Japan Labor Management QA

Email: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

LRC – Japan Labor Regulations

LRC-JP-20.10
What must be included in the contents of a labor contract in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, arts. 14-18.
All contracts should clearly state wages, hours, and other working conditions.
An employer with 10 or more employees must draft a set of work rules, submit them to a Labor Standards Inspection Office and publicize them to employees by posting them in the workplace, delivering copies to the employees or otherwise.
The work rules must address the following topics:

•  the beginning and end of the workday
•  rest periods, rest days, and leave
•  if workers are employed in two or more shifts, issues relating to the change in shifts
•  methods for determining, calculating, and paying wages, as well as issues relating to wage increases
•  any applicable special wages or minimum wages
•  any retirement allowances
•  the termination of employment and grounds for dismissal
•  any requirement that employees bear the cost of food, supplies for work, or other such expenses
•  safety and health issues
•  vocational training if any
•  accident compensation and/or support for injury or illness outside the scope of employment
•  specifics on commendations or sanctions and
•  any other work rules applicable to all employees.

 LRC-JP-20.11
Does Japan arrange labor contract in fixed term?
What should be the length of the labor contract in Japan?

Evershine RD:

Yes.
A contract for a fixed term, other than those for the completion of a specific task, must not exceed three years, five years for workers over the age of 60 and highly specialized professionals.

LRC-JP-20.20
What is the minimum age for hiring new employee in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, art.56.
Generally, employers may not hire children under 15 years of age and older children not before the first April 1 after they turn 15.

LRC-JP-20.40
Is it a requirement for employer in Japan to conduct a pre-employment background check?

Evershine RD:

According to Personal Information Protection Law, 2003, No. 57, art. 16.
Under the Employment Security Law, employers are allowed to collect personal information about job seekers only to the extent necessary to meet the needs of their businesses.
A wider scope of inquiry is permitted if employees give their consent to the collection of the information.

LRC-JP-20.50
Is the Non-Competition indemnity clause in a labor contract in Japan has legal effect?

Evershine RD:

Noncompetition agreements are valid if reasonable.
In determining whether a noncompetition agreement is reasonable, courts look at the substantive and geographic scope of the agreement, its duration, whether such an agreement is needed to protect an employer’s confidential information, the effect of the agreement on the employee’s ability to earn a living and on the public interest and any compensation paid by the employer to offset the restriction on the employee’s activities.
In general, any analysis of the reasonability of a noncompetition agreement is highly fact-intensive, based on the individual circumstances of the agreement in question.

LRC-JP-40.05
What are the regulations on Gender Discrimination in employment specifically for female workers in Japan?

Evershine RD:

According to Act on Securing Equal Opportunity and Treatment Between Men and Women in Employment, 1972, No. 113, art.5.
Regarding the recruitment and employment of workers, employers shall provide equal opportunities for all persons regardless of sex.
Employers also may not dismiss or adversely treat female employees because of pregnancy, childbirth, marriage, or request for maternity leave.
Employers must notify employees of their policies against sexual harassment, establish a process for responding quickly and appropriately to complaints of sexual harassment, protect employees’ privacy in connection with sexual harassment complaints and establish a policy to protect employees who report sexual harassment from retaliation.

LRC-JP-50.10
Can the employer in Japan collect, or process data transmitted by employees over the internet?

Evershine RD:
According to Personal Information Protection Law, 2003, No. 57.
Employers can monitor employees’ use of email, Internet and telephone and observe them via closed-circuit television.
Employee consent generally is not required, but guidelines issued by the Ministry of Economy, Trade, and Industry state that employees should be made aware of any monitoring, its purpose, and to whom the data will be supplied.
Employees must be informed if monitoring may result in disciplinary action.

LRC-JP-60.10
What are the regulations on working hours in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, arts. 32-36.
The Labor Standards Act sets the regular Japanese workweek at no more than 40 hours and the standard workday at no more than 8 hours, subject to certain exceptions relating to flexible work schedules.
Employers must provide workers with at least 1 rest day per week or at least 4 rest days during a 4-week period.

LRC-JP-60.30
What are the regulations on overtime hours in Japan?
What is the overtime premium rate in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, art. 37(1)-(3).
An employer may require overtime work only if there is a written employment agreement permitting it or is an extraordinary need.
If there is a written agreement permitting overtime work, the agreement must be submitted to a Labor Standards Inspection Office.
Employees are entitled to overtime pay based on the following criteria:

•  for overtime hours on regular workdays, 25% higher than the employee’s ordinary pay and
•  for overtime exceeding 60 hours in a month, 50% higher than the employee’s ordinary pay (however, a moratorium on this rate of increase is in effect for small and medium employers until April 1, 2023.)

LRC-JP-60.50
Is it common to pay 13^th month’s salary in Japan?

Evershine RD:
Although not required by law, Japanese companies commonly give a winter and a summer bonus.
The summer bonus typically is paid in June or July and the winter bonus typically is paid in December.
If a bonus scheme is set by an employment contract, the payment is legally classified as wages and employers are legally obligated to pay it.

LRC-JP-70.10
What are the regulations on general leave policy for employee in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, art. 39(1)-(6).
Employees who have been employed for at least 6 months and who have reported for work on at least 80% of their working days during that time are entitled to 10 days of paid annual leave.
Employees are entitled to an additional day of vacation for each of the following 2 years of employment and an additional 2 days of vacation for each of the subsequent 4 years of employment.

The maximum amount of paid vacation is 20 days.
Leave may be taken consecutively or incrementally.
Up to 2 years of unused vacation may be carried forward.
After 2 years, the unused paid vacation is forfeited.

LRC-JP-70.20
What are the public holidays in Japan?
What is the overtime premium rate during public holiday in Japan?

Evershine RD:
According to Law Concerning National Holidays, 1990, No. 178.

• Jan. 1: New Year’s Day
• Second Monday in January: Coming of Age Day
•  Feb. 11: National Foundation Day
•  Feb. 23: Emperor’s Birthday
•  Vernal Equinox (date in March varies)
•  April 29: Showa Day
•  May 3: Constitution Memorial Day
• May 4: Greenery Day
• May 5: Children’s Day
• Third Monday in July: Marine Day
• August 11: Mountain Day
•  Third Monday in September: Respect for the Aged Day
•  Autumnal Equinox (date in September varies)
•  Second Monday in October: Health and Sports Day
•  Nov. 3: Culture Day
•  Nov. 23: Labor Thanksgiving Day
•  Dec. 23: Emperor’s Birthday

A national holiday that falls on a Sunday is celebrated the next day.
The declaration of a national holiday is not binding on private businesses, and employers are not required to provide paid or unpaid leave for such holidays.

LRC-JP-70.30
What is the maternity leave policy for female employees in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, arts. 64(2), 65-66.
A female employee is entitled to take maternity leave for up to 6 weeks preceding the expected date of birth, up to 14 weeks if she is expected to give birth to more than 1 child.
After childbirth, the mother is required to take 8 weeks’ leave.
An employer need not pay wages during maternity leave unless its work rules require it.
Employment insurance provides compensation of 60% of the employee’s wages for 6 weeks of maternity leave prior to childbirth, 14 weeks if the mother is expecting more than one child, and 8 weeks after.
If the employer wishes to pay the employee while she is on maternity leave, its social insurance liability will be reduced by the amount paid.
Effective from April 2022, employers are required to notify employees who report pregnancy or childbirth about the maternity leave system.

LRC-JP-70.40
What is the paternity leave policy for male employees in Japan?

Evershine RD:
According to Child Care and Family Leave Law, 1991, No. 76, art. 5.
There is no statutory requirement for paternity leave, but an employee, male or female, is entitled to up to 1 year of childcare leave after maternity leave ends.
Effective from April 2022, employers must notify employees who report pregnancy or childbirth about the paternity leave system.
Effective from October 2022, male employees will be able to take up to 4 weeks of paternity leave within the first 8 weeks of their child’s birth.
Effective from October 2022, male employees will be able to take up to 4 separate periods of childcare leave before the child turns 1 year old.
Effective from April 2023, companies with more than 1,000 employees must report the annual percentage of childcare leave taken by male employees.

LRC-JP-70.50
What are the provisions on sick leave, bereavement leave and personal leave for employees in Japan?

Evershine RD:
According to Child Care and Family Leave Law, 1991, No. 76, art.5.

Sick leave

Employers are not required to provide sick leave, but it may be included in an employer’s work rules or in collective bargaining agreements.
Japan’s national health insurance program entitles employees to 2/3 of the applicable standard wage as sick leave allowance after 3 days of absence for 18 months.

Leave due to death in the family

Employers generally (but are not required by law to) allow employees to take up to 5 days’ paid leave for the death of a father, mother, spouse, or child and up to 3 days for the death of a grandparent, grandchild, sibling, child’s spouse, or spouse’s parent.

Family care leave

If a family member of an employee needs constant care for 2 or more weeks because of an injury, sickness, or physical or mental disability, the employee is entitled to 2 forms of partially paid family care leave:

•   5 days a year to take care of one family member or 10 days a year to take care of 2 or more family members and
•   up to 93 days per family member, which can be taken in 3 different periods during the year.

LRC-JP-70.60
What are the regulations on pension benefits and social security insurance benefits for employee in Japan?

Evershine RD:
All Japanese residents must be covered by the National Pension system which provides basic pension benefits.
The program is administered by the Japan Pension Service and includes the mandatory Employees’ Pension Insurance program.

LRC-JP-70.70
What are the regulations on Workers’ Compensation for employee in Japan?

Evershine RD:
According to Labor Standards Act, 1947, No. 49, art. 75.
Employers must pay all insurance premiums for a government-operated program to compensate employees for work-related illnesses and injuries.
The program compensates employees for medical expenses, a percentage of lost wages and disability expenses.
If the injury or illness results in the worker’s death, survivors are compensated for funeral expenses and receive either a pension or a lump-sum benefit.

LRC-JP-80.05
Can the employee in Japan join labor union?

Evershine RD:
According to Japan Constitution, 1946, art. 28.
Yes.
The Labor Union Act bars employers from discrimination based on union membership and prohibits companies from barring employees from joining a union or requiring them to leave one as a condition of employment.

LRC-JP-80.06
How to handle labor dispute in Japan?

Evershine RD:

According to Labor Relations Adjustment Act, 1946, No. 25, Chs. 2, 3, 4.
Under the Labor Relations Adjustment Act, when a labor dispute has occurred that creates the danger of a strike, slowdown, or lockout, the parties may engage in conciliation, mediation, or arbitration.

Conciliation

At the request of either party or on its own initiative, the Labor Relations Commission may appoint one or more conciliators to assist the parties in reaching a settlement.

Mediation

At the request of both parties or at the request of one party pursuant to the terms of a collective bargaining agreement, the commission may appoint a mediation committee to mediate the dispute.
After hearing the views of the parties, the mediation committee has the authority to draft a settlement proposal and present it to the parties.

Arbitration

At the request of both parties, or at the request of one party pursuant to the terms of a collective bargaining agreement, the commission may appoint a committee to arbitrate the dispute.

LRC-JP-90.10
What are the regulations on workplace safety and health for employee in Japan?

Evershine RD:
According to Labor Contract Act, 2007, No. 128, art. 5 and Industrial Safety and Health Act, 1972, No. 57, art. 1.
Courts have held employers legally responsible for the death of an employee from heart disease due to overwork (karoshi), and the Supreme Court has held that employers have a duty not to drive their employees to suicide (karojisatsu).
If an employee commits suicide due to workplace stress, the employer may be required to pay damages to the employee’s survivors.
Under the Act on Asbestos Health Damage Relief, the Environmental Restoration and Conservation Agency must compensate individuals who suffer asbestos-related injuries or, in the case of employee death, their survivors.
Such compensation includes medical expenses, funeral expenses, and a condolence allowance for a surviving spouse.

LRC-JP-100.10
What are the circumstances that an employer can terminate an employee in Japan?

Evershine RD:
According to Labor Contract Act, 2007, No. 128, art. 16 and Labor Standards Act, 1947, No. 49, art. 16, 20.
The following circumstances provide objectively reasonable grounds for termination:

•  the mental or physical disease has rendered the employee incapable of performing assigned duties
•  economic reasons require a reduction in force and the employer has taken every reasonable measure to avoid termination
• inadequate performance by the employee is unlikely to improve with education and guidance
•  the employee obtained employment through misrepresentations or other improper means
•  the employee is absent from work without permission or justification for seven consecutive days or more than 10 days in one month
•  the employee has engaged in acts of violence or intimidation against other employees
•  the employee has engaged in acts of insubordination without justification
•  the employee has become a director or employee of another business without permission of the current employer, and the second job adversely affects the performance of the first
•  the employee has improperly used employment to personally obtain items of value
•  the employee has improperly disclosed confidential business information or trade secrets
• the employee has been sentenced to a term of imprisonment, and
• the employee has been repeatedly disciplined but has shown little or no improvement.

LRC-JP-100.11
What is the notification period for terminating an employee in Japan?
How much is the severance pay?

Evershine RD:
Generally, an employer must give an employee at least 30 days’ notice of termination or pay the employee 30 days’ wages in lieu of such notice.
No notice is required if:

•   continuance of the business has been made impossible because of a natural disaster or other unavoidable reason
•   the employee is being terminated for cause, or
•   the employee is still on probation.

Severance pay is not mandated by law.

LRC-JP-100.12
What is the reporting requirement for employer in Japan to notify the termination of employees to the competent authority?

Evershine RD:
In the situations described below, employers may dismiss employees without notice and without paying a notice allowance so long as the employer obtains the approval of the head of the chief of the relevant labor standards inspection office.

• The company is unable to continue its business because of natural disaster or other such unavoidable circumstances.
• The dismissal of the employee is unavoidable and the result of causes attributable to the employee.

LRC-JP-100.20
What are the regulations on mass layoffs in Japan?

Evershine RD:

According to Employment Measures Act, 1966, No. 132, art. 6.
Employers can perform mass layoffs only when compelling reasons exist. In all cases, the employer must:

•  be in poor financial condition
•  attempt to reduce costs and reassign employees within the organization
•  establish appropriate selection criteria; and
•  give all employees a proper explanation for the redundancy.

If an employer plans to make 30 or more employees redundant at a given workplace within one month, it must create a termination plan that lists the employees and explain the steps it will take to help them find jobs.
The employer must, after consultation with the union or worker representatives, submit a reemployment assistance plan for the approval of the chief of the Public Employment Security Office, whom the employer also must notify before the terminations take place.

LRC-JP-100.30
What is the time limit for employer in Japan to pay employees upon termination?

Evershine RD:
According to Labor Standards Act, 1947, art. 23.
If a resigning employee requests, the employer must pay any outstanding wages within 7 days.

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E-mail: tyo4ww@evershinecpa.com
Contact: Andrea Kyu, speak both Japanese and Mandarin
Onarimon Yusen Building 7F,Nishi-Shinbashi 3-23-5,Minato-ku, Tokyo 105-0003, Japan

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