Fixed-Term Contract Resignation in Korea: Early Termination, Severance Pay & Unemployment Benefits Guide for Foreign Workers

Resigning from a Fixed-Term Contract: More Complicated Than You Think

Fixed-term workers often assume that once the contract period ends, they can simply leave. In practice, however, there are several important issues to consider: whether early termination is possible, the conditions under which severance pay (퇴직금) arises, and eligibility for unemployment benefits. This article organizes the key legal points around fixed-term contract resignation.

Note for foreign workers: Your employment contract may set terms different from the statutory minimums described below, but the statutory minimums cannot be waived to your disadvantage.

1. Can You Resign Mid-Contract?

A fixed-term employment contract carries an obligation to provide work for the duration of the contract period. However, Article 661 of the Civil Act (민법 제661조) provides that the contract may be terminated when there is an "unavoidable cause." Wage arrears, workplace harassment, and deteriorating health are representative examples of recognized unavoidable causes.

Even if you resign mid-contract without an unavoidable cause, Article 20 of the Labor Standards Act (근로기준법 제20조) explicitly prohibits pre-agreed penalty or liquidated damages clauses. Therefore, any clause in your contract stating "pay a penalty upon mid-contract resignation" is void on its face. However, if the employer can specifically prove actual damages (e.g., costs of hiring a replacement), a damages claim remains possible. To minimize disputes, it is advisable to give sufficient advance notice and complete a proper handover.

2. Contract Expiry vs. Voluntary Resignation: The Difference for Unemployment Benefits

Contract expiry is classified as an involuntary separation under the Employment Insurance Act (고용보험법). If you meet the eligibility requirements — including at least 180 insured unit days within the 18 months before separation — you can receive job-seeker's allowance. As of 2026, the daily upper limit is 68,100 won and the daily lower limit is 66,048 won.

By contrast, voluntary resignation (mid-contract termination) is in principle treated as a voluntary separation, which restricts eligibility for unemployment benefits. However, if your reason for leaving falls under the "justifiable grounds for separation" listed in Attached Table 2 of the Enforcement Rules of the Employment Insurance Act (고용보험법 시행규칙 별표2) — such as wage arrears, workplace harassment, or deteriorating health — you may still qualify even if you resigned voluntarily. It is essential to document the relevant grounds in writing before you leave.

3. Severance Pay: Fixed-Term Workers Are Entitled After 1 Year

Article 4 of the Act on the Guarantee of Workers' Retirement Benefits (근로자퇴직급여 보장법 제4조) mandates severance pay for any worker with at least 1 year of continuous service and scheduled weekly working hours averaging at least 15 hours. There is no distinction between regular and fixed-term employees.

If the contract was renewed multiple times and the total period effectively exceeds 1 year, the periods before and after renewal are combined for the severance pay calculation. Severance pay must in principle be paid within 14 days of the retirement date; if delayed, annual interest of 20% applies (Article 17 of the Enforcement Decree of the Labor Standards Act / 근로기준법 시행령 제17조). If you worked less than 1 year, no severance pay arises, but you may separately claim unused annual leave (연차유급휴가) allowance.

4. Contract Expiry Notice and the Expectation of Renewal

Under Article 4 of the Act on the Protection of Fixed-Term and Part-Time Workers (기간제법 제4조), if a fixed-term worker is employed for more than 2 years, they are deemed to have been converted to an indefinite-term (무기계약직) employee. Furthermore, where repeated renewals have created a legitimate expectation of renewal, the Supreme Court has consistently held that an employer's refusal to renew without reasonable grounds entitles the worker to relief equivalent to that for unfair dismissal (부당해고) (Supreme Court Decision 2011다42324, etc.).

Not Sure How to Calculate Your Severance Pay?

Fixed-term severance pay is calculated based on the average wage over the final 3 months, and the amount can vary depending on whether allowances are included and the history of contract renewals. Using the severance pay calculator at workbear.kr, you can instantly estimate your expected severance pay by simply entering your start date, end date, and wage information. If you want to check whether you qualify for unemployment benefits, try the unemployment benefits eligibility checker there as well.

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