This case concerns a fixed-term employee’s claim of “legitimate expectation of renewal (internal recruitment fixed-term employee with at least three years remaining until retirement age),” in which the employee prevailed in full before the Labor Relations Commission. Decision date: 2026-09-11 · Commission: Incheon Regional Labor Relations Commission · Case No.: 2026Buhae836 Key issue summary: A. Whether the employee had a legitimate expectation of renewal There was a basis for one-year contract extensions in the Detailed Enforcement Rules of the Organization Regulations and in the Work Contract, and the internal recruitment notice also expressly stated that the contract could be extended for one year depending on the results of a performance evaluation. 1. Legal Implications This unfair dismissal case is a refusal to renew the employment contract of a fixed-term employee heard by the Incheon Regional Labor Relations Commission, where the Commission ruled in favor of the employee. In particular, despite the public corporation’s assertion of managerial difficulties, the Commission recognized the employee’s legitimate expectation of renewal and determined the unfairness of the dismissal by faithfully applying the legal principles on legitimate expectation of renewal that Labor Law Firm Law& has consistently developed across multiple cases. Ⅰ. Case Overview The fixed-term employee of the public corporation was hired into the Win-Win Cooperation Headquarters through an internal recruitment process, with an initial contract term of two years. Upon expiry of this term, the employer (the public corporation) refused to renew the contract, citing the abolition of the Win-Win Cooperation Headquarters and the need to reduce personnel costs. The employee filed an application for remedy for unfair dismissal, which was adjudicated by the Incheon Regional Labor Relations Commission. The employee argued that, in light of the Detailed Enforcement Rules of the Organization Regulations, the Work Contract, and the internal recruitment notice, there was a legitimate expectation that the contract would be extended in one-year increments upon satisfaction of certain conditions. The employer asserted that managerial difficulties and organizational downsizing justified the refusal to renew. Ⅱ. Issue Summary The issue in this case is: “In circumstances where the Detailed Enforcement Rules of the Organization Regulations, the Work Contract, and the internal recruitment notice expressly provide a basis for one-year extensions and the possibility of extension depending on evaluation, does a refusal to renew the contract on the grounds of the public corporation’s managerial difficulties and organizational downsizing constitute unfair dismissal?” Ⅲ. Summary of the Labor Relations Commission’s Findings The panel in this case found that: there was a basis for a one-year contract extension in the Detailed Enforcement Rules of the Organization Regulations and in the Work Contract; the internal recruitment notice expressly stated that the contract could be extended for one year depending on the results of a performance evaluation; the initial contract period stated in the recruitment notice was two years, yet eligibility to apply was limited to those with at least three years remaining until the mandatory retirement age; there were actual instances of contract extensions; and this employee also had no restriction on extension in terms of retirement age. In light of these factors, the panel held that the employee had a legitimate expectation that the contract would be renewed for one year upon satisfaction of certain conditions. The Commission also acknowledged that the public corporation was facing managerial difficulties. However, at the time of the refusal to renew, the abolition of the Win-Win Cooperation Headquarters had not been concretely finalized, and the organization and its duties continued to exist even after expiry of the contract term. The employer had not conducted the performance evaluation specified in the recruitment notice, nor had it produced objective evidence to show that the employee was unsuitable for renewal. Considering these circumstances, the Commission found it difficult to conclude that the necessity of refusing renewal for reasons of organizational downsizing and personnel cost reduction had been sufficiently substantiated. As the Supreme Court has held, where a legitimate expectation of renewal is recognized, the employer bears the burden of proving that there is a “reasonable cause” for refusing renewal, and the grounds and procedures for such refusal must be objectively, reasonably, and fairly acceptable under social norms. In this case, the employer failed to meet these stringent standards with respect to managerial necessity, the concreteness of the organizational abolition, and the employee’s evaluation and alleged unsuitability. Accordingly, the Commission held that the dismissal in this case constituted unfair dismissal. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s perspective, it is important to carefully check whether documents such as the employment contract, organization regulations, detailed enforcement rules, and internal recruitment notices expressly refer to “possibility of extension” or “renewal based on evaluation,” and how the contracts of similarly situated employees have actually been managed in practice. Such documents and practices are key evidence for establishing a legitimate expectation of renewal. Where evaluations have not been properly conducted in the renewal process, or where managerial reasons are asserted only in a formal or superficial manner, employees should actively consider filing an application for remedy for unfair dismissal. Furthermore, even fixed-term employees, once a legitimate expectation of renewal is recognized, cannot have their contracts non-renewed without reasonable cause, and the burden of proof lies with the employer. Employees should therefore verify whether there are in fact any unfavorable evaluation materials or managerial grounds, request the employer to produce such materials, and carefully examine the objectivity and fairness of their contents. Ⅴ. Practical Points (From the Employer’s Perspective) From the employer’s perspective, it is important from the outset—when hiring fixed-term employees—to ensure consistency between the rules on contract extension and actual practice. Employers should recognize that vaguely stating “possible extension” in internal recruitment notices, contracts, or internal regulations, while in practice refusing renewal at will based on managerial needs, increases the risk of disputes. In particular, where the employer has, in light of retirement age, evaluation-based extensions, and the likelihood of the organization’s continued existence, led employees to form a reasonable expectation of long-term employment, the employer must correspondingly decide on renewal based on appropriate evaluation procedures and objective materials. If an employer intends to refuse renewal on grounds of managerial difficulties or organizational restructuring, it should, in advance, organize and document: how concrete the plans for organizational abolition or downsizing are; whether there are figures or data demonstrating the need to reduce headcount; whether the same or similar work will continue; and whether any replacement hiring has occurred. In addition, the employer must be able to clearly explain whether evaluations were conducted, whether the evaluation criteria were fair, and how the evaluation results are causally linked to the renewal decision, in order to have “reasonable cause” recognized by the Labor Relations Commission or the courts. 2. Matters Decided A. Case Overview and Procedural History A case in which the Labor Relations Commission recognized the employee’s legitimate expectation of renewal of the employment contract and held that the employer’s refusal to renew lacked reasonable cause. 3. Summary of Decision A. Summary of the Labor Relations Commission’s Findings A. Whether the employee had a legitimate expectation of renewal There was a basis for a one-year contract extension in the Detailed Enforcement Rules of the Organization Regulations and in the Work Contract, and the internal recruitment notice also expressly stated that the contract could be extended for one year depending on the results of a performance evaluation. In addition, although the initial contract period in the recruitment notice was two years, eligibility to apply was limited to those with at least three years remaining until the mandatory retirement age; there were actual instances of contract extensions; and the employee also had no restriction on extension in terms of retirement age. Taken together, these circumstances support recognition of a legitimate expectation that the contract could be renewed for one year upon satisfaction of certain conditions. B. If a legitimate expectation of renewal exists, whether there was reasonable cause for the refusal to renew Although the public corporation’s managerial difficulties are acknowledged, at the time of the refusal to renew, the abolition of the Win-Win Cooperation Headquarters had not been concretely finalized, and the organization and its duties continued to exist even after expiry of the contract term. It is therefore difficult to find that the necessity of refusing renewal on the grounds of organizational downsizing and personnel cost reduction was sufficiently proven. Furthermore, the employer did not conduct the performance evaluation specified in the recruitment notice and failed to present concrete evidence showing that the employee was unsuitable for renewal. Accordingly, there was no reasonable cause for the refusal to renew. [Further Related Decisions] - “Unfair Dismissal Case on ‘Remedy Interest · Refusal to Rehire (Post-Retirement Fixed-Term Employee)’” - “Unfair Dismissal Case on ‘Expectation of Employment Succession (Logistics Center Competitive Bidding)’” - “Unfair Dismissal Case on ‘Business Necessity (Reassignment of Cleaning Staff)’” [Tags] Unfair dismissal, legitimate expectation of renewal (internal recruitment fixed-term employee with at least three years remaining until retirement age), refusal to renew fixed-term contract, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm ※ This article is part of Labor Law Firm Law&’s “Unfair Dismissal Decisions” series. ※ The previous article, “Unfair Dismissal Case on ‘Denial of Employee Status (Privately Owned Delivery Vehicle)’,” can be viewed in a new window. ※ The list of decisions related to legitimate expectation of renewal (internal recruitment fixed-term employee with at least three years remaining until retirement age) can be found in the “List of Decisions on Legitimate Expectation of Renewal (Internal Recruitment Fixed-Term Employee with at Least Three Years Remaining Until Retirement Age).” ※ Korean version of this case: Korean article