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The period during which an employment contract—concluded for the purpose of an employee providing labor to an employer and the employer paying wages in return—remains in effect is called the employment contract period. Regarding the employment contract period, the Labor Standards Act stipulates that 'except for cases with no fixed period or a period necessary for the completion of a specific project, such period shall not exceed one year.' In other words, employment contract periods can be divided into forms with no fixed period and forms with a fixed period. In the case of an employment contract with no fixed period, the employee's freedom to resign is guaranteed, so they can terminate the contract at any time; however, the employer cannot terminate the employment contract unless there is a just cause under Article 30 of the Labor Standards Act.
When concluding an employment contract with a fixed period, the period can be set as the time necessary for the completion of a specific project or within a range not exceeding one year. Setting the employment contract period as the time necessary for the completion of a specific project means objectively determining that a certain project will clearly end within a specific period and setting the contract period until the completion of that project; otherwise, the employment contract period cannot exceed one year.
This provision was originally established to prevent the potential for personal confinement or forced labor abuses arising from long-term employment contracts exceeding one year. Recently, however, the problem of employment instability caused by repeatedly renewing short-term contracts of less than one year has been increasing. In principle, when the employment contract period is fixed, the employment relationship terminates upon expiration of the contract period without the need for dismissal or other measures. However, if the contract has been repeatedly renewed several times or an expectation has formed that continued employment is possible even after the expiration of the contract period, dismissal cannot be made solely on the grounds of contract expiration without just cause. On the other hand, the Supreme Court has recognized the validity of setting contract periods for contracts exceeding one year (e.g., 3 years, 5 years, etc.) and stated that the employee is guaranteed the freedom to resign and terminate the contract at any time after one year.