Fixed-Term Contracts in Korea: What Happens After 2 Years? Conversion & Termination Explained

What Happens After 2 Years on a Fixed-Term Contract?

You may have heard: "If you work as a fixed-term employee for 2 years, you become a permanent employee." This is only half true. More precisely, you are converted to an indefinite-term contract worker (무기계약직), which is not the same concept as a regular permanent employee (정규직). Let's look at where the 2-year threshold comes from and how it actually applies.

The '2-Year' Principle Under the Act on Fixed-Term Workers

Article 4(1) of the Act on Fixed-Term and Part-Time Workers (기간제 및 단시간근로자 보호 등에 관한 법률; hereinafter "the Act") provides that if an employer uses a fixed-term worker for more than 2 years, that worker is deemed to have entered into a labor contract without a fixed term (an indefinite-term contract).

The key word is "exceeds." If the contract ends on the day the 2-year mark is reached, there is no violation of the law. However, if the worker is allowed to continue working even one day beyond 2 years, they are considered converted to an indefinite-term contract from that moment.

Note for foreign workers: Your employment contract may set terms different from this statutory minimum, but the statutory protection applies regardless.

Exceptions: Cases Where a Fixed-Term Contract May Continue Beyond 2 Years

The proviso to Article 4(1) of the Act permits use of a fixed-term worker beyond 2 years in the following cases:

• Contracts with workers aged 55 or older
• Work requiring specialized knowledge or skills, such as positions held by doctoral degree holders
• Government-funded jobs under the Framework Act on Employment Policy (고용정책 기본법) and similar statutes
• Cases where the worker wishes short-term employment for reasons such as study or vocational training

If one of these exceptions applies, the fixed-term contract may be maintained beyond 2 years. However, once the grounds for the exception cease to exist, the 2-year count restarts from that point.

What Is the 'Reasonable Expectation of Renewal' (갱신 기대권)?

Even if a contract is terminated at exactly the 2-year mark, that does not automatically make the termination lawful. The Supreme Court has held that where there is a practice of repeated renewals or the employer has promised renewal, a reasonable expectation of renewal (갱신 기대권) is established (Supreme Court Decision 2011다4629, etc.).

If a reasonable expectation of renewal is recognized, terminating the contract without a justifiable reason constitutes unfair dismissal (부당해고). You may assert a reasonable expectation of renewal in situations such as:

• The contract was renewed multiple times for the same duties
• The employer promised renewal verbally or in writing at the time of hiring or during the contract period
• All other colleagues in similar positions were renewed but your contract alone was terminated

How to Respond If You Receive a Contract Termination Notice

1. Secure your contracts and renewal history: Keep all past contracts, renewal notices, text messages, emails, and any other relevant documents.
2. Calculate your period of continuous service: If your continuous service period is 1 year or more, the right to claim severance pay (퇴직금) arises.
3. Check eligibility for unemployment benefits (실업급여): An involuntary contract termination is, in principle, a qualifying reason to receive unemployment benefits.
4. File an unfair dismissal remedy application: If you believe a reasonable expectation of renewal existed, you may file a remedy application with the Labor Relations Commission (노동위원회) within 3 months of the contract termination date.

Don't Miss Out on Severance Pay and Unemployment Benefits

Even as a fixed-term worker, you are entitled to severance pay if you meet the requirements of continuous service for at least 1 year and at least 15 hours of work per week. If your 2-year contract has ended, you are eligible to receive severance pay.

To estimate your severance pay amount, use the severance pay calculator at Workbear (workbear.kr). Simply enter your average wage and length of service to instantly check your estimated severance pay. You can also quickly assess your eligibility for unemployment benefits using the AI search feature.

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