The Supreme Court has ruled that a taxi company violated the Minimum Wage Act by setting the prescribed working hours at 3 hours and 30 minutes a day when concluding a wage agreement with taxi drivers. The court said the fares earned from driving for 3 hours and 30 minutes a day appear insufficient even to cover the "daily quota payment" that taxi drivers must pay to management.
The Supreme Court's Third Division (presiding Justice Lee Heung-gu) said on the 19th that on the 9th of last month it overturned an appellate ruling that dismissed the claims of three taxi drivers, including a driver identified as A, in a back wage suit against a Ulsan taxi company identified as B, and sent the case back to the Ulsan District Court.
The three, including A, work or previously worked at B. In 2007, when B concluded a wage agreement with the labor union, it set the monthly prescribed working hours at 160 hours, then reduced them in 2008 to 96 hours a month (4 hours a day). In 2014, it cut the prescribed working hours to 3 hours and 30 minutes a day, restored them to 4 hours in 2016, and then reduced them again to 3 hours and 30 minutes in 2017.
This was because in December 2007 an exceptional provision was added to the Minimum Wage Act excluding "wages based on output" from the scope of wages included in the minimum wage. In Ulsan, this provision has applied since July 2009.
A and the others argued that "the reduction of the prescribed working hours under the 2007 wage agreement from 160 hours a month to 96 hours or 80 hours and 30 minutes is invalid because it circumvents the mandatory exceptional provision of the Minimum Wage Act." They demanded payment of wages and severance pay falling short of the minimum wage calculated on the basis of 160 hours a month.
B, on the other hand, said, "Until the 2007 wage agreement, the company operated a full-amount management system, not a fixed daily quota payment system," and added, "To stave off liquidation amid worsening business, the union agreed to participate in management starting with the 2008 wage agreement, and we implemented a fixed daily quota payment system while reducing the prescribed working hours."
Under the full-amount management system, a taxi driver pays the company all transportation revenue earned in a day, and the company pays the driver a fixed monthly salary. Under the fixed daily quota payment system, the driver pays the company a set amount each day (the daily quota payment) and keeps the remaining revenue.
The first trial dismissed the plaintiffs' claims. Citing the union's participation in management, the first trial bench found it difficult to see the agreement to shorten only the prescribed working hours as intended to avoid having the fixed pay, excluding wages based on output under the exceptional provision, fall below the minimum wage. The plaintiffs appealed, but the second trial dismissed the appeal.
The Supreme Court found there is a strong possibility that the 2014, 2017, and 2019 wage agreements setting the prescribed working hours at 3 hours and 30 minutes a day constitute an unlawful act aimed at circumventing the application of the Minimum Wage Act's exceptional provision.
The Supreme Court said, "The actual working hours of taxi drivers include preparation time and waiting time," adding, "Three hours and 30 minutes a day appears insufficient time even for a taxi driver to cover the daily quota payment." It continued, "It is true the union participated in management, but that does not make the agreement to shorten the prescribed working hours valid for that reason."