South Korea: Court Finds Wage Discrimination Against Fixed-Term Employees Converted To Indefinite-Term With Inferior Benefits

Last Updated: 16 February 2017
Article by Yulchon LLC

 In June 2016, the Seoul Southern District Court ruled in favor of 97 former fixed-term contract employees of a broadcasting company who had been converted to indefinite-term employees. The employees had filed the lawsuit against the company to demand the same employment benefits, such as a housing allowance, that were available to regular indefinite-term employees who had not started on fixed-terms and been converted.

The plaintiffs had initially been hired by the company as fixed-term employees, and their contracts were extended to indefinite-term contracts. That, in essence, provides them with the same employment security enjoyed by other indefinite-term employees who were not initially on fixed-terms. However, as between the former fixed-term employees and the other indefinite-term employees, there were some discrepancies in terms of benefits and remuneration, including a housing allowance offered only to the latter group.

Article 8(1) of the Protection of Fixed-Term and Short-Term Employees Act prohibits unjustified discrimination against fixed-term employees, but this statute does not expressly cover providing inferior terms to employees who have converted from fixed-term to indefinite-term. As such, the parties' arguments focused extensively on whether their converted, former fixed-term status falls within "social status," which is listed in Article 6 of Labor Standards Act as an impermissible ground for discrimination.

The Seoul Southern District Court held that it did, and ruled against the company. The court reasoned:

There is no difference, in terms of the type, scope, volume, and difficulty of work, between the plaintiffs and the regular [indefinite-term] employees, while the hiring process, and the possibility of being made the head of department or being promoted are different. The part of the employment agreement between the plaintiffs and the company depriving them of benefits such as the housing allowance, is in violation of Article 6 of Labor Standards Act and thus invalid.

If this decision is upheld on appeal, indefinite-term workers who have been converted from fixed-term contracts with restrictions on their available benefits will be able to demand equal treatment with other indefinite-term employees

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