drivers filed a lawsuit claiming that since the work itself had not changed, the reduction of statutory working hours was intended to secretly evade the mandatory Minimum Wage Act and was therefore invalid, demanding unpaid wages based on the original 6 hours and 40 minutes per day.

The Seoul Western District Court ruled that, given the nature of the taxi industry where work is performed outside the workplace, the agreement to shorten statutory working hours by labor-management agreement was valid, dismissing the plaintiffs’ claims and siding with the company.

Subsequently, in March 2022, the second trial upheld the first trial’s ruling, and the Supreme Court also dismissed the taxi drivers’ appeal (dismissed without review). The court consistently ruled in favor of the taxi company from start to finish.

#2. (Busan) In February 2022, seven taxi drivers of B Transportation won a lawsuit claiming unpaid wages against their company in the second trial.

The Busan High Court ordered the taxi company to pay 56.37 million KRW out of the 154.56 million KRW claimed by the plaintiffs in the appeal.

The Busan court viewed that since the actual working patterns and driving hours had not changed and only the statutory working hours were shortened, this was a ‘circumvention act’ cleverly avoiding the special provisions of the Minimum Wage Act and thus invalid. The Supreme Court also dismissed B Transportation’s appeal against this ruling (dismissed without review).

Although the shortened statutory working hours and the timing of labor-management agreements differed, the nearly identical lawsuits in Seoul and Busan courts produced different rulings, plunging the nationwide taxi industry into turmoil.

Both active and retired taxi drivers have been filing a flood of unpaid wage lawsuits to have the full 6 hours and 40 minutes recognized.

Including first trial rulings, over 300 lawsuits are reportedly pending in Busan alone. About 18 verdict hearings are scheduled from August to October.

Expanding nationwide, the situation is even more serious. Courts across the country are reportedly handling about 2,000 ‘identical’ lawsuits.

From case hearings, resumption of arguments, to verdicts, domestic courts are each adjudicating the same issue of ‘shortening statutory working hours’ separately.

Moreover, depending on the outcome of the trials, the number of related lawsuits involving more ‘stakeholders’ is expected to snowball.

A corporate taxi driver in Busan said, “There is still time before the statute of limitations expires, so I plan to watch as many verdicts as possible and see how the company responds before deciding,” adding, “I understand most other drivers and retirees think similarly.”

Hit hard by the ongoing COVID-19 crisis for over two years and burdened by about 2,000 related lawsuits and conflicting court rulings, the taxi industry is being pushed endlessly toward the edge.

So far, labor and management in the taxi industry have set basic wages and deposit amounts based on statutory working hours through agreements, due to the nature of taxi work performed outside the workplace where working hours and minimum wage settings were unclear, following the implementation of special provisions under the Minimum Wage Act in July 2009.

Statutory working hours refer to the hours mutually agreed upon by employer and employee for wage calculation when working hours cannot be measured within the workplace. Taxi drivers’ working hours are a representative example of statutory working hours.

Under the Minimum Wage Act, even if the employer tries to set longer statutory working hours, taxi drivers consistently oppose it.

The longer the statutory working hours, the higher the fixed salary, but fixed salary includes indirect costs such as various taxes and four major social insurance premiums, which increase the deposit paid to the company more than the fixed salary increase. This wage structure is not favored by drivers who consider the excess transportation income after deducting the deposit as their real earnings.

The current wave of unpaid wage lawsuits in the taxi industry was triggered by the Supreme Court’s plenary session ruling in 2019.

The ruling declared that the labor-management agreement to shorten statutory working hours was a ‘circumvention’ act to reduce fixed salary and thus invalid.

Attorney Oh Seung-won of Somang Law Firm pointed out, “The plenary session ruling misunderstood the legal principles regarding working hours by overlooking the special nature of taxi company work patterns such as alternate day shifts, and also failed to understand that taxi drivers’ work obligations are determined by the correlation between taxi fares and deposits, resulting in a major error.”

Attorney Oh also said, “The trust between taxi labor and management who agreed on statutory working hours has collapsed, and rulings are not made based on objective and uniform standards but vary depending on judges’ tendencies, resulting in different rulings even on identical or similar cases.”

A lawyer who formerly served as a Supreme Court judicial researcher explained, “The more socially significant the trial, the more judicial researchers thoroughly review it to ensure no conflict with existing precedents,” adding, “Since 2019, strange trials producing conflicting results on the same issue have been ongoing.”

Jang Sung-ho, director of the Busan Taxi Transportation Business Association, lamented, “I have heard the saying that ‘tangerines from Gangnam become trifoliate oranges when they go to Gangbuk’ depending on the soil, but what if the law differs between Seoul and Busan?” He added, “After the COVID-19 crisis, some companies are considering temporary closure or shutdown, and having to face wage lawsuits with different rulings in each trial is very painful.”

The taxi industry has lost many passengers over the past two years due to social distancing and nighttime business restrictions. Facing livelihood crises, taxi drivers have chosen to change jobs, and taxi companies are unable to find drivers, leaving vehicles idle. As operation rates decline, consumers sometimes face a ‘taxi-catching war,’ and taxi companies are struggling in a deficit.

Before emerging from this dark and long tunnel, taxi labor and management stand in line before ‘lottery’ trials, hoping to meet a favorable judge.