Employment Law in Japan

Employment law is not consolidated into a single Code. The most important item of employment legislation is the Labour Standards Act (No. 49 of 7 April 1947), which governs matters such as wages, working time, rest, annual leave, maternity and pregnancy rights, aspects of the employment contract, discrimination and termination of employment. Other significant laws include the following.

• Employment Contracts Act (No. 128 of 5 December 2007)

• Minimum Wages Act (No. 137 of 15 April 1959)

• Act on Securing the Proper Operation of Worker-Dispatch Businesses and Protecting Dispatched Workers (No. 88 of 5 July 1985)

• Act on Improvement of Personnel Management and Conversion of Employment Status for Part-Time and Fixed-Term Employees (No. 76 of 18 June 1993)

• Act on Childcare Leave, Caregiver Leave and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (No. 76 of 15 May 1991)

• Employment Security Act (No. 141 of 30 November 1947)

• Employment Measures Act (No. 132 of 21 July 1966)

• Act on Securing Equal Opportunity and Treatment between Men and Women in Employment (No. 113 of 1 July 1972)

• Act on Promotion of Women’s Participation and Advancement in the Workplace (No. 64 of 4 September 2015)

• Act on Employment Promotion of Persons with Disabilities (No. 123 of 25 July 1960)

• Act on Stabilisation of Employment of Older People (No. 68 of 25 May 1971)

• Employment Measures Act (No. 132 of 21 July 1966)

• Trade Union Act (No. 174 of 1 June 1949)

• Labour Relations Adjustment Act (No. 25 of 27 September 1946)

• Industrial Safety and Health Act (No. 57 of 8 June 1972)

• Act on Promoting the Resolution of Individual Labour-Related Disputes (No. 112 of 11 July 2001)

• Act on Succession to Employment Contracts upon Company Split (No. 103 of 31 May 2000)

• Vocational Abilities Development Promotion Act (No. 64 of 18 July 1969)

• Protection of Personal Information Act (No. 57 of 30 May 2003).

In many cases, government ordinances provide more detailed rules on the application of the various Acts (most of which have been amended since their initial adoption). Case law, and especially that of the Supreme Court, interprets the legislation.

Collective agreements (which are almost all signed at single-employer level) are a further source of regulation of the employment relationship but cover only around a sixth of employees. More important are the employment rules that employers are required to draw up in workplaces with 10 or more employees, dealing with wages, working hours, dismissal, and a range of other issues. Individual employment contracts are generally based on the employment conditions provided for by these employment rules unless the contractual provisions are at least as favourable for the employee as the employment rules. Employment rules and employment contracts must not conflict with employment legislation or any applicable collective agreement.

Japan is divided into 47 administrative prefectures. The authorities at prefectural level do not play a significant role in employment regulation except that each sets a separate statutory minimum wage rate for its own prefecture.

This topic refers to employment law in the private sector only.

• Employers may generally seek or obtain information about job candidates only to the extent that this is necessary for assessing the individual’s suitability for the position concerned. Recruitment and Selection

• A probationary period of longer than six months is likely to be deemed unreasonable and unenforceable. Recruitment and Selection

• An employment contract is defined as an agreement between an employee and an employer that the former will work through being employed by the latter and the employer will pay wages for such work. Employment Contracts

• The duration of fixed-term contracts must not generally exceed three years, though contracts of up to five years are permitted for employees who have an advanced level of expert knowledge, skills, or experience, or are aged at least 60. Employment Contracts

• Employers must take various measures to promote equal or fair treatment for fixed-term and part-time employees and their move to “standard” status — ie employment on an indefinite-term contract with full-time hours. Employment Contracts

• Wages must be paid at least once a month in cash or, with the employee’s consent, by bank transfer, accompanied by a payslip. Pay and Benefits

• Each of Japan’s 47 prefectures sets its own statutory national minimum wage. Pay and Benefits

• In general, employees’ normal working time must not exceed eight hours per day and 40 hours per week, but various flexibility arrangements are available. Working Time, Rest and Holidays

• Overtime is generally permitted only on the basis of a labour-management agreement and is subject to statutory limits, while employees working overtime are entitled to a wage supplement. Working Time, Rest and Holidays

• Employees are generally entitled to rest breaks during the working day and a weekly rest day. Working Time, Rest and Holidays

• Statutory rules on working time and rest breaks/periods do not apply to employees who are in supervisory or management positions or handle confidential processes, while highly-qualified professional employees may also be exempted if they consent. Working Time, Rest and Holidays

• Employees who have at least six months’ service are entitled to 10 days’ paid annual leave, with the entitlement rising to 20 days after six-and-a-half-years’ service. Working Time, Rest and Holidays

• Working mothers are entitled to 14 weeks of maternity leave, while parents are entitled to take 12 months of childcare leave and employees with certain caring responsibilities may take caregiver leave and short-term care leave. Parenthood and Work-life Balance

• Discrimination in employment is prohibited on grounds of sex, disability, nationality, religion, social status or trade union membership/activities, while age discrimination is prohibited in recruitment only. Equality and Discrimination

• Employers must take the necessary measures to prevent sexual harassment, harassment relating to pregnancy, childbirth, or childcare/caregiver leave, and — in the case of large employers — “power harassment”. Equality and Discrimination

• It is an unlawful unfair labour practice for an employer to dismiss or otherwise treat in a disadvantageous manner an employee because they are a member of a trade union or have carried out union activities. Industrial Relations and Collective Rights

• It is an unlawful unfair labour practice for an employer to refuse to engage in collective bargaining with any trade union representing its employees, without legitimate grounds. Industrial Relations and Collective Rights

• In a number of areas, employment legislation allows various special arrangements and derogations from the normal rules to be introduced only on the basis of a “labour-management agreement” — this is either collective agreement signed with a trade union representing a majority of employees at the workplace or, in the absence of such a union, an agreement with an employee representative representing a majority of these employees. Industrial Relations and Collective Rights

• Employers have numerous detailed health and safety obligations, while employees have various duties and rights in this area. Occupational Health and Safety

• A dismissal is null and void if it lacks “objectively reasonable” grounds and is not considered to be “appropriate in general societal terms”: the meaning of these terms is not defined by statute but case law has established that the main reasons justifying dismissal are an employee’s incapacity or misconduct, or the employer’s operational needs (essentially redundancy). Termination of Employment

• As a general rule, an employer must give an employee at least 30 days’ notice of dismissal, except in cases warranting summary dismissal, while employees must give two weeks’ notice of resignation. Termination of Employment

• Where ownership of a business is transferred from one party to another, the general rule is that the employment contracts of the employees are not automatically transferred from the old owner to the new owner. Other Key Issues

• In workplaces with 10 or more employees, the employer must draw up employment rules dealing with wages, working hours, dismissal, and a range of other issues. Other Key Issues