Japanese employment laws mainly cover employer-employee relationships. These laws apply to all employees working in Japan regardless of their nationality. However, board members as defined under the Company Act (2005) as well as independent contractors are not categorised as employees subject to Japanese employment laws, in principle, and therefore are not protected under Japanese employment laws.
Employment law in Japan is predominantly based upon the following sources:
Furthermore, administrative authorities have published various guidelines relating to labour laws. The purpose of these guidelines is to assist in the legal interpretation of the applicable laws. These guidelines are not legally binding, however, they are widely accepted as the social standard and/or best practices in Japan. In particular, Supreme Court precedent has the potential to have considerable influence on the application of labour and employment laws in market practice and Japanese custom.
Under the Act on Stabilisation of Employment of Elderly Persons (1971), to ensure employment of older workers, employers that have set the retirement age to less than 65 years of age are obliged to take one of the following measures in respect of such employees until they reach the age of 65: (i) raise the retirement age; (ii) abolish the retirement age; or (iii) introduce a continuous employment system (e.g. re-hirement or extension) for all employees who wish to stay. Starting April 2025, the above measures will be mandatory for all companies, including small and medium-sized companies. Furthermore, under recent legistative amendments, an employer whose employees have reached the age of 65, shall endeavor to apply one of the following measures to such employees until they reach the age of 70: (a) raise the retirement age; (b) abolish the retirement age; (c) introduce a continuous employment system; or (d) bring in measures other than employment by executing a labour-management agreement (specifically, a system for continuous outsourcing contracts or a system allowing for employees to engage in social contribution activities on a continuous basis). It is important to note that the measures for employees until the age of 70 are only an obligation for employers to make such efforts and are not mandatory. There are no sanctions imposed on employers for not implementing any of the measures (a) to (d) outlined above.
Under the Child Care and Nursing Care Act, various amendments have been made and are already in effect to allow employees to take leave flexibly including, but not limited to, the following: new childcare leave that men can take immediately after a birth; childcare leave that can be taken in two installments as well as allowing the married couple to take it in turns; child nursing and family care leave that can be taken on an hourly basis; and the application of the childcare right extended to fixed-term employees. These amendments require employers to update their work rules.
The recent amendments to the Whistleblower Protection Act (2004), which came into effect in June 2022, expanded the protection of whistleblowers. The major changes include the followings: (i) employers’ obligation to establish a system necessary to properly respond to whistleblowing (although employers with 300 employees or less are only obliged to make efforts to do); (ii) confidentiality obligations imposed on persons engaged in internal investigations; (iii) expansion of situations in which dismissal on the basis of whistleblowing is invalid; (iv) expanded scope of whistleblowers to be protected extended to former employees within one year of resignation; (v) expanded scope of reporting contents to be protected; and (vi) exemption of whistleblower’s liability for damages in addition to prohibitions on disadvantageous treatment. This has led to an increase in whistlebrowing in practice, especially harassment.
