In the South Korean Supreme Court Decision 2015 Da254873 (Repayment of Wages) decided on 24 December 2019, the Supreme Court recently held that fixed term workers who are deemed to be permanent employees due to their employment periods exceeding the two year limit, should be subject to the same Work Rules as permanent employees as long as they perform the same type of work and are within the same industry.
Facts of the case
The plaintiffs were initially hired as fixed term workers by the defendant employer, a South Korean broadcasting company. However, as the plaintiffs' employment periods exceeded the two year limit, they were deemed to be permanent employees.
The plaintiffs performed the same services, in terms of scope and quantity, and in the same department as the employer's permanent employees, and there were no separate Work Rules applying to them.
The plaintiffs claimed that they were entitled to the same salary as permanent employees working for the employer and sought the difference in salary payments.
The Supreme Court had to decide whether the employer's Work Rules which apply to permanent employees should similarly apply the plaintiffs. Under the Act on the Protection of Fixed Term and Part Time Workers ("Act"), an employer may only hire a fixed-term worker for a period of not exceeding 2 years, including any renewal period; beyond that period, workers are deemed to be permanent employees. The Act also prohibits discriminatory treatment against fixed term workers who perform the same type of work, and are within the same industry as permanent employees.
The Supreme Court observed that the Act is aimed at facilitating the healthy development of the labour market by strengthening the protection and working condition of fixed-term workers. In view of the regulatory framework and the spirit of the Act, there should no difference in the working conditions between permanent employees and fixed term workers performing the same type of work and within the same industry.
The Supreme Court found for the plaintiffs and held that the same work rules which apply to permanent employees should also apply to the plaintiffs. This meant that the plaintiffs were also entitled to the same regular salary increases, base salaries, bonuses, seniority allowances and transportation reimbursements as permanent employees pursuant to the Work Rules.
Employees hiring fixed term workers in South Korea should pay close attention to the duration of the contracts, including renewals. Once the worker has been employed for more than two years, they are deemed to be permanent employees, meaning they enjoy the additional protections in relation to termination.
Even if the fixed-term employees are engaged for less than two years, if they perform the same work as permanent employees, employees should ensure that their pay and benefits are harmonised.