[Q&A] Precautions for Renting Buses for Staff Commutes
2025. 4. 3
Question: Due to employees’ commuting needs or outings during working hours, it may become necessary to hire a bus as a commuter vehicle or company car. A car leasing company has proposed the option of providing a driver alongside the leased vehicle. Is this approach acceptable, and what risks could this entail?
Answer: When a car leasing company provides a driver alongside the leased vehicle, this arrangement constitutes a passenger transportation service rather than a conventional vehicle lease service. A commuter bus service transporting multiple individuals on designated routes and schedules falls under the category of "Chartered Passenger Transportation" as defined in Article 3 of the "Regulations on Road Passenger Transportation and Terminal Management." Likewise, a company vehicle used during working hours falls under the "Taxi Operation Services" category outlined in the "Taxi Operation Services Management Regulations." Consequently, these arrangements are classified as passenger transportation businesses, not simple vehicle leasing businesses.
In such instances, it is critical to confirm whether the car leasing company possesses the appropriate authorisation to operate passenger transportation services and whether the vehicles provided are registered and declared as commercial passenger vehicles. Failure to meet the necessary governmental approval requirements may expose your organisation to the following risks:
1.If the leasing company insures the vehicles as non-commercial vehicles and an accident occurs, the insurance company may decline to provide compensation. This could be on the grounds that the leasing company has been engaged in passenger transportation services beyond the scope of their insurance policy and breach the principle of integrity. As a result, compensation for injuries sustained by passengers may be affected.
2.Utilising an unauthorised leasing company may result in serious repercussions in the event of a major traffic accident. Your organisation could be held accountable during the determination of safety production liability. This could lead to fines being imposed on your organisation, as well as potential criminal or administrative consequences for your company’s key executives (this risk is particularly pronounced in the case of commuter bus services).
Question: If the inclusion of a driver provided by the leasing company increases the level of risk, what risks are associated with arranging drivers internally within the organisation?
Answer: Should your organisation arrange for its own drivers, the car leasing company’s role is limited to the provision of vehicles, without the need to apply for passenger transportation-related permits. From an administrative standpoint, only the external leasing of small microbuses is currently required to be reported to the local authorities. This does not significantly increase the legal risks borne by the lessee.
Nevertheless, your organisation should pay attention to the following two risks:
1.In the context of a simple vehicle rental arrangement, your organisation becomes the actual user of the vehicle. In accordance with the provisions of the Civil Code, your organisation would bear liability in the event of a traffic accident where the vehicle is at fault. Consequently, it may be necessary to appropriately increase the coverage of the insurance policy.
2.As the actual user of the vehicle, your organisation must ensure that the drivers operating the vehicles hold valid driving licences. In addition, it is essential to carry out regular maintenance, condition management, and pre-departure inspections of the vehicles to mitigate risks associated with safety production.