Recent Noteworthy Court Rulings Labor and Employment Disputes

Court Denies Employment Status to FoodDelivery Worker

Seoul Central District Court Case No. 2022GaHap534381

The Seoul Central District Court ruled that a delivery services worker operating his motorcycle who entered into a delivery service outsourcing agreement with a company with a delivery services platform (the “Company”) is not an “employee” under the Labor Standards Act (the “LSA”). Pursuant to the LSA, an “employee” is defined as “a person, regardless of the kind of occupation, who offers labor to business or a workplace for the purpose of earning wages.” The District Court in the first instance highlighted that the delivery worker performed his delivery services independently with the ability to accept or reject delivery requests as communicated by the company while also making any deliveries as accepted to routes selected by the delivery worker – the foregoing served as the District Court’s rationale in denying employment status the delivery person. The District Court further noted that the delivery worker could in his own discretion set his/her status as “working,” “resting” or “off duty” without regard to any working hour and break time requirements set by the Company as well as to accept or reject delivery requests based on his location and route. Lastly, the District Court found that the Company’s guidelines for its delivery workers were not to be viewed as specific work instructions. Interestingly, the prohibition on the wearing of slippers when providing delivery services was not to be deemed an employee requirement/rule nor direct work orders; rather, such prohibition was implemented as safety measures for the benefit of its delivery workers.

This ruling is in contrast with a recent ruling by the Supreme Court of Korea where the judges held and recognized drivers of Tada as employees under the LSA. In its decision, the Supreme Court focused on the drivers and their willing compliance to the supervision and control by Tada. Tada is a ride-hailing service company for consumer passengers in South Korea established in 2015. Tada primarily offers mobility and transportation services where users can download the Tada mobile application and once installed the user can request a vehicle by a Tada driver.

The recent District Court ruling is expected to have a significant impact with legal discourse on with respect to various platforms businesses and the status of employment for its workers. However, as in the Tada case, there remains a possibility of the employment status being challenged on appeal and a reversal of the decision by a High Court in the second instance.

Wage Peak System Invalidated at Hana Securities

Seoul Southern District Court Case No. 2023GaDan210186

On 16 August 2024, the Seoul Southern District Court invalidated the wage peak system implemented by Hana Securities as having violated the Age Discrimination in Employment Act (the “Age Discrimination Act”). The wage peak system involves the reduction of wages in place of the practice of extending or maintaining the retirement age at Hana Securities.

In this case, the District Court examined factors such as the purpose of introducing the wage peak system, the degree to which affected employees were disadvantaged, the adequacy of compensation provided by the employer, and the intended use of the saved wages. Moreover, the District Court focused on the fact that by increasing the retirement age by two years led to a de facto reduction of the total wages or maintaining/holding the total wages for the affected employees during the additional period. The decision received criticism as an unusual decision by the District Court. The outcome of any potential appeal and its impact will be closely monitored by many employers, employees and other stakeholders.

LG Electronics Labor-Management Council Regulation Disclosure Order

Seoul Administrative Court Case Nos. 2023GuHap79975, 2023GuHap79982

The Seoul Administrative Court overturned a decision made by the Ministry of Employment and Labor where the MOEL denies the disclosure of the Labor Management Council Regulations (respectively the “LMC” and the “LMC Regulations”) at LG Electronics. In doing so, the Administrative Court ordered LG Electronics to make available specific information of the LMC Regulations not only to union members at LG Electronics but also to the executives of The Korean Metal Workers' Union (“KMWU”). The KMWU is one of the major industrial/manufacturing labor unions in South Korea which is affiliated with the Korean Confederation of Trade Unions (“KCTU”) which is also a major labor federation organization in South Korea.

The union members and executives of KMWU requested the disclosure of the LMC Regulations in 2022; however, the MOEL previously ruled to withhold some information as business trade secrets.

The Administrative Court later found that information such as the name, location, and electoral districts of the LMC did not constitute trade secrets such as product production information, business and sales status, or strategic directives. This administrative ruling implies that when information related to a labor-management council is requested and there is a decision to not comply and disclose same – careful consideration must be given as to whether the information constitutes a business trade secret and whether disclosure would significantly harm a company's legitimate commercial interests.

Trends in the Labor Market and Government Policy

Coupang Death due to Excessive Work Allegations and Violation of the Serious Accident Punishment Act

The National Delivery Workers’ Union (the “Delivery Union”) filed a complaint against the CEO of Coupang alleging violations of the Serious Accident Punishment Act (“SAPA”). The specific claims involve Coupang's “Rocket Delivery” system which led to physical exhaustion leading to death among delivery drivers for the Rocket Delivery system. The Delivery Union argues that Coupang’s management is responsible and liable under SAPA for which it should bear legal responsibility for the deaths. Recent cases involving the death of delivery drivers on the job due to excessive work are cited as evidence.

However presently, there are no cases involving criminal prosecution under SAPA involving claims for excessive work leading to death by workers as it is challenging to prove causation from an evidentiary perspective; as a result, the likelihood of the actual prosecution of such cases is considered to be low.

Aricell Fire Incident: Arrest Warrant for Management Executives

A fire at the Aricell’s battery plant in Hwaseong on 24 June 2023 led to the death of 23 individuals. The National Police Agency and the Ministry of Employment and Labor have issued arrest warrants for Aricell’s CEO Park Soon-Kwan and two other executives on charges of violating the Serious Accident Punishment Act, the Occupational Safety and Health Act, and the Act on the Protection of Temporary Agency Workers (a/k/a the “Dispatch Act”). The three executives are accused of failing to implement and install adequate safety measures at the battery plant and concealing certain facts surrounding the industrial accident at Hwaseong.

The Gyeonggi District Prosecutor’s Office has set up a Special Investigation Team to determine the cause of the fire and assign responsibility to any wrongdoers. Additionally, labor law violations such as wage arrears were discovered during the investigation of the Dispatch Act leading to an order by the MOEL for corrective measures against Aricell.

Minimum Wage for 2025 set at KRW 10,030 per Hour

The Minimum Wage Commission has set the minimum wage for 2025 at KRW 10,030 per hour which is an increase of 1.7% from 2024. The minimum wage will be applied uniformly across all industries and companies of varying sizes. This marks the first time the minimum wage as exceeding KRW 10,000 in turn raising the monthly salary of workers to KRW 2,096,270 (approximately USD 1,560 s of the current foreign exchange rate).

It is noted that the decision for the increase was a median based on a range (i.e., KRW 10,000 to KRW 10,290) as suggested by public interest members to narrow the gap between labor and management opinions.

Increase in Childbirth and Parenting Support pursuant to the 2025 Budget for the Ministry of Employment and Labor

The 2025 budget proposal by the Ministry of Employment and Labor highlights increased support for childbirth and parenting for employees. Parental leave benefits will be raised to a maximum of KRW 2.5 million per month. Specifically, the support benefits will start at KRW 2.5 million per month for the first three months during the post-birth period; decrease to KRW 2 million for months 4-6; and will be KRW 1.6 million for months 7-12.

Additionally for priority support companies, paid leave for spouses will be extended from 5 days to 20 days. Also, a new incentive program will provide an additional KRW 200,000 per month to employees who provide additional work when taking the role and responsibilities of an employee on parental leave.