Temporary Employees, Contract Employees: Two Years Only

by Brendon Carr

Anyone doing business in Korea quickly becomes familiar—sometimes through painful experience—with the extreme legal protection of employees’ “right” to continued employment. Requiring “just cause” to terminate an employee under the Labor Standards Act (LSA), Korea has created a system of employment for life.

Differing (informal) standards of official enforcement against small-and-medium enterprises (SMEs) and large corporations means that there are two classes of employees in Korea: Those who have nearly no protections or recourse to law, and those who have a grip on an iron rice bowl. Multinational and foreign-invested companies are generally imagined to be flush with cash—which means you, Mr. Foreigner, are only permitted to offer the iron rice bowl.

Under the 1998 Dispatched Workers Protection Act (DWPA)—and its companion statute adopted in 2006, the Fixed-Term and Part-Time Workers Protection Act (FT-PTWPA)— there are some alternative working arrangements possible.

Today my associate Sun-Hee Kim brought me a case report from the Supreme Court of Korea establishing a useful precedent in respect of these workers: Namely, that in all cases, a non-regular employee’s status shall be converted by operation of law to regular (i.e., permanent) employment whenever an employer shall have used that employee for a continuous period of two years or more.

Most of us in the private practice of law already knew this, but a lot of HR directors and company managers have thought they could get fancy and evade the laws. However, this precedent, as a unanimous decision of the Supreme Court, makes things rather unambiguous.

In the case at hand, a company sourced dispatched workers from a worker-dispatch agency, and used those workers for a period longer than two years (over five years, to be precise). But the activities for which the workers were used were not included in the 26 types of occupations enumerated on the “positive list” established under the DWPA.

When those workers tried to claim regular-employee status, the company claimed that since the worker-dispatch was unlawful, the DWPA—and its rule limiting the non-regular status of dispatched workers to two years—should not be applicable.

Needless to say, they lost.

With this precedent in hand, we can state unambiguously: Non-regular employment in Korea is always limited to two (2) years. After two years, if the employer continues to use the services of the non-regular employee, the relationship converts to regular employment by operation of law. And this means that all the consequences of that status—in particular, employment for life—shall come into play.

4 Responses to This Entry

1. MattyPattyEnglishClown on November 26, 2008 @ 6:41 am

   Sadly, I’m not an employer. I’m on the the other side of the dialectic, a simple wage slave. I’m know I’m asking a solider of the bourgeoisie, so forgive me. Do English teachers get this kind of protection?

2. Brendon Carr on November 26, 2008 @ 12:32 pm

   Mr. Clown—As an employer-side lawyer who doesn’t regularly advise English institutes, I really don’t know the answer to your question off the top of my head. It’s best for me to comment only on things to which I already know the answer. My guess is the answer is “it depends” (which is the answer to all questions put to a lawyer), but that’s only a guess.

   There are various resources available to the English-teacher set: EFL-Law and the Association of Teachers of English in Korea (ATEK) stand out in my recollection. You might also contact the labor-advocate (employee-side) office of Mr. Bong Soo Jung, a nomusa, or certified Korean labor advocate whom I recommend to English teachers.

3. Karl Randall on January 14, 2009 @ 6:11 pm

   I was under the impression that the law is being implemented in stages. The first stage was to apply to companies with 300 or more regular full-time employees (started in mid 2006).

   Stage two was to be for companies with either 100 or 150 regular full times employees (started in mid 2008).

   Keep in mind that if you were in mid-contract when the regulation started you would start the 2-year clock at the start of your next contract renewal.

   How this applies to colleges, universities and public schools is quite unclear to me.

   Also, since most hagwon only employ a handful of people, and many of those are part time chances are good that you would either need to wait until at least stage 3 implementation in 2010, and then an additional two years to become a “regular” worker (at best) at a hagwon job. I don’t know what the cut-off point is going to be for stage 3, but it will likely be in the neighborhood of 20~50 regular, full time employees for the law to apply.

   If anyone can find out how this applies to colleges and universities I would be much obliged.

4. Brendon Carr on January 16, 2009 @ 6:33 pm

   Karl—Yes, the 2006 Fixed-Term and Part-Time Workers Protection Act (FT-PTWPA) becomes effective and mandatory in stages, depending on the number of workers in a given workplace.

   But the two-year threshold for fixed-term contract workers to be converted to permanent employment by operation of law came not from the FT-PTWPA but from a court precedent concerning the employee’s right to continued employment inferred by the employer’s “successive renewal” of a term employment contract. This rule predates the 1998 DWPA too. That’s why I wrote that “most of us in the private practice of law already knew this [two-year rule].”

   Don’t be fooled! There’s no need to wait to Stage 3 implementation in 2010—if a term employment agreement has been successively renewed, there is probably a permanent relationship here.

   But as I am not in the business of advising English teachers, English institutes, or colleges and universities, I have no idea how—or whether—these successive-renewal rules apply to them. In respect of hagwon the answer is probably “yes”, but you ought to consult your own lawyer for a definitive answer.

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