Supreme Court Rules "Tada Drivers Should Be Considered Workers Under the Labor Standards Act"

The Supreme Court has ruled that drivers for the vehicle dispatch service 'Tada' qualify as workers under the Labor Standards Act.

Supreme Court building.

On the 25th, the Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) dismissed the appeal filed by SoCar, the parent company of VCNC which operated Tada, against the Central Labor Commission's decision to cancel the retrial ruling on unfair dismissal, thereby upholding the lower court's ruling against the company.

In July 2019, VCNC, which operated Tada under freelance contracts with drivers, notified about 70 drivers including Mr. A of contract termination, citing the necessity to reduce the number of vehicles. Mr. A applied for relief from unfair dismissal to the Labor Commission, claiming that he was effectively a worker under VCNC's direction and supervision but was unilaterally dismissed. The Central Labor Commission recognized SoCar as the employer and ruled that the unilateral contract termination constituted unfair dismissal. SoCar filed a lawsuit in objection.

The first trial court ruled that Mr. A was not an employee of SoCar, but the second trial court judged that he was indeed a worker. The second trial court stated, "Mr. A's work was basically determined within the framework created by the Tada service operator through the application (app)," and found that he provided labor in a state of factual subordination.

On this day, the Supreme Court also found no problem with the lower court's judgment.

The court stated, "Whether a person qualifies as a worker or employer under the Labor Standards Act should be judged not by the form of the contract but by the substance of the labor provision relationship, specifically whether labor was provided under a subordinate relationship for wages in a business or workplace."

Furthermore, "When determining whether platform workers are employees, it is necessary to appropriately apply the criteria for workers and employers under the Labor Standards Act, considering the business structure where labor providers and users are connected through online platforms, reducing the need for direct individual labor contracts, and the characteristics of labor management involving algorithms of online platforms or multiple business participants in deciding work allocation and execution methods."

Mr. A initially filed the relief application against VCNC but later added SoCar as a respondent. SoCar argued that the statute of limitations for filing an unfair dismissal relief application had passed, but the Supreme Court rejected this. The court reasoned, "As modern employment forms diversify, workers often find it difficult to accurately identify their employer from the outset, and in such cases, they are more likely to be in economically vulnerable positions, making it even more necessary to use the Labor Commission's relief procedures."

The court added, "If relief is denied on the grounds that the statute of limitations has already expired despite circumstances arising to add or change the respondent after the worker's relief application, it would defeat the purpose and intent of the Labor Commission's relief procedures."