A court has ruled that delivery riders should be regarded as employees under the Labor Standards Act, a decision expected to send ripples through the industry. Until now, delivery riders had been classified as workers in special types of employment, holding a dual status as both self-employed operators and employees under the Labor Standards Act. The ruling is expected to serve as a bridge for platform workers, including delivery riders, to be recognized as employees under the Labor Standards Act.
According to labor and legal circles on Monday, the Seoul High Court on Friday ruled in favor of the plaintiff in an appeal in a lawsuit for confirmation of invalid dismissal and payment of wages, filed by a delivery rider identified as A against a platform company. As A's status as an employee under the Labor Standards Act was recognized, the company's contract termination, which did not follow the legal procedures under the Labor Standards Act such as written notice, was ruled invalid. At the same time, A's right to claim wages that had not been paid during the dismissal period was recognized.
The key basis on which the court recognized A's status as an employee was the employer's "substantial direction and supervision." Platform companies have typically argued that they merely act as intermediaries connecting service users, franchise stores, and delivery riders. But the court structurally regarded the company and delivery riders as "a single business." The court said, "The substance of the defendant's business lies in building and operating a service to deliver goods to users who have purchased products from franchise stores," adding, "The delivery rider did not selectively use the platform as an independent operator, but was substantially incorporated into the defendant's business by accepting and performing delivery orders through the app."
A worked in a structure in which it was difficult to completely reject the dispatch information provided by the company and work independently. The company used delivery algorithms and the Global Positioning System (GPS) to look up in detail A's real-time location, travel routes, and number of deliveries. In this process, specific work instructions were issued, such as "a ban on dispatching orders that had been received less than 10 minutes earlier." When a delivery rider violated guidelines or was absent, the company imposed sanctions and control by lowering the cap on the number of bundled deliveries, which determined the rider's income. In effect, they also had to work at designated working hours and workplaces.
However, the court acknowledged that A worked in a somewhat more relaxed form than a typical employee. This was because A worked only when logged into the delivery app and could hold a second job outside working hours. But the court said, "If it is a labor relationship in which work is performed subordinately under direction and supervision for the purpose of compensation, the worker should be regarded as an employee under the Labor Standards Act," adding, "Until separate legislation on platform labor is enacted, it is desirable to flexibly regulate the labor relationship in accordance with its substance, rather than broadly denying employee status."
Labor circles actively welcomed the ruling. Oh Min-gyu, head of the research office at the labor issues research institute Haebang, said, "This ruling interprets the app and algorithm as an element of dependency on the employer, that is, of direction and control, while at the same time recognizing the need for flexible application of the Labor Standards Act to platform workers," adding, "We can expect this to spread to platform labor in general, in which labor management through apps and algorithms is a core element." The Public Service and Transport Workers' Union said in a statement, "It has once again been confirmed that obligations under the Labor Standards Act cannot be stripped away on the grounds of platform labor," urging, "Platform companies must establish measures to guarantee the rights of platform workers under labor law."
