The South Korean Supreme Court has ruled that taxi companies cannot artificially reduce workers’ designated working hours to bypass minimum wage laws, establishing a significant legal precedent for transport industry compensation. According to court records from a ruling delivered on July 9, 2026 (Case No. 2025다213225), justices overturned lower court decisions that had previously validated hour-reduction agreements between transport firms and drivers.
Supreme Court Ruling Tackles Minimum Wage Evasion
According to the Supreme Court ruling, taxi company H Company repeatedly altered the designated working hours of its drivers. The firm set working hours at four hours per day in 2012, reduced them to three and a half hours in 2014, increased them back to four hours in 2016, and reduced them again to three and a half hours in 2017 and 2019. Court documents show that despite these frequent contractual adjustments, drivers’ actual daily driving times and on-site work patterns remained entirely unchanged. Driver A and colleagues filed a lawsuit for unpaid wages, arguing that the company manipulated designated hours solely to make hourly base pay appear compliant with South Korea’s minimum wage laws.
Legal Standards for Reduced Working Hours Under South Korean Law
Under South Korean labor law, employers and workers can freely agree on baseline working hours provided they do not exceed statutory limits. However, according to Supreme Court jurisprudence—including a 2019 full bench decision (Case No. 2016다2451)—agreements made merely as formal pretenses or with the intent to evade mandatory statutes like the Minimum Wage Act are legally void. In the H Company case, the Supreme Court emphasized that three and a half hours per day does not reflect a taxi driver’s normal working hours, nor is it sufficient to meet daily revenue quotas (sanakgeum). The court found a substantial mismatch between actual working hours and the shortened contract hours, ruling that union participation in management agreements does not automatically validate such evasive practices.
Impact on Transport Workers and Future Wage Claims
This ruling carries significant implications for minimum wage enforcement across the transportation sector.
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