Avoid wrongful termination in Japan

Japanese labor laws provide strong protections against dismissal and the regulations apply to both Japanese and non-Japanese workers equally. So having knowledge of labor laws related to dismissal or termination of employment is useful for protecting your own interest.

How Permanent Employees can avoid wrongful dismissal? 

If you are employed indefinitely, you are deemed as a permanent employee. Under Japanese labor laws, companies cannot easily dismiss such employees. Even if the company are facing the financial difficulty due to the new coronavirus infection, legitimacy of dismissal are strictly examined  in light of the following factors:

  1. Does the company need to reduce personnel?;
  2. Has the company made efforts to avoid dismissal?;
  3. Is the selection of the persons to be dismissed fair?; and
  4. Have the explanation and discussion with employees been properly done?

Certainly, in case your company is in a critical situation where they will go bankrupt without dismissal, dismissal may be allowed. But in many cases, companies fail to fulfill one or two of the factors.

In addition, even in the case where dismissal is permitted, the Labor Standards Act requires that company notify the workers at least 30 days in advance of the dismissal, or if they do not give such notice, they must pay dismissal notice allowance which is at least 30 days’ worth of average wages.

Note that it is possible to dispute the validity or legality of dismissal even after receipt of such a dismissal notice allowance. However, when the worker receives such dismissal notice allowance, the employer may later insist that the worker approved the dismissal. So it is advisable to tell your employer early that you will dispute the dismissal and receive the dismissal notice allowance as a salary for your future work.

Because it is so difficult for companies to dismiss permanent employees in Japan, some companies may seek to encourage voluntary retirement. This is called retirement encouragement. If the company mentions about termination of your employment, it is recommended that you ask company for clarification whether it is dismissal or retirement encouragement.
In the case of retirement encouragement, workers do not need to accept it. So, if you have no intention of voluntary retirement, just refuse it clearly. Company may try to encourage it through unfair harassment or detrimental treatment. If you feel difficult to refuse it by yourself, you should consult with the labor union in your company, Labor Standard Inspection Office or lawyers. Also, if you have colleagues who are encouraged to retire, you may collaborate with them.

Even if you accept the request of retirement from the company, it is better to obtain a written agreement on the conditions for retirement such as retirement benefit. Also, when you ask the company to create a letter of resignation(離職票 Rishoku Hyō), you should make sure that it says “involuntary resignation” or “for company’s convenience(会社都合 Kaisha Tsugō)” instead of “self-convenience(自己都合 Jiko Tsugō)” because there are disadvantage when you try to receive unemployment insurance benefits if the reason of your retirement is for your own convenience.

Can Contract Employees avoid non-renewal of  labor contract. 

If you have a fixed-term labor contract, the employer cannot dismiss you during the term of contract unless there is an “unavoidable circumstances” . “Unreasonable circumstances” are judged more strictly than normal requirements for dismissal as stated above, and in the case of improper dismissal, the company is obliged to pay the wage at least until the expiration of the term of labor contract. Therefore, if you accept the dismissal during the term, it is advisable to claim the wage for the period until the end of the term.

And when the term of the labor contract has expired, do you think it is possible to force your company to renew it?

It depends.

In case of the following situations, companies may not be able to refuse the renewal of your labor contract unless there is objectively reasonable ground and it is considered appropriate in light of common practice:

  1. Your labor contract can be considered substantially equal to permanent contract after repetition of the renewal; or
  2. There is a reasonable ground that you expect your labor contract will be renewed.

Since it requires complicated analysis to determine whether your case falls into one of the two situations above, it’s better to consult with lawyers if you want to know you can be protected by labor laws.


How about Temporary Workers?

In Japan, there are two types of dispatching. One is Regularly-Employed-Type Dispatching (常用型派遣 Jōyō Gata Haken) and another one is Registered-Type-Dispatching (登録型派遣 Tōroku Gata Haken).  Regularly-Employed-Type Dispatching is the form where you are regularly employed by temporary staffing company as a permanent employee(or a contract employee) and dispatched to some companies which your temporary staffing company made Dispatch Worker Contract with. On the contrary, Registered-Type-Dispatching is the form where you are registered in the list of temporary staffing company and make labor contract with temporary staffing company only when you are dispatched to a company for the same period as Dispatch Worker Contract.

If you are Regularly-Employed-Type Dispatching,  a dispatch cut (派遣切りHaken Giri) from the dispatched company does not mean you will lose your job.  It only means that the Dispatch Workers Contract between the temporary staffing company  and the dispatched company is terminated. So, labor contract between temporary staffing company and you will remain effective. Temporary staffing companies may not terminate the labor contract with temporary workers just because the Dispatch Worker Contract was terminated by dispatched company. They are required to make efforts to find another company which accept you. Even if they cannot find such company soon, they are supposed to maintain the labor contract with you by paying allowance for absence which is at least 60 % of the average wages. On the other hand if you are Registered-Type-Dispatching worker, temporary staffing company may be able to terminate the labor contract with you because the Dispatch Workers Contract has been terminated.

Things you should keep in mind

Japan is a country where employees have relatively high level of job security. However, as explained above, the level of protection varies depending on the worker’s type you choose.  In addition, because of the difficulty in dismissal, company may seek to encourage voluntary retirement through various illegal or unfair ways. If you face such situation, please do not hesitate to consult with your colleague, trade union, Labor Standard Inspection or lawyers.  We hope your peaceful career in Japan.

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