Corporate trends / Performance record
Unfair Dismissal Decision on “Expectation of Renewal (Three-Month Repeated Contracts)” (Unfair Dismissal 15)
- Date2025/12/30 04:11
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An application for remedy for unfair dismissal relating to an “expectation of renewal (three‑month repeated contracts)” was heard before the Labor Relations Commission, and a decision was rendered in favor of the employee. Labor Law Firm Law& would like to share this decision and its legal implications with you. Unlike collective redundancies, this case concerned a refusal to renew a fixed‑term contract in the form of a contract expiration, and the key issue was whether, in substance, it constituted an unfair dismissal.
1. Legal Implications
The key issue in this case was whether, in an ultra‑short‑term contract that had been repeatedly renewed every three months, an employee’s legitimate expectation of renewal of the employment contract could be recognized, and whether the employer’s asserted managerial reasons could constitute a reasonable ground for refusing renewal.
The panel in this case noted that the employee, after joining the company on June 9, 2023, had his or her employment contract renewed consecutively as many as eight times on a three‑month basis; that among employees on the same type of ultra‑short‑term contracts, there were cases of individuals who had worked for as long as six years; and that, in light of these circumstances, it was reasonable to view that a relationship of trust had been formed between the parties to the effect that “the contract will continue to be renewed.”
Despite the employer’s assertion that the employee had no choice but to retire automatically upon expiration of the contract term and that the refusal to renew was unavoidable for the purpose of managerial improvement due to deteriorating profits and losses, the panel held as follows.
This dismissal was found to be unfair on the grounds that, with respect to a fixed‑term employee whose expectation of renewal was recognized, the employer had refused to renew the contract without reasonable cause. Accordingly, the legal principles on restrictions on dismissal were applied by analogy.
Even if a fixed‑term employment contract is repeatedly renewed for short periods, an expectation of renewal may be recognized where, in actual operation, the employee is continuously employed over a long period and a practice of long‑term service among comparable employees has been established. Furthermore, where an expectation of renewal is recognized, the burden of proof regarding the reasonable grounds for refusing renewal lies with the employer. Therefore, a mere assertion of deteriorating profits and losses is insufficient; concrete financial data, workforce adjustment plans, and objective evaluation materials must be prepared in order to obtain recognition of legitimacy before the Labor Relations Commission or the courts. This should be carefully considered in practice.
2. Matters Decided
A. Whether an expectation of renewal of the employment contract exists
Considering that, after joining the company on June 9, 2023, the employee had his or her employment contract renewed eight times on a three‑month basis with the employer, and that among employees on the same type of ultra‑short‑term contracts there was an individual who had worked for six years, it is reasonable to view that a relationship of trust was formed between the parties that the employment contract would be renewed. Therefore, an expectation of renewal of the employment contract exists.
B. Whether there is a reasonable ground for refusal to renew
The employer argued that the refusal to renew was made for the purpose of managerial improvement due to deteriorating profits and losses. However, the evidence submitted by the employer was insufficient to conclude that the company’s management had deteriorated to such an extent that it was unavoidable to refuse renewal of the employee’s contract. In addition, there were no objective evaluation materials that could constitute a reasonable ground for refusing renewal of the employee’s contract. In light of these circumstances, there is no reasonable ground for the refusal to renew.
3. Gist of the Decision
A. Whether an expectation of renewal of the employment contract exists
Considering that, after joining the company on June 9, 2023, the employee had his or her employment contract renewed eight times on a three‑month basis with the employer, and that among employees on the same type of ultra‑short‑term contracts there was an individual who had worked for six years, it is reasonable to view that a relationship of trust was formed between the parties that the employment contract would be renewed. Therefore, an expectation of renewal of the employment contract exists.
B. Whether there is a reasonable ground for refusal to renew
The employer argued that the refusal to renew was made for the purpose of managerial improvement due to deteriorating profits and losses. However, the evidence submitted by the employer was insufficient to conclude that the company’s management had deteriorated to such an extent that it was unavoidable to refuse renewal of the employee’s contract. In addition, there were no objective evaluation materials that could constitute a reasonable ground for refusing renewal of the employee’s contract. In light of these circumstances, there is no reasonable ground for the refusal to renew. /
1. Legal Implications
The key issue in this case was whether, in an ultra‑short‑term contract that had been repeatedly renewed every three months, an employee’s legitimate expectation of renewal of the employment contract could be recognized, and whether the employer’s asserted managerial reasons could constitute a reasonable ground for refusing renewal.
The panel in this case noted that the employee, after joining the company on June 9, 2023, had his or her employment contract renewed consecutively as many as eight times on a three‑month basis; that among employees on the same type of ultra‑short‑term contracts, there were cases of individuals who had worked for as long as six years; and that, in light of these circumstances, it was reasonable to view that a relationship of trust had been formed between the parties to the effect that “the contract will continue to be renewed.”
Despite the employer’s assertion that the employee had no choice but to retire automatically upon expiration of the contract term and that the refusal to renew was unavoidable for the purpose of managerial improvement due to deteriorating profits and losses, the panel held as follows.
This dismissal was found to be unfair on the grounds that, with respect to a fixed‑term employee whose expectation of renewal was recognized, the employer had refused to renew the contract without reasonable cause. Accordingly, the legal principles on restrictions on dismissal were applied by analogy.
Even if a fixed‑term employment contract is repeatedly renewed for short periods, an expectation of renewal may be recognized where, in actual operation, the employee is continuously employed over a long period and a practice of long‑term service among comparable employees has been established. Furthermore, where an expectation of renewal is recognized, the burden of proof regarding the reasonable grounds for refusing renewal lies with the employer. Therefore, a mere assertion of deteriorating profits and losses is insufficient; concrete financial data, workforce adjustment plans, and objective evaluation materials must be prepared in order to obtain recognition of legitimacy before the Labor Relations Commission or the courts. This should be carefully considered in practice.
2. Matters Decided
A. Whether an expectation of renewal of the employment contract exists
Considering that, after joining the company on June 9, 2023, the employee had his or her employment contract renewed eight times on a three‑month basis with the employer, and that among employees on the same type of ultra‑short‑term contracts there was an individual who had worked for six years, it is reasonable to view that a relationship of trust was formed between the parties that the employment contract would be renewed. Therefore, an expectation of renewal of the employment contract exists.
B. Whether there is a reasonable ground for refusal to renew
The employer argued that the refusal to renew was made for the purpose of managerial improvement due to deteriorating profits and losses. However, the evidence submitted by the employer was insufficient to conclude that the company’s management had deteriorated to such an extent that it was unavoidable to refuse renewal of the employee’s contract. In addition, there were no objective evaluation materials that could constitute a reasonable ground for refusing renewal of the employee’s contract. In light of these circumstances, there is no reasonable ground for the refusal to renew.
3. Gist of the Decision
A. Whether an expectation of renewal of the employment contract exists
Considering that, after joining the company on June 9, 2023, the employee had his or her employment contract renewed eight times on a three‑month basis with the employer, and that among employees on the same type of ultra‑short‑term contracts there was an individual who had worked for six years, it is reasonable to view that a relationship of trust was formed between the parties that the employment contract would be renewed. Therefore, an expectation of renewal of the employment contract exists.
B. Whether there is a reasonable ground for refusal to renew
The employer argued that the refusal to renew was made for the purpose of managerial improvement due to deteriorating profits and losses. However, the evidence submitted by the employer was insufficient to conclude that the company’s management had deteriorated to such an extent that it was unavoidable to refuse renewal of the employee’s contract. In addition, there were no objective evaluation materials that could constitute a reasonable ground for refusing renewal of the employee’s contract. In light of these circumstances, there is no reasonable ground for the refusal to renew. /
