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Dispatched Workers and the 3-year Rule

In my previous article, I explained that a contract (or fixed-term) worker has the right of conversion from a fixed-term contract to a non-fixed term contract if their contract has been renewed at least once, and s/he has worked for 5 years or longer in total. We often call this a ‘5-year rule’.

In this article, I introduce the ‘3-year rule’ applicable to a dispatched worker.

A dispatched worker is a worker who is employed by an agency and dispatched to a client company based on a worker dispatch contract between the agency and the client company. The 3-year rule only applies to dispatched workers whose contract with their agency is a fixed-term contract (i.e., registered-type dispatched workers). Their status is a contract worker as well as a dispatched worker. Therefore, the 5-years rule is also applicable in this case.

Unlike the 5-year rule, the 3-year rule governs the length of dispatching to the same company. It says that agencies cannot dispatch their dispatched workers to the same client company for 3 years or longer.[1] Thereafter, if the client company wants the dispatched worker to continue working, the client company must directly hire them (i.e., s/he will leave the agency and be employed by the client company). Or the agency can avoid this restriction by changing their status from a fixed-term (registered-type) employee to a non-fixed term employee.

If this rule is breached, it will be deemed in principle that the client company has made an employment offer to the dispatched worker under the same terms under which s/he is then working.[2] The dispatched worker will become an employee of the client company if s/he accepts such an offer.

In practice, agencies sometimes insert a term restricting client companies from hiring their dispatched workers into the worker dispatch contract. However, the law prohibits this kind of restriction[3], and such a term (if any) is invalid.

Note:
[1] Article 35-3 of the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Protection of Dispatched Workers (the ‘Act’).
[2] Article 40-6(1)iii and iv of the Act
[3] Article 33 of the Act

Disclaimer: While every effort has been made to ensure that the information on this article is accurate at the time of posting, it is not intended to provide legal advice as individual situations will differ. If you do require advice or wish to find out more about the information provided and related topics, please contact the author.

Text by: Atty. Atsushi Miyake of Miyake Law, March 2021.
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Category
Business
Fukuoka Prefecture
Published: Mar 9, 2021 / Last Updated: Mar 9, 2021

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