Indefinite-Term Contracts in Korea: What They Are, How They Differ from Regular Employment, and Conversion Conditions
What Is an Indefinite-Term Contract (무기계약직)?
An indefinite-term contract worker (무기계약직) is an employee who has entered into a labor contract with no fixed term. The term "무기 (無期)" means "no period," meaning there is no contract expiration date — which distinguishes this status from fixed-term contract workers (기간제 계약직) whose contracts are renewed in 1- or 2-year cycles. However, indefinite-term contract workers often differ from regular employees (정규직) in pay scales, benefits, and promotion opportunities, placing them in a so-called "middle zone" of employment.
Conditions for Converting from Fixed-Term to Indefinite-Term Status
Article 4 of the Act on the Protection of Fixed-Term and Part-Time Workers (기간제 및 단시간근로자 보호 등에 관한 법률, the Fixed-Term Act) provides that if an employer uses a fixed-term worker for more than 2 years, the employment relationship is deemed — from that point onward — to be a contract without a fixed term. In other words, indefinite-term status is granted automatically by law without any separate written contract.
However, if any of the following exceptions apply, the worker may remain on a fixed-term contract even beyond 2 years:
- Holders of a doctoral degree working in the relevant field
- Workers aged 55 or older (older workers / 고령자)
- Holders of professional licenses (doctors, lawyers, etc.)
- Participants in government-funded job creation programs
- Workers hired as substitutes for employees on maternity or parental leave, etc.
In public institutions, conversion to indefinite-term status also frequently occurs under the Public Sector Non-Regular Worker Regular Employment Conversion Guidelines (공공부문 비정규직 정규직 전환 가이드라인), separate from the Fixed-Term Act.
How Do Indefinite-Term Contracts Differ from Regular Employment?
| Category | Indefinite-Term Contract | Regular Employment |
|---|---|---|
| Contract period | None | None |
| Dismissal protection | Same (just cause required) | Same |
| Wages & benefits | Varies by company (often lower) | Benchmark |
| Promotion & pay scale | Often limited | Applied |
The most significant difference lies in wages and benefits. Indefinite-term contract workers are free from the worry of contract expiration, but in practice it is common for them to perform the same work as regular employees while receiving lower pay or limited welfare benefits.
Dismissal Protection: Indefinite-Term Contract Workers Are Protected the Same as Regular Employees
Because there is no fixed end date, the employment relationship cannot be terminated on the grounds of contract expiration. To dismiss an indefinite-term contract worker, the employer must have just cause under Article 23 of the Labor Standards Act (근로기준법 제23조), and the same obligations apply: either give 30 days' advance notice of dismissal or pay 30 days' ordinary wages in lieu of notice. If an unfair dismissal (부당해고) occurs, the worker may file a remedy application with the Labor Relations Commission within 3 months of the dismissal date.
Discrimination Remedy Applications Are Also Available
Article 8 of the Fixed-Term Act (기간제법 제8조) prohibits unreasonable discrimination against fixed-term and part-time workers. If an indefinite-term contract worker performs the same or similar work as a regular employee but is discriminated against — without reasonable justification — in wages, bonuses, or benefits, they may file a discrimination remedy application (차별시정 신청) with the Labor Relations Commission. The application must be filed within 6 months of the date on which the discriminatory treatment occurred.
How Do Severance Pay and Annual Leave Apply?
Indefinite-term contract workers are also entitled to severance pay (퇴직금) if they meet the requirements of at least 1 year of continuous service and 15 or more hours of work per week. Severance pay must be paid within 14 days after retirement; if delayed, a late-payment interest rate of 20% per year applies under Article 17 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제17조). Annual leave (연차유급휴가) applies equally: workers with less than 1 year of service accrue 1 day per month (up to 11 days), and workers with 1 or more years of service are entitled to 15 days.
Note for foreign workers: The figures above are statutory minimums. Your employment contract may provide more favorable terms, but it cannot provide less than what the law requires.
If you are unsure whether you have been converted to indefinite-term status, or if issues arise regarding severance pay or discrimination, use the severance pay calculator at Workbear (workbear.kr) to check your estimated entitlement first. The AI labor law search and complaint drafting features are also available to help you take practical action.
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.
Frequently Asked Questions
If I work as a fixed-term employee for more than 2 years, do I automatically become an indefinite-term employee?
Under Article 4 of the Act on the Protection of Fixed-Term and Part-Time Workers 기간제 및 단시간근로자 보호 등에 관한 법률, the Fixed-Term Act , if an employer uses a fixed-term worker for more than 2 years, the employment relationship is deemed to be a contract without a fixed term. However, if an exception applies — such as holding a doctoral degree, being an older worker aged 55 or above, or being a licensed professional — the worker may remain on a fixed-term contract even beyond 2 years.
Can indefinite-term contract workers receive severance pay (퇴직금)?
Yes. Severance pay is paid regardless of employment type, provided the worker has at least 1 year of continuous service and works 15 or more hours per week. The same conditions apply to indefinite-term contract workers. Severance pay must be paid within 14 days after retirement; if delayed, a late-payment interest rate of 20% per year applies under Article 17 of the Enforcement Decree of the Labor Standards Act 근로기준법 시행령 제17조 .
Is it easy to dismiss an indefinite-term contract worker?
No. Because there is no fixed end date, the employment relationship cannot be terminated on the grounds of contract expiration. To dismiss an indefinite-term contract worker, the employer must have just cause under Article 23 of the Labor Standards Act 근로기준법 제23조 , and the same obligations apply: either give 30 days' advance notice of dismissal or pay 30 days' ordinary wages in lieu of notice. If unfairly dismissed 부당해고 , the worker may file a remedy application with the Labor Relations Commission within 3 months of the dismissal date.
Is it illegal to pay indefinite-term contract workers less than regular employees for the same work?
Article 8 of the Fixed-Term Act 기간제법 제8조 prohibits unreasonable discrimination against fixed-term and part-time workers. Even if an indefinite-term contract worker does not fall under the Fixed-Term Act's definition of a fixed-term worker, if they perform the same or similar work as a regular employee but receive different wages or working conditions without a reasonable justification, they may file a discrimination remedy application with the Labor Relations Commission.