Fixed-term employees and the ‘two years’ bar

Recently, Seoul High Court issued a judgment on fixed-term employees and its extension: two foreign English instructors employed by a major Korean conglomerate accumulated more than two years of continuous service, and when the company declined to renew, a court declared the terminations void. This is an important case to understand the structure of fixed-term employment in Korea.

The Legal Framework: Korea's Fixed-Term Worker Act

At the outset, there is a dedicated statute for fixed-term & part-time employees in Korea called the Act on the Protection of Fixed-Term and Part-Time Workers (기간제 및 단시간근로자 보호 등에 관한 법률, "Fixed-Term Act”). It sets the foundational rule: an employer may engage a fixed-term employee for no more than two years in total, including periods under consecutively renewed contracts. Once that two-year threshold is crossed, the worker is deemed to have concluded an open-ended (indefinite-term) employment contract with the employer, regardless of what the written contract says.

The consequences are significant. A worker deemed indefinite-term is no longer a fixed-term employee whose contract simply expires. Ending the relationship now requires justifiable cause for dismissal under, plus written advance notice of the grounds and effective date. Contract expiration, by itself, is not justifiable cause. An employer that terminates on that basis alone is committing an unfair dismissal.

The Current Case: What Happened

Two foreign nationals joined a major conglomerate in Korea as in-house English instructors, the first in May 2019 and the second in March 2020. Each signed a one-year contract. Each had that contract renewed annually. Each exceeded two years of cumulative service.

In early 2023, GS Construction notified both that their contracts would not be renewed. The company's position was straightforward: the contracts were fixed-term agreements, the terms had run, and the employment relationship was over.

Both employees filed a lawsuit. The Seoul Central District Court ruled in their favor in June 2025. The company appealed. On April 24, 2026, the Seoul High Court affirmed the ruling of the court of first instance - holding that the terminations were void as unfair dismissals and ordering the company to compensate the unpaid wages.

The court held that by the time the third contract was executed with each plaintiff, both had already crossed the two-year threshold under Article 4(2) of the Fixed-Term Act and were therefore deemed indefinite-term employees. Terminating them on the basis of contract expiration, without justifiable cause and without the required written notice of grounds, rendered each dismissal void.

The Visa Argument — and Why It Failed

The company advanced a more technically grounded position: that the plaintiffs fell within a statutory exception to the two-year rule.

Article 4(1) of the Fixed-Term Act, read together with Article 3(3)(1) of its Enforcement Decree, carves out an exception where "another statute provides for a different employment period for fixed-term workers, or allows a fixed-term contract to be concluded for a specified period." In such cases, an employer may retain a fixed-term worker beyond two years without triggering the conversion to indefinite-term status.

However, the Seoul High Court rejected this reasoning. Its analysis rested on two points.

First, the immigration rules serve a different statutory purpose. Second, the court observed that one plaintiff held an F-6 visa — a status granted to the foreign spouses of Korean nationals. People on F-6 visas reside in Korea for family reasons, not employment purposes. There is no compelling basis to say that immigration law "specifies a different employment period" for such individuals; the immigration rules say nothing about how long their employer may engage them.

What This Means for Employers

The practical implications for foreign-invested companies and others employing foreign nationals on fixed-term contracts in Korea:

Visa type is not a complete answer. The ruling addressed F-2 and F-6 visa holders specifically. Whether holders of other visa categories — particularly E-2 (Language Instructor), E-7 (Specially Designated Activities), or F-4 (Overseas Korean) — are similarly covered remains to be clarified by the courts. In any case, the company should be careful not to merely rely on visa types.

Continuous renewal triggers the rule. The conversion operates based on cumulative employment time, not on any single contract's duration. Repeatedly renewing one-year contracts does not prevent conversion; it produces it.

Termination after conversion requires more than expiration.Relying on "the contract term ended" as a standalone rationale can expose the employer to an unfair dismissal claim.

Back-pay exposure accumulates. When a dismissal is declared void, the employment relationship is treated as having continued uninterrupted. The employer owes wages for the entire period from the date of termination through the date the dispute resolves.

This article is provided for general informational purposes and does not constitute legal advice. For guidance specific to your circumstances, please consult qualified counsel. Also, please do feel free to contact us for any advice.

© 2026 SJ Chun. All rights reserved. This article may not be reproduced, copied, or republished, in whole or in part, without prior written permission from the author.