Why Korean Courts Voided Taxi Drivers' Agreed Reductions in Scheduled Work Hours

Background

Some taxi companies have used an unusual tactic to avoid the Minimum Wage Act (최저임금법). Without changing the reality that taxi drivers actually operate vehicles for 8–10 or more hours a day, they reduced the "scheduled work hours" (소정근로시간) to just 2–3 hours a day through labor-management agreements or amendments to work rules. Because shorter scheduled hours make the apparent hourly wage look higher relative to the minimum-wage benchmark, companies could pay wages that actually fell below the minimum wage while appearing to comply with the law.

Core Holding of the Supreme Court's 2026 Ruling

In its ruling 2025다202901, handed down on 14 May 2026, the Supreme Court again drew a clear line against this practice. The key legal principle is as follows:

An agreement that formally reduces only scheduled work hours while leaving actual working hours unchanged is void as an illegal act of evasion (탈법행위) designed to circumvent the Minimum Wage Act.

The Court held that not only agreements that "reduce" scheduled hours, but also those that set or maintain unrealistically low scheduled hours from the outset, may be void. By reversing and remanding the lower-court decision, the ruling opened the door for taxi drivers to recover the shortfall below the minimum wage.

A Consistent Line of Rulings

This ruling did not emerge in isolation. The Supreme Court had already held in 2016다2451 (decided in 2019) that a reduction in scheduled work hours through an amendment to work rules constitutes an illegal evasion and is void. Subsequently, 2023다279402 ruled void an agreement that cut scheduled hours from 6.6 hours per day to 2 hours 50 minutes, and 2023다206138 confirmed that the same legal principle applies to agreements newly concluded after the special-provision amendments to the Minimum Wage Act took effect.

The question of which hours to use as the basis for calculating the minimum wage once scheduled hours are ruled void has also been settled. 2021다225074·225081 and 2023Da200314 held that the scheduled hours under the previous collective agreement apply first; if those cannot be determined, the court must supplement the parties' intent and fix the hours on a reasonable basis. 2023다292955 reversed and remanded a lower-court decision for error regarding whether weekly holiday hours (주휴시간) should be included.

The Supreme Court followed the same line in 2023Da223744 (decided 25 July 2024), a claim by taxi drivers for minimum-wage shortfalls: it found no legal error in the lower court's (Suwon High Court) judgment on the effect of the agreement reducing scheduled work hours. However, finding errors in how the lower court calculated the minimum-wage shortfall — such as counting hours beyond the 40-hour statutory work week as scheduled hours — the Court reversed the part of the lower court's judgment that the company lost on the main claim, among others, and remanded the case to the Suwon High Court.

Practical Points Workers Should Know

① Check your scheduled work hours first. If the scheduled work hours stated in your employment contract or work rules differ significantly from your actual start and end times, you should examine whether your wages fall below the minimum wage.

② How to compare against the minimum wage. The 2026 minimum wage is KRW 10,320 per hour (KRW 2,156,880 per month, based on a 40-hour week / 209 hours). If your actual wages divided by your actual working hours fall below this figure, you may claim the difference. Note that your contract may specify terms different from this statutory minimum, but the statutory floor always applies.

③ Interest accrues on unpaid wages. If an employer misses the payment deadline (e.g., within 14 days after retirement), delay interest of 20% per annum accrues under Article 17 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제17조).

④ Preserve evidence. Securing actual driving logs, attendance records, and pay stubs will be advantageous in the event of a dispute.

Conclusion

Disputes over scheduled work hours are not limited to the taxi industry. Article 6 of the Minimum Wage Act (최저임금법 제6조) applies to all employers, and a formal agreement made for the purpose of illegal evasion can be void regardless of industry. If you want to check whether your wages meet the minimum wage standard, use the salary take-home calculator at workbear.kr to quickly confirm your net pay after taxes and four major social insurance deductions, as well as your hourly wage equivalent.

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

Frequently Asked Questions

If a scheduled-hours agreement is ruled void, what scheduled hours are used to calculate the minimum wage?

The Supreme Court held that when an illegal-evasion agreement is void, the scheduled work hours under the previous collective agreement apply. If those hours cannot be determined either, the court must supplement the parties' intent and fix the scheduled hours on a reasonable basis see cases 2021다225074·225081 and 2023다200314 .

If a taxi company pays the minimum-wage shortfall late, does interest accrue?

In principle, yes. Any money not paid within 14 days after retirement accrues delay interest at 20% per annum Article 37 1 1 of the Labor Standards Act / 근로기준법 제37조 제1항 제1호 and Article 17 of its Enforcement Decree / 근로기준법 시행령 제17조 . Since the amendment in force from 23 October 2025, it also applies to wages unpaid while still employed. However, it applies only to wages whose payday falls on or after that date Article 37 1 2 of the same Act / 같은 항 제2호; Article 2 of the Addenda to Act No. 20520 / 근로기준법 부칙 법률 제20520호 제2조 , and not for any period in which it is recognized as appropriate for the employer to dispute the wages before a court or the Labor Relations Commission Article 37 3 of the same Act / 같은 조 제3항; Article 18 of its Enforcement Decree / 같은 법 시행령 제18조 .

Can workers other than taxi drivers also claim that an agreement reducing scheduled work hours is void?

Yes. An agreement that reduces only scheduled work hours — without any actual change in the way work is performed — for the purpose of evading the Minimum Wage Act can be void as an illegal evasion regardless of industry. However, the purpose, circumstances, and actual hours worked must all be examined comprehensively, so professional consultation is recommended.