In a significant case where the employee status of Tada service drivers was at issue, the Seoul Administrative Court rendered a decision in favor of the Plaintiff, Socar Co., Ltd. (“Socar”), thereby reversing the decision of the National Labor Relations Commission (the “NLRC”) that recognized the Tada drivers as Socar’s employees.

The case at issue began when freelance drivers providing driving services for Tada filed a wrongful termination petition against Socar, claiming that their exclusion from the entitlement to preferential assignment of vehicles by the service company constituted wrongful termination.  The Seoul Regional Labor Relations Commission (the “SRLRC”) dismissed the petition for relief on the ground that the drivers were not Socar’s employees.  However, the NLRC accepted the petition upon re-examination, recognizing the drivers as “employees” under the Labor Standards Act (“LSA”) and Socar as the actual operator of Tada services.

In response, Socar, represented by Kim & Chang appealed the NLRC’s decision and filed an administrative lawsuit with the Seoul Administrative Court, analyzing the characteristics of the platform business and workers in the platform business industry, and based on this analysis, argued that platform workers and employees are clearly distinguishable under the LSA.  In addition, Kim & Chang argued in depth that (i) the traditional legal principles regarding employees under the LSA that are premised on an established subordinate relationship, are not applicable to platform workers, and (ii) the provision of information to and from platform workers in the course of performing their duties is different from the employer’s supervision and direction over employees under the LSA.

Accepting all of Socar’s arguments, the Seoul Administrative Court stated that, even if there is a need to protect platform workers against the backdrop where the boundary between independent contractors and employees has become blurred with the number of platform workers continuing to increase, various forms of private contractual relationships should still be respected.  The Court also suggested that the existing criteria for “employee” status based on the subordinate relationship under the LSA may not apply to platform workers, and thus the protection of platform workers should be ensured via separate legislation.

With the continued emergence of a gig economy, where platform work represented by big data and algorithms is increasing, relevant legal disputes occur more frequently.  In light of this, the Seoul Administrative Court’s recent decision may be considered very meaningful, in that it suggested important criteria for determining whether platform workers may be recognized as employees under the LSA.