Renewal dispute, fixed term team leader at a contracted out local government centre

1. Overview of the case

Case type: application for remedy against unfair dismissal (refusal to renew contract)

Agency in charge: Chungnam Regional Labour Relations Commission

Client: fixed-term worker (team head at a centre operated under entrustment by a local government)

Opposing party: a corporation entrusted by the local government with the operation of the centre

Outcome: unfair dismissal recognized, order for reinstatement to the original position and payment of wages for the dismissal period

2. Facts

Client A joined a community support centre under a local government around September 2020 and worked as the head of the business support team, and later, when the entrusted operator changed to Corporation B, the employment was succeeded in March 2023 and the same duties continued (the contract period was formally one year).

Corporation B's entrustment period for operating the centre ran until 31 December 2024, and A's employment contract also contained a clause to the effect that the contract could be renewed in units of one year or less until the end date of the entrustment period.

However, around January 2024, the employer notified A that the employment relationship would end upon expiry of the contract period, and even though A immediately demanded renewal, this was not accepted.

3. Issues

The issues were whether A, as a fixed-term worker, was recognized as having a legitimate expectation of renewal of the employment contract, and whether the employer's refusal to renew had a reasonable reason.

4. Representative's arguments and evidence strategy

The Supreme Court has held that even where there is no renewal provision in the employment contract or the like, if a legitimate expectation of renewal is recognized by taking into account various circumstances surrounding the employment relationship, the employer's unfair refusal to renew is ineffective just like an unfair dismissal (Supreme Court Decision 2007Du1729 delivered on 14 April 2011), and the burden of proof regarding the reasonable reason for the refusal to renew lies with the employer (Supreme Court Decision 2015Du44493 delivered on 12 October 2017).

Attorney Joo Youngjae argued for the expectation of renewal by focusing on proving (i) the public-interest and continuous nature of the entrusted project operated with the local government's budget and the employment succession conditions, (ii) the permanent and continuous nature of the duties continued for about three years, (iii) the basis clause for renewal in the employment contract, (iv) precedents of renewal for workers in the same position, and (v) the fact that about ten months of the entrustment period remained at the time of the notification.

In addition, he argued that the employer had failed to present any objective and reasonable ground for the refusal to renew, and that the circumstances the employer took issue with had not resulted in any disciplinary decision and the criminal complaint had also ended in a police decision not to refer the case to the prosecutor, so they could not be regarded as reasons attributable to A.

5. Outcome of the decision

The Regional Labour Relations Commission accepted attorney Joo Youngjae's arguments and determined that A was recognized as having a legitimate expectation that the employment contract could be renewed until the end date of the entrustment period, and that the employer had failed to prove a reasonable reason for the refusal to renew (articles 23(1) and 30 of the Labor Standards Act, article 15(3) of the Labor Relations Commission Act).

6. Implications of the case

The formality of "contract period expiry" does not by itself mean a lawful termination of the employment relationship. If a reasonable expectation of renewal is recognized, a refusal to renew without a reasonable reason is invalid, just like an unfair dismissal.

Workers in entrusted projects have a high likelihood of being recognized as having a reasonable expectation of renewal. The entrustment period, employment succession conditions, renewal clause and precedents of renewal for the same position are the key materials.

Compliance with the remedy application period (three months from the date of dismissal) is a prerequisite. Even if you receive a notice of contract expiry, please clearly record your intention to contest it and seek consultation early.