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Japan
 


Source and scope of regulations - 2018    

References
Remarks:
  • Latest English translation of LSA is from Dec 2012.
  • Labour Standards Act [LSA], Act No. 49 of April 7, 1947 as last amended by Act No. 42 of 27 June 2012 last amended by the Act to Promote the Work Style Reform by Amending Related Acts (Act No.71 of 2018 of 6 July 2018 )[Work Style Reform Act of 2018]
    Date: 01 Dec 2004; view website »
  • Labour Contract Act [LCA], Act No. 128 of December 5, 2007 as last amended by Act No.59 of 10 August 2012 last amended by the Work Style Reform Act 2018
    Date: 05 Dec 2007; view website » (view in NATLEX »)
  • Civil Code [CC], Law No. 89 of 27 April, 1896, as amended through Act No. 78 of 2006
    Date: 21 Jun 2006; view website »
  • Employment Measures Act [EMA], Act No. 132 of July 21, 1966 as last amended by Act No. 79 of July, 15, 2009, last amended by the Work Style Reform Act 2018, including the new title “Act on Comprehensive Promotion of Labour Measures, Employment Stability, and Improvement of Working Life
    Date: 15 Jul 2009; view website »
  • Act on Securing, Etc. of Equal Opportunity and Treatment between Men and Women in Employment, Act No. 113 of 1972, as last amended by Act No. 82 of 2006
    Date: 21 Jun 2006; view website »
  • Labour Union Act, Act No. 174 of June 1, 1949 as last amended by Act No. 102 of 2005
    Date: 21 Oct 2005; view website » (view in NATLEX »)
  • Labour Tribunal Act [LTA], No. 45 of 2004 as last amended by Act No. 53 of 2011
    Date: 2004; view website » (view in NATLEX »)
  • Act on Improvement, etc. of Employment Management for Part-Time Workers (Act No. 76 of 1993) as amended by Act No. 27 of 2014 (entry into force 1 April 2015) [PTA], as last amended by the Act to Promote the Work Style Reform by Amending Related Acts (Act No.71 of 2018 of 6 July 2018 – the entry into force of this 2018 Act varies according to the provisions)
    Date: 2014; view website »
Scope
Size of enterprises excluded (≤): none
Workers' categories excluded: civil/public servants; domestic workers; seafarers; employer's family members
Remarks:
  • The CC applies to all contracts of civil law and the LSA covers all the employment contracts in the private sector. (See art. 9 LSA)
    Public employees and seafarers are not expressly excluded. However, they are governed by specific legislation. (i.e. Seafarer's Act (1947) and National Public Service Act, Act No. 120 of 1947 as amended up to May 2006, available at: http://www.cas.go.jp/jp/seisaku/hourei/data/nps_2.pdf)
    The employer’s family members, if they live together with the employer, and domestic workers are explicitly excluded from the scope of LSA (See art.116(2) LSA) The former category is also excluded from LCA (art.19(2)). National and local public employees are also excluded from LCA (art.19(1)).

Types of employment contracts - 2018    

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Maximum probationary (trial) period: no limitation

Remarks:
  • Probationary periods are also frequently used in practice. There is no statutory provision on it, exception made for the requirement put on the employer to give the employee a 30 days' notice after the first 14 days of the probationary period (sec. 21(4), LSA). Under the Japanese case law, the employer's freedom to dismiss an employee during the probationary period is broader than an ordinary dismissal. "However, the exercise of the reserved cancellation right of the employer should be permitted only when, viewed in the light of the aims and objectives in reserving a cancellation right, there is an objective reason and the exercise is permissible with regards to the common sense of society"
    (See: The Mitsubishi Jushi Case, Supreme Court (1973), SMS, Vol. 27, No. 11, p. 1536 as cited in Tadashi A. Hanami, Fumito Komiya: "Japan", in R. Blanpain (ed.): International encyclopaedia for labour law and industrial relations (The Hague, Kluwer Law International, 2006), p. 79)

Fixed term contract (FTC):
  • Valid reasons for FTC use: no limitation
    Remarks:
    • An FTC can be concluded for less than 3 years without objective reasons.
      An FTC can be however concluded for a maximum duration of five years only in the following cases: 1) if the employee is highly specialized or 2) if aged 60 years or older (art. 14, LSA).
      It is worth highlighting than the dismissal a fixed-term employee before the expiry of the term, unless "there are unavoidable circumstances" (art. 17(1) Labour Contract Law (2007).

      Article 20 LCA as amended in 2012 (entry into force on 1 April 2013) is explained as imposing a (“Prohibition of Unreasonable Labor Conditions by Providing a Fixed Term” (restriction on unreasonable differentiation of employment conditions between FTCs and other workers). It reads:“If a labor condition of a fixed-term labor contract for a Worker is different from the counterpart labor condition of another labor contract without a fixed term for another Worker with the same Employer due to the existence of a fixed term, such difference is not allowed to be unreasonable, considering the content of the duties of the Workers and the extent of responsibility accompanying the said duties (hereinafter referred to as the "content of duties" in this Article), the extent of changes in the content of duties and work locations, and other circumstances.”

      Article 8 of the PT-FT Act [former “Part-time Workers Act” as amended by the 2018 Act (entry into force April 2020, and 2021 for small and medium-sized enterprises)] prohibits unreasonable difference of labour conditions for FTC workers as well as part-time workers (restriction on unreasonable differentiation of employment conditions between FTCs and other workers). It slightly strengthened the term used for restriction, but corresponds to the contents of art.20 of LCA before 2018.

      The 2018 amendment to the PT-AT Act extended the scope of the prohibition of discriminatory treatment in its article 9 (including in wage fixing, training, welfare facilities; compared to comparable regular workers) for all part-time workers and all FTC workers, whether the latter work part-time or full-time (this prohibition of discrimination previously covered only when the FTC worker worked part-time).
  • Maximum number of successive FTCs: no limitation
    Remarks:
    • No statutory limitation on the maximum number of successive FTC. However art. 17 (2) of the Labour Contract Act (2007) which codifies existing case law states that "With regard to a fixed-term labour contract, an employer shall give consideration to not renewing such labour contract repeatedly as a result of prescribing a term that is shorter than necessary in light of the purpose of employing the worker based on such labour contract."
  • Maximum cumulative duration of successive FTCs: no limitation
    Remarks:
    • Although the legislation places limits on the duration of a single fixed-term contract, maximum duration of FTC is not subject to statutory limitations.
      An employment contract cannot be concluded for a term exceeding three years, exception made for the contracts concluded for completion of a specified project. The maximum duration of five years is authorized for the contracts of employment of highly specialized employees and those aged 60 years or older (sec. 14, LSA).

      As for successive renewals, art. 17 (2) of the Labour Contract Act (2007) which codifies existing case law states that "With regard to a fixed-term labour contract, an employer shall give consideration to not renewing such labour contract repeatedly as a result of prescribing a term that is shorter than necessary in light of the purpose of employing the worker based on such labour contract."

      HOWEVER: Article 18(1) LCA as amended in 2012 provides for “Conversion of a Fixed-term Labor Contract to a Labor Contract Without a Fixed Term”, if the cumulative duration of successive FTCs exceeds 5 years (excluding the FTCs before an interruption of 6 months or more, under Article 18(2)) upon the application by the worker, which the employer is deemed to accept. This amendment entered into force on 1 April 2013, and FTCs which started on this date or later counted for the cumulative duration.
  • % of workforce under FTC: 13.7 %
    Remarks:
    • Source: OECD statistics database - Incidence of permanent employment, share of temporary workers. Data for 2009.
      Temporary worker are those "Workers whose main job is a fixed-term contract lasting not more than one year, occasional, casual or seasonal work, daily workers, or work lasting less than 12 months".

Substantive requirements for dismissals (justified and prohibited grounds) - 2018    

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Obligation to provide reasons to the employee: Yes
Remarks:
  • Upon request of the dismissed employee, the employer shall issue a certificate indicating the reason for dismissal in writing and without delay, i.e. between the advance notice and the last day of employment (art. 22, LSA).


Valid grounds (justified dismissal): any fair reasons
Remarks:
  • Under the Civil Code, both parties can terminate an employment contract of indefinite duration at will provided that two weeks' notice is given (art. 627, CC).
    However, the freedom of the employer to dismiss an employee has been restricted by the Japanese courts which have developed the doctrine of abusive dismissal based on the basic principle of prohibition of abuse of rights enshrined in art. 1(3) CC. The 2003 amendment to the LSA codified this long-established case-law under art. 18-2 LSA. Since the entry into force of the Labour Contract Act (2008), art. 18-2 LSA has been deleted from the LSA (see suppl. provisions - art. 2) and the prohibition of abusive dismissal is now to be found in identical terms in art. 16 LCL. This provision reads as follows: "A dismissal shall, if it lacks objectively reasonable grounds and is not considered to be appropriate in general societal terms, be treated as an abuse of rights and be invalid".

    Although there are no listed statutory grounds for dismissal, they are generally included in collective agreements and/or in the workplace rules (Shugyo-Kisoku). Art. 89 (iii) LSA requires the employer to include in the workplace rules matters pertaining to termination of employment, including grounds for dismissal. These rules must be established in all enterprises employing ten or more workers.

    With the 2012 amendment to the LCA, certain jurisprudence (of the Supreme Court) on abusive refusal to renew FTCs became legal provisions (Art.19, LCA as amended, which entered into force upon its publication: 10 Aug 2012): “the Employer's refusal to accept the said application [for a renewal of a FTC] lacks objectively reasonable grounds and is not found to be appropriate in general societal terms, it is deemed that the Employer accepts the said application with the same labor conditions as the contents of the prior fixed-term labor contract” when: (i) the said FTC has been repeatedly renewed in the past, and it is found that terminating the said FTC by not renewing it when the contract term expires is, in general social terms, equivalent to an unjustified dismissal of a non-FTC worker; or (ii) it is found that there are reasonable grounds upon which the said Worker expects the said FTC to be renewed when it expires.


Prohibited grounds: marital status; pregnancy; maternity leave; filing a complaint against the employer; temporary work injury or illness; race; sex; religion; social origin; nationality/national origin; trade union membership and activities; whistle blowing
Remarks:
  • * Art. 19 LSL prohibits dismissal:
    - during the absence of an employee because of work-related illness and 30 days thereafter; and
    - during an employee's statutory maternity leave and 30 days thereafter.
    If an employee is dismissed during the above-mentioned periods, such dismissal will be void.

    * The Act on Securing, Etc. of Equal Opportunity and Treatment between Men and Women in Employment (1973, as amended in 2006) prohibits dismissal based on sex (art. 6), marriage, pregnancy, childbirth, and requesting maternity leave (art. 9).

    * Article 7 of The Trade Unions Act (1949, as amended in 2005) prohibits dismissal based on trade union activities and membership.

    *Art. 104 LSA prohibits an employer from dismissing an employee on the grounds that he or she reported violations of the Labour Standard Act to the Inspecting authority.
    Specific laws regulating certain aspects on employment also contain provisions on the prohibition to dismiss a worker for reporting violations of these laws to the competent authority (i.e. the Industrial Safety and Health Law, 1972, amended in 2006: art. 97 and the Security of Wage Payment Law, 1976, amended up to 2002: art. 14).

    *See also the Whistleblower Protection Act (2004), art. 3 on the nullity of dismissal of a whistleblower.

    * In addition, Art. 14 of the Japanese Constitution prohibits discrimination in political, economic or social relations on the grounds of race, creed, sex, social status or family origin.
    More specifically, art. 3 LSA prohibits discriminatory treatment with respect to wages, working hours or other working conditions on the grounds of the nationality, creed or social status of any worker. Although political opinions is not listed as a prohibited ground in art. 3 LSA, it has been held that the term "creed" includes both political and religious beliefs(1).
    "Nationality" is also generally interpreted to include the concept of race(2).


    *******
    ((1) see Tadashi A. Hanami, Fumito Komiya: 'Japan', in R. Blanpain (ed.): International encyclopaedia for labour law and industrial relations (The Hague, Kluwer Law International, 2006), § 220, p. 137).
    (2) Idem, citing the Hitachi Seisakujo case, The Yokohama District Court, 1974, HJ, No. 744, p. 29.
    *******

    The 2018 amendment to the Part-time Workers Act (the tile will change to Part-time and Fixed-term Workers Act) will enter into force on 1 April 2020, except that for small and medium-sized enterprises on 1 April 2021, including the following changes:

    Section 24 (2) of PT-FT Act prohibits dismissal and other unfavourable treatment of a FTC worker (as well as of a part-time worker) for the reason that the worker has requested support from the Directors of Prefectural Labour Bureaux such as advice and recommendation for dispute resolution regarding their treatment.

    Section 14 (3) of the same Act also prohibits dismissal and other unfavourable treatment of a FTC (or part-time) worker for having requested information to the employer regarding their treatments (on the difference in treatment compared to regular workers and reasons for it) in accordance with Section 14 (2).



Workers enjoying special protection: pregnant women and/or women on maternity leave; workers on temporary leave following an occupational disease or a work injury
Remarks:
  • See art. 19(1) LSA which prohibits an employer from dismissing a woman while on maternity leave of six weeks prior to (14 weeks in the case of multiple pregnancy) and eight weeks after the childbirth, and 30 days thereafter.
    [As exception, however, dismissal is possible, if the enterprise is unable to continue its activities as a result of a natural disaster or some other unavoidable circumstances provided that the employer has obtained prior authorization from the Labour Standards Inspection Office].

    Note that art. 19(1) LSA also apply to workers which are absent from work for a result of illness or injury incurred in the course of work, and for 30 thereafter.

    See also art. 9(4) of the Act on Securing, Etc. of Equal Opportunity and Treatment between Men and Women in Employment (1973, as amended in 2006) which provides for a special protection against dismissal during pregnancy and maternity leave, as it stated that: "Dismissal of women workers who are pregnant or in the first year after childbirth shall be void." However, this protection is not absolute since "it does not apply n the event that the employers prove that dismissals are not by reasons prescribed in the preceding paragraph [pregnancy, childbirth and requesting maternity leave]".



Procedural requirements for individual dismissals - 2018    

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Notification to the worker to be dismissed: no specific form required

Remarks:
  • No statutory provision on the form of notice.

Notice period:
Remarks:
  • Art. 20 (1) LSA: at least 30 days advance notice.

    However, in accordance with art. 21 LSA, this rule does not apply to the following workers:
    * workers employed on a daily basis if they have worked for less than one month;
    * workers employed for a specific period not exceeding two months;
    * seasonal workers employed for a specific period not exceeding four months; and
    * workers during a trial period if they have worked for less than 14 days.

    In addition, an employer is exempt from obligations pursuant to article 20 LSA if the continued operation of the undertaking becomes impossible because of a natural disaster or some other unavoidable cause or in the event of dismissal for reasons attributable to the employee. In such cases, an employer is obliged to obtain administrative approval from the head of the local Labour Standards Inspection Office (art. 20 (3) LSL).

    • tenure ≥ 6 months
      • 30 day(s).
    • tenure ≥ 9 months
      • 30 day(s).
    • tenure ≥ 2 years
      • 30 day(s).
    • tenure ≥ 4 years
      • 30 day(s).
    • tenure ≥ 5 years
      • 30 day(s).
    • tenure ≥ 10 years
      • 30 day(s).
    • tenure ≥ 20 years
      • 30 day(s).

    Pay in lieu of notice: Yes

    Remarks:
    • Art. 20(1) LSA.

    Notification to the public administration: No

    Notification to workers' representatives: No

    Remarks:
    • No statutory obligation. However, prior consultation may be foreseen in a collective agreement between the employer and a trade union.

    Approval by public administration or judicial bodies: No

    Remarks:
    • Except for a dismissal without notice which is allowed if the continued operation of the undertaking becomes impossible because of a natural disaster or some other unavoidable cause or in the event of dismissal for reasons attributable to the employee. In such cases, an employer is obliged to obtain administrative approval from the head of the local Labour Standards Inspection Office. (art. 20 (3) LSL).

    Approval by workers' representatives: No

    Procedural requirements for collective dismissals for economic reasons (redundancy, retrenchment) - 2018    

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    Definition of collective dismissal (number of employees concerned):
    Concerning 30 employees or more within one month.

    Remarks:
    • This threshold only applies to the compulsory notification to the Public Employment Office and the establishment of a social plan in the event of workforce reduction, as set out in art. 24 of the Employment Measures Act.
      Article 4 of the Enforcement Ordinance of the Employment Measures Act (not available in English) specifies that the workforce reduction shall affect more than 30 employees.

    Prior consultations with trade unions (workers' representatives): Yes

    Remarks:
    • Statutory obligations to consult with the trade union on the "re-employment assistance plan" (art. 24 (2) EMA).

      In addition, according to case-law, mandatory consultation with the trade union on the reasons for dismissal, timing, scale and its methods, is part of the requirements which must be satisfied for an adjustment dismissal to be considered valid (see remark under definition of collective dismissal).

    Notification to the public administration: Yes

    Remarks:
    • Statutory obligation to notify the Minister of Labour in the event of workforce reduction (art. 27(1) EMA).
      In addition, the employer must establish a "re-employment assistance plan" (=social plan) and submit for approval to the Chief of Public Employment Security Office (art. 24 EMA)

    Notification to workers' representatives: Yes

    Remarks:
    • Statutory obligations to consult with the trade union on the "re-employment assistance plan" (art. 24 (2) EMA).

      In addition, according to case-law, mandatory information to and consultation with the trade union on the reasons for dismissal, timing, scale and its methods, are part of the requirements which must be satisfied for an adjustment dismissal to be considered valid (see remark under definition of collective dismissal).

    Approval by public administration or judicial bodies: No

    Remarks:
    • Administrative authorization of the dismissal is not required.
      The employer is only required to obtain the approval of the administration with regard to the "re-employment assistance plan" (art. 24 EMA)

    Approval by workers' representatives: No

    Priority rules for collective dismissals (social considerations, age, job tenure): No

    Remarks:
    • No statutory selection criteria.
      However, according to case-law, the use of reasonable criteria (objective standards) is one of the requirements which must be satisfied for an adjustment dismissal to be considered valid (see remark under definition of collective dismissal).

    Employer's obligation to consider alternatives to dismissal (transfers, retraining...): Yes

    Remarks:
    • The legislation only regulates the employer's obligations with regards to post-dismissal effects insofar as the employer is required "to formulate a plan concerning measures for assisting the re-employment of the workers who will unavoidably lose their jobs" (art. 24(1) EMA).

      However, case-law as established the obligation to make reasonable efforts to avoid dismissals as part of the 4 requirements which must be satisfied for an adjustment dismissal to be considered valid (see remark under definition of collective dismissal).

    Priority rules for re-employment: No

    Severance pay and redundancy payment - 2018    

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    Notes / Remarks
    No statutory severance pay or redundancy payment.
    Collective agreements can provide for severance pay in case of dismissals.

    Avenues for redress (penalties, remedies) and litigation procedure for individual complaints - 2018    

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    Compensation for unfair dismissal - free determination by court: No

    Compensation for unfair dismissal - Legal limits (ceiling in months or calculation method):
    Unjustified dismissals are null and void. Consequently, if a dismissal is held to be unjustified, the employment relationship will always continue. The employee will only be entitled to receive his or her normal wages for the period between the dismissal and the reinstatement.

    Reinstatement available: Yes

    Remarks:
    • See art. 16 LCL.This provision reads as follows: "A dismissal shall, if it lacks objectively reasonable grounds and is not considered to be appropriate in general societal terms, be treated as an abuse of rights and be invalid".

    Preliminary mandatory conciliation: Yes

    Remarks:
    • Under the new Labour Tribunal System, the Labour Tribunal Committee initially tries to resolve labour disputes through conciliation and in the case of its failure it proceeds to a Labour Tribunal procedure.
      It is also

    Competent court(s) / tribunal(s): ordinary courts; labour court

    Remarks:
    • Ordinary courts have had traditionally exclusive jurisdiction over claims of unfair dismissal.
      However, pursuant to the Labour Tribunal Law (Act No 45 of 2004 - in force since 2006), a Labour Tribunal system was established. The law establishes Labour Tribunal Committee (LTC) in Districts Court consisting of a judge and two independent experts in labour relations. The committee initially tries to resolve labour disputes through conciliation and mediation and in the case it fails to do so, it then proceeds to the adjudication of the case pursuant to the Labour Tribunal procedure. The Labour Tribunal procedure should be rapid and conclude after a maximum three sessions. The decision of the Labour Tribunal has the force of settlement in the court, unless either party raises an objection. When an objection is raised, the Labour Tribunal procedure is transformed into a normal judicial process pending at the District Court, in which the Labour Tribunal has been set up.

    Existing arbitration: Yes

    Remarks:
    • Under the Labour Tribunal System, the Labour Tribunal Committee (LTC) attempts to settle the individual labour dispute through mediation in its second or third session and if one of the parties rejects it, the LTC will issue a judicial decision following the Labour Tribunal procedure. (See Labour Tribunal Act - No. 45 of 2004).

    Source of additional information - 2018    

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