Maximum extension terms allowed for fixed-term contract workers and an exception allowed when hiring an elderly person on a fixed-term basis

Maximum extension terms allowed for fixed-term contract workers and an exception allowed when hiring an elderly person on a fixed-term basis

Under Article 4 of the Fixed-Term and Short-Term Employees Protection Law of Korea, the employer may offer a fixed-term contract for a maximum duration of 2 years. If an employee works for more than 2 years and none of the exceptions listed below apply, employee shall automatically be converted to a permanent employee, considered to have an employment contract with no fixed term.

Article 4 (Use of Fixed-Term Employees) of the Fixed-Term and Short-Term Employees Protection Law of Korea:
① An employer may hire a fixed-term employee for a period not exceeding 2 years (the total continuous employment period shall not exceed 2 years in cases where a fixed term employment contract is repeatedly renewed). However, a fixed-term employee may be employed for a period exceeding 2 years if any of the following exceptional conditions are met.
1. When a period necessary for completion of a business project or a specific task is specified.
2. When a vacancy arises due to an employee’s leave of absence or transfer to another business location, and a temporary replacement is needed until the employee returns.
3. When a period necessary for an employee to complete academic courses or vocational training is specified.
4. When an employment contract is concluded with an elderly person, as defined in Article 2, Paragraph 1 of the Act on Employment Promotion of the Elderly.
5. When the use of professional knowledge or skills is required, or when jobs are provided in accordance with government welfare or unemployment policies as prescribed by the Presidential Decree.
6. Other rational reasons equivalent to items 1 through 5 above, as prescribed by the Presidential Decree.
② If an employer continues to employ a fixed-term employee for a period exceeding 2 years without satisfying any of the exceptions outlined in Paragraph 1, or if such exceptions no longer apply, the fixed-term employee shall be deemed to have entered into an employment contract of indefinite duration.

In this connection, however, in accordance with the “Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion, when an employment contract is entered into with an elderly person (aged 55 or older), the obligation to convert to a permanent position is exempt even if the contract exceeds two years. Accordingly, when company re-hires employees after mandatory retirement age, the company will be therefore exempt from the two-year limitation.