Notable court cases this month

Invalidity of wage payments made to a third party even with employee authorization

On June 12, 2025, the Supreme Court of Korea held that, in principle, an employer’s payment of wages to a third party—even if based on the employee’s authorization—violates the “principle of direct payment” under Article 43 of the Labor Standards Act and is therefore invalid, unless exceptional circumstances apply. The Court acknowledged a limited exception only when wages are paid to a person who is effectively treated as the employee under social norms or to someone who can be trusted to deliver the wages directly to the employee without fail (Supreme Court Case 2025Da209645, June 12, 2025).

Case summary:

• A construction company hired seven daily workers and had them work on-site for a certain period. The workers submitted written authorizations requesting that their wages be paid into a bank account held by a staffing agency employee, citing difficulties in opening their own bank accounts.
• However, the staffing agency employee who received the payments testified that he had never met the workers and merely transferred the wages to a third party based on the submitted IDs and authorization letters.
• It was later found that this third party used the wages for other purposes, and the workers subsequently filed a lawsuit, claiming that the company had violated the statutory principle of direct wage payment.
• The lower court ruled that the principle of direct payment is a mandatory provision aimed at protecting workers’ livelihoods and should be followed except as expressly stipulated by law (e.g., under the Seafarers Act).
• The Supreme Court affirmed this view, holding that the staffing agency employee could not be deemed someone equivalent to the employee or someone who could be trusted to deliver the wages directly. Therefore, the employer’s wage payments were invalid, and the obligation to pay wages to the employees remained.

Implications:

This ruling underscores that wages must, as a rule, be paid directly to the employee. Payments to staffing agencies or third-party accounts—even if authorized by the employee—may be legally invalid. Unless there are exceptional circumstances, employers must ensure that wage payments are made directly to the employee. Any alternative method of payment should be strictly limited to cases where the recipient can be clearly trusted to deliver the wages on behalf of the employee.

Labor and government trends

1. Minimum wage commission rejects industry-specific rates, maintains single minimum wage system

On June 19, 2025, the Minimum Wage Commission held its sixth plenary session at the Government Complex Sejong and voted on whether to adopt industry-specific minimum wages for 2025. The proposal was rejected with 11 votes in favor, 15 against, and 1 invalid, meaning that a uniform minimum wage will continue to apply across all industries throughout 2026.

During the session, labor representatives opposed the proposal, arguing that there are no objective data showing a correlation between the minimum wage and small business closure rates. They also warned that applying different minimum wages by industry could institutionalize discrimination.

In contrast, business representatives emphasized the varying payment capacities and productivity levels across industries and argued that sectors such as hospitality and food services require differentiated wage levels. They also cited examples from several OECD countries that operate similar differentiated systems, stating that such models could improve public acceptance of wage policies.

The labor and business sides also submitted their initial proposals for the 2025 minimum wage. Labor representatives called for a 14.7% increase, proposing KRW 11,500, while business representatives proposed a freeze at KRW 10,030—resulting in a gap of KRW 1,470 between the two sides. It remains to be seen how the Commission will settle the issue. Its next session is expected to take place on July 3.

2. Ministry of employment and labor to reintroduce legislation on working hour restrictions during heatwaves

In January 2025, the Ministry of Employment and Labor (MOEL) proposed an amendment to the Regulations on Occupational Safety and Health Standards, defining any work environment with an apparent temperature of 31°C or higher as a “heatwave work environment.” The proposed amendment included mandatory measures such as: providing at least 20 minutes of rest for every two hours of work when the apparent temperature exceeds 33°C; installing cooling and ventilation equipment; and requiring immediate reporting of suspected heat-related illnesses.

The new regulation was scheduled to take effect on July 1, 2025. However, the Regulatory Reform Committee recommended reconsideration, citing concerns about the effectiveness of the “20-minute rest after two hours of work” rule and the burden it may impose on small businesses. As a result, implementation of this clause has been put on hold.

MOEL announced plans to revise and reintroduce the draft regulation, focusing specifically on the contested provision. In the interim, the ministry has issued “Five Basic Safety Guidelines for Heatwaves” and is conducting a voluntary compliance period from June 2 to 20, 2025.

Given the increasing frequency of extreme heat due to climate change and rising rates of heat-related workplace accidents, how to institutionalize effective protection measures for workers under such conditions is expected to be a central issue in future labor policy discussions.

3. New administration nominates former KCTU leader as minister of employment and labor

On June 23, 2025, President Lee Jae-myung nominated Kim Young-hoon, former chair of the Korean Confederation of Trade Unions (KCTU), as Minister of Employment and Labor. Kim is a veteran labor activist who previously led the railway workers' union and the KCTU. During the 2022 presidential campaign, he served as head of labor policy for then-candidate Lee and helped draft key proposals such as the “Yellow Envelope Act.”

The nomination was welcomed by labor groups, who described Kim as a “pro-labor figure with a deep understanding of workplace realities.” In contrast, business groups urged caution, emphasizing the need to carefully consider how quickly and in what manner labor policies are implemented.

With this appointment, core labor initiatives of the new administration—including a proposed 4.5-day workweek, the enactment of the Yellow Envelope Act, and extending the mandatory retirement age—are expected to gain momentum. However, given the significant differences between labor and management on these issues, achieving a balance between social consensus and practical policy implementation will be challenging.