In connection with the “expectation of renewal (repeatedly renewed fixed-term contracts),” this post shares, from the perspective of Labor Law Firm Law&, an unfair dismissal relief application case that was heard before the Labor Relations Commission in which the employee prevailed, as well as the legal implications of the decision. As with collective redundancies, this case concerns workforce adjustment, and it examines the criteria under which an employer’s refusal to renew a fixed-term employee’s contract is evaluated as an unfair dismissal.

1. Legal Implications

The issue in this case was whether, in a situation where a fixed-term employee has acquired a legitimate expectation of contract renewal, the employer’s refusal to renew the contract on the ground of expiration of the contract term can be regarded as a lawful dismissal.

The decision-making panel in this case found that the employees’ employment contracts had been repeatedly renewed on multiple occasions; that the work performed by the employees was continuous and regular in nature and closely linked to the operation of the business; and that, in light of the continuity of these contractual relationships and of the work itself, it could be viewed that a “relationship of trust that they would be able to continue working” had been formed between the employer and the employees.

Notwithstanding the employer’s argument that the only reason was the expiration of the contract term and that there were abstract grounds such as managerial and personnel needs, the panel held that the dismissal in this case was unfair, in that it excluded the fixed-term employees’ legitimate expectation of contract renewal without presenting any reasonable grounds that could be accepted under social norms.

Where a fixed-term employment contract has been repeatedly renewed and the work is regular and continuous, an expectation of renewal may be recognized even in the absence of a separate provision. In such cases, if the employer fails to prove objective and reasonable grounds and fair procedures equivalent to those required for dismissal, the refusal to renew may be deemed invalid. In practice, it should be borne in mind that once the employee asserts and substantiates the existence of an expectation of renewal, the burden of proof lies with the employer to establish the existence of reasonable grounds for refusing renewal and the fairness of the procedures followed.

2. Matters Determined

A. Whether there was a legitimate expectation of contract renewal
In light of the number of times the employees’ contracts were renewed and the continuity of the work performed, it can be viewed that a relationship of trust was formed between the employer and the employees that the contracts would be renewed, and thus a legitimate expectation of contract renewal existed.

B. Whether there were reasonable grounds for refusing renewal
It cannot be found that there existed reasonable grounds for the employer’s refusal to renew that would be recognized under social norms.

3. Gist of the Decision

A. Whether there was a legitimate expectation of contract renewal
In light of the number of times the employees’ contracts were renewed and the continuity of the work performed, it can be viewed that a relationship of trust was formed between the employer and the employees that the contracts would be renewed, and thus a legitimate expectation of contract renewal existed.

B. Whether there were reasonable grounds for refusing renewal
It cannot be found that there existed reasonable grounds for the employer’s refusal to renew that would be recognized under social norms. /