Taxi Co-op Members Are Workers Too — Full Guide to Supreme Court Decision 2023Du54914

Taxi Co-op Members Are Workers Too — Full Guide to Supreme Court Decision 2023Du54914

Background of the Case

On 29 January 2026, the Supreme Court handed down Decision 2023Du54914, addressing two questions: whether taxi drivers who are members of a taxi cooperative (택시협동조합) qualify as workers under the Labor Standards Act (근로기준법), and whether their employment relationships are automatically transferred when a business succession occurs between cooperatives. The ruling is of great practical importance because it put a brake on attempts to deny worker status by exploiting the special organizational form of a cooperative.

Key Issue ① Worker Status of Cooperative Members

Article 2(1)(1) of the Labor Standards Act (근로기준법 제2조 제1항 제1호) defines a worker as "a person who provides labor to a business or workplace for the purpose of wages, regardless of the type of occupation." Courts determine worker status based on the actual subordinate relationship, not on the name or form of the contract.

In this case, the taxi drivers were registered as members of the cooperative, but in practice they followed the cooperative's assigned driving schedules, operated vehicles allocated in the cooperative's name, and paid a fixed percentage of their earnings to the cooperative. The Supreme Court recognized their worker status on the basis of this actual subordinate relationship, making clear that worker status cannot be denied simply because of the outward appearance of a cooperative structure.

Note for foreign workers: Whether your contract calls you a "member," "partner," or "freelancer," what matters is how you actually work. If you follow your employer's instructions and work under their control, you may be protected as a worker under Korean law regardless of your contract's label.

Key Issue ② Transfer of Employment Relationships on Business Succession

A further issue was whether, when a business is transferred between cooperatives, the existing workers' employment relationships are automatically succeeded by the acquiring cooperative. The Supreme Court applied the established legal principle — that employment relationships are as a general rule comprehensively transferred to the transferee upon a business transfer — equally to transactions between cooperatives.

Accordingly, the acquiring cooperative must take over the existing workers' length of service, the basis for calculating severance pay (퇴직금), wage conditions, and all other terms of employment as they stand. Dismissing workers on the grounds of a business transfer, or unilaterally changing their working conditions to their disadvantage, may constitute a violation of Article 23 of the Labor Standards Act (근로기준법 제23조, restrictions on dismissal, etc.).

Why This Ruling Matters

As platform work, cooperatives, and freelance contracts become increasingly common, the determination of worker status is growing ever more important. This decision reaffirms that even where the organizational form is a cooperative, workers who are in a genuinely subordinate relationship are entitled to the protections of the Labor Standards Act.

It is also important to note that if a resignation letter is submitted while a relief application for unfair dismissal (부당해고) is pending, the interest in relief is extinguished. The Supreme Court made this clear in Decision 2008Du22136: once the employment relationship ends, the Labor Relations Commission must dismiss the application. Anyone pursuing an unfair dismissal relief procedure must therefore think very carefully before resigning.

Practical Checklist

• Confirm worker status: Regardless of what your contract is called, comprehensively review whether you are subject to direction and supervision, how your pay is structured, and whether you work exclusively for one employer.
• Relief application deadline: You must file an application for relief with the Regional Labor Relations Commission within 3 months of the date of the dismissal or other disadvantageous disposition (Article 28 of the Labor Standards Act, 근로기준법 제28조).
• Check working conditions after a business transfer: Always verify that the acquiring employer has taken over your existing working conditions.
• Severance pay payment deadline: If severance pay is not paid within 14 days of retirement, a delay penalty of 20% per annum accrues (Article 17 of the Enforcement Decree of the Labor Standards Act, 근로기준법 시행령 제17조).

If you want to know whether your situation constitutes unfair dismissal or how much severance pay you are entitled to, try the severance pay calculator and AI labor law search at workbear.kr. You can also get help with complex worker-status assessments and drafting relief application documents.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.