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COVID-19: Back To Work in Japan

1. Emergency Measures

Decrees, orders or guidelines in effect and pertaining to reopening facilities.

In Japan, the state of emergency declared on 7 April 2020 was lifted on 25 May, and now is the phase to increase the level of socio-economic activities gradually by relaxing the request to stay home, to conduct gatherings and to limit the use of facilities, on the basis that “the new lifestyle” is well-established in society and the economy as a whole. From the legal perspectives, under the state of emergency, the governors requested various measures, but there have been no statutory directives enacted to combat the COVID-19 pandemic restricting activities of business and individuals and/or imposing specific obligations on employers. There are no sanctions (e.g. fines or penalties) for non-compliance with any of these measures. Everything is just a request and not an order and therefore cannot be required. Please note, however, that requests, guidance and/or recommendations announced by the government, including those for the purpose of combating COVID-19 would be commonly considered as the guidelines that should be followed, regardless of whether sanctions could be applied or not, and therefore it would be advisable for employers to take careful but flexible measures in a practical manner, especially in the course of returning to work.

Basic Policies for Novel Coronavirus Disease Control was decided by the government on 28 March 2020, which presents measures to be taken to combat the COVID-19 pandemic. The English summary of the latest policies on May 25 is available at: https://www.mhlw.go.jp/content/10900000/000634753.pdf

Optimal approach to keep track of the latest updates.

The latest information on COVID-19 in Japan is available at: https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/newpage_00032.html

2. State Aid

Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.

Japan currently has an “Employment Adjustment Subsidy” system, which has been revised to help businesses suffering as a result of COVID-19. The system is designed to help employers avoid termination by covering part of their employees’ salaries (in general up to a maximum of JPY8,330 per employee per day, and for a maximum of 100 days in any 12 months, but disregarding days in the period 1 April to 30 June 2020, if the subsidy was requested in that period) during the period the employees are furloughed. In order to be eligible, the employer must have a labour agreement with an employee representative, or union if there is one, and its monthly business activities (evaluated by reference to factors such as sales volume and/or sales amounts) must have decreased by 10% due to COVID-19, when compared to the same period in the previous year, if the request for the subsidies was submitted in the period 24 January 2020 to 31 March 2020, 5% if the request was submitted in the period 1 April to 30 June 2020 and 10% thereafter. The subsidy is paid to the employer; the rate of the subsidy being between 50% and 100% of the payment the employer is required to make during the furlough (i.e. at least 60% of the employee’s average wage), the actual amount being calculated based on whether the company is a small or medium sized company or a large company, the total number of the employer’s employees, the dates covered by the payments and whether the company has terminated any employees. Application for the subsidy is made to the competent Prefectural Labour Bureau or Employment Service Center.

3. Health and Safety Measures

Requirements mandated by law or any official guidance.

In general, an employer has a statutory duty to give appropriate consideration to ensure that its employees are physically safe at their place of work. There have been no statutory directives enacted to combat the COVID-19 epidemic, imposing specific obligations on employers. The declaration of state of emergency authorised the governors in the areas affected to request (not require) that residents stay home except for essential tasks; businesses can be requested that they “thoroughly implement infection control measures”; but this is just a request and not an order and therefore cannot be required.

Measures typically implemented by employers and the associated legal risks, limitations, obligations and issues to consider.

Measures to satisfy the COVID-19 obligations might include collecting information on employee’s health and physical condition, asking employees to work from home or a safe location, installing temperature meters or other health risk detection methods for employees and visitors (subject to compliance with possible data protection requirements), and implementing staggered commuting times; which measures to take would have to be determined on a case-by-case basis. Although the state of emergency has been lifted, employers are still expected to reduce the number of the employees attending their workplaces and avoid the Three C’s (i.e. closed spaces with poor ventilation, crowded places with many people nearby and close-contact settings such as close-range conversations). Examples of the advisable measures to be taken by employers when gatherings are to be held include (i) limiting the number of the people and providing proper instructions for entering/leaving, (ii) preventing crowded places with many people nearby, (iii) making attendees wash their hands and wear masks and (iv) ventilating a room.

4. Teleworking

Policies and procedures for telework once the business reopens.

Neither policies nor procedures are required for telework. Telework remains an option as one of the advisable measures to be taken by employers, which fully depends on their decision and discretion.

5. Managing COVID-19-Related Employee Issues

Management of quarantine, childcare and medical leave for employees affected by COVID-19.

No specific rights or obligations arise out COVID-19. If an employee is too sick to work in general, they should and would be asked to take sick leave. There is no statutory obligation to pay salary for sick leave. However, if an employee is “able to continue working” but the employer orders the employee to take a leave of absence based on its own judgment and in light of its obligations to provide a safe working environment (including the situation where the employee is infected or suspected of being infected, or has had close contact with an infected person but is not yet reasonably suspected of being infected), the case is considered as furlough, where the payment referred to in section VI part a. (below) is obliged. There is no statutory right to paid or unpaid leave or to look after school-age children affected by COVID-19. The government is providing special benefits to employers that provide extra paid leave for parents, who have children affected by school closures relating to the COVID-19 crisis, for the period from 27 February to 30 June 2020.

Employees who fear infection and refuse to work.

An employee may not refuse to attend to their place of work unless ordered to do so by the employer, regardless of any actual or perceived risk of infection. The employee could also take paid annual leave, but the employer must not coerce the employee to do so. The company’s works rules should set out the procedures for requesting and granting leave.

Disclosure of employees who are infected.

Employers need to be particularly careful that they do not inadvertently disclose an employee’s medical condition without the employee’s consent, e.g. by having them work from home where it could be deduced by others that the employee is infected with COVID-19. An exception for a data folder (an employer or medical professional in respect of an employee’s health data) could be applied for the purpose of preventing the spread of COVID-19, if the acquisition or transfer is considered to be necessary for the protection of the life, health, or property of an individual and it is difficult to obtain the consent of the data subject, or as required by a state agency or a local government to perform their legal duties, or by an individual or a business operator entrusted by either of them for that purpose, and obtaining the consent of the data subject is likely to impede the performance of those duties.

Other issues.

The Japanese government has banned foreigners from entry into Japan (including those with work permits, and those with spousal visas or permanent residency who left Japan on or after 3 April 2020) if within the 14 days before entry, they have been in any of the 111 countries and regions on a list issued by the Ministry of Justice; these countries include the US, the UK and most EU nations. These rules are subject to change.

6. Cost-Reduction Strategies

To what extent can employers implement the following cost-reduction strategies as a result of COVID-19, and what are the primary limitations on each? 

  • Furloughs.

A unilateral reduction in working days or working hours (including furloughs) is permitted only if based on reasonable grounds. A material reduction in business activity, or a requirement to furlough employees as a result of COVID-19, or a government order (but not a request) may constitute reasonable grounds, but each case would have to be examined based on its own facts. If an employer reduces an employee’s working days or hours, or the employee is absent from work due to a cause attributable to the employer, even if there are reasonable grounds for such reduction or absence, the employer must pay the employee: (i) for a reduction in days worked, at least 60% of the employee’s average wage for the days the employee does not work; and (ii) for a reduction in hours worked in a day, normal salary for the hours worked, but not less than 60% of the average wage for the day.

  • Salary reductions.

In general, a unilateral reduction in salary is not allowed and neither can an obligation be waived based on the employee’s employment contract. However, an employer and employee are otherwise free to voluntarily agree on payment terms for a reduction in working days, hours and salary.

  • Redundancy.

The COVID-19 crisis does not provide an employer with any additional rights to terminate an employee. Termination of employment must be objectively reasonable. In the case of redundancy, termination must be based on a cause that would objectively be considered reasonable, and must generally satisfy four tests:

  • there must be a genuine and significant economic need for the termination;
  • the employer must have taken all reasonable steps to avoid the termination, e.g. reassigning the employee(s) to other roles, reduction of payments other than salary and reduction in hiring;
  • if only some employees from within a discrete group in the affected business are being terminated, the criteria for selection of those to be terminated must be fair and not discriminatory; and
  • the employer must have consulted with the affected employee(s) and any labour union.

Terminating an employee as a result of a reduction in, or reorganisation of, the employer’s business resulting from COVID-19 is, depending on the situation, unlikely to be considered objectively reasonable and/or satisfy the four tests. Therefore, the employer should seek to agree on a voluntary termination with the affected employee, including an appropriate severance payment.

  • Facility closure.

Facility closure can be considered as an example of furloughs or redundancy.

7. Best Practices

Tips, recommendations and common pitfalls.

In Japan, each employer is strongly expected to maintain employment. Terminating employees in Japan is generally a difficult process and it is advisable to seek the advice of local counsel or a specialist employment law advisor before doing so. While no enforceable directives with restrictions have been enacted to combat the COVID-19 pandemic, an employer has a statutory duty to take appropriate measures to ensure a physically safe environment at their place of work, in accordance with guidance and recommendations provided by the government as well as business associations. In practice, each business association is preparing guidelines setting out measures to combat COVID-19 in accordance with the type of business, respectively.

Any questions

Ask our member firm Atsumi & Sakai in Japan