Contributed By Yoon & Yang LLC (Seoul - HQ)
Among various types of employment contracts, the two major types are (i) “employment contracts without a fixed term” (ie indefinite employment contracts) and (ii) “employment contracts with a fixed term” (ie definite employment contracts). The Labor Standards Act does not have provisions that separately govern the duration of employment contracts. Therefore, employers and employees may freely determine the employment contract durations.
However, definite employment contracts are governed by the Act on the Protection, etc. of Fixed-term and Part-time Workers (the “Fixed-term Workers Act”). According to Article 4 of the Fixed-term Workers Act, employment contracts with a fixed term in excess of two years are considered to be indefinite employment contracts. Further, Article 8 of the Fixed-term Workers Act prohibits employers from discriminating between employees under definite employment contracts and other employees under an indefinite employment contract who engage in the same or similar kinds of work in the same business or workplace.
Article 17(1) and (2) of the Labor Standards Act provides that employment contracts must explicitly provide for the terms and conditions of employment in writing. In particular, employment contracts must include provisions on (i) wages (eg composition of wages, methods for calculating wages, methods for paying wages, etc), (ii) contractual working hours, (iii) weekly holidays, and (iv) annual paid leaves.
Moreover, employers are obliged to deliver such employment contracts to the employees. If employers fail to deliver employment contracts to the employees, they may be punished with a criminal fine not exceeding KRW5 million in accordance with Article 114 of the Labor Standards Act.