Now Reports

Foreign Workers and Termination of Employment

The employment environment is worsening amid the coronavirus pandemic. Many employees have been dismissed and this trend is likely to continue for a while. Compared with other countries, however, Japanese labor laws give employees a higher level of protection, which I am going to outline.

Foreigners and labor laws
Labor laws, including dismissal regulations, are generally applicable to foreign nationals working in Japan. Besides, discriminatory treatment based on nationality is prohibited by a specific provision. [1] Several laws such as the Minimum Wage Act and the Industrial Safety and Health Act apply even to illegal workers.

Permanent employees
Permanent employees are called Sei sha-in (正社員) in Japanese. As represented by the word “lifetime employment”, it is extremely difficult to dismiss permanent employees in Japan.

Under the law, an employee can be dismissed if the employer has objectively reasonable grounds to do so and the dismissal would not be considered unreasonable in general societal terms. [2] This is ambiguous. In court precedents, however, poor performance or misconduct that justifies termination in other countries often does not warrant it. Even in case of redundancy, which is likely to be insisted by employers during the current crisis, it is highly difficult to satisfy the four-part test that is established by courts: (a) economic necessity; (b) reasonable steps to avoid terminations have been taken; (c) the selection of the employees to be dismissed must be reasonable; and (d) termination procedures must be appropriate.

For instance, many employees were dismissed after the collapse of Lehman Brothers in 2009, but courts did not easily accept the validity of dismissals using this test. Coronavirus pandemic is more or less the same. It can be an understandable trigger to dismiss employees but it doesn’t necessarily mean such a dismissal is valid.

From employers’ point of view, therefore, offering severance agreements and paying some consideration in exchange for the employee’s voluntary resignation, which avoids a future dispute, is often an advisable business judgment.

From employees’ point of view, on the other hand, it is advisable not to sign/seal any document accepting a resignation with nominal or no consideration (i.e. money).

[1] Article 3 of the Labor Standards Act.
[2] Article 16 of the Labor Contracts Act.

Contract employees
Contract employees are called Keiyaku sha-in (契約社員) in Japanese. More foreign workers seem to be employed as a contract employee rather than a permanent employee. It can either be full-time or part-time, renewable or nonrenewable. If your employment contract has a contractual period, such as six months, 1 year or 3 years, you are a contract employee.

While a contract worker can avoid a long-term commitment expected from a permanent employee (For instance, they follow a transfer order from a company), they are less protected in terms of termination of employment. Generally, employers have no obligation to renew a contract at the end of its term.

However, there also exist several legal frameworks to protect contract employees from their unstable status. First, termination of a fixed-term contract within the agreed term is even more difficult than termination of a permanent contract which is already difficult as explained.

Second, if a fixed-term contract is renewed several times and can be assessed to be equivalent to a permanent contract [3], non-renewal of the fixed-term contract will be assessed as a dismissal, whereby the employer must meet the same criteria required for a dismissal of a permanent employment.

Third, a contract employee whose contract has been renewed at least once, and who has worked for 5 years or longer in total has the right of conversion from a fixed-term contract to a non-fixed-term contract if s/he desires so. This scheme was newly introduced and functioned from April 2018.

Dispatched employees
Dispatched employees (or temporary staff) are called Haken sha-in (派遣社員) in Japanese. A dispatched employee is employed by an agency and dispatched to a client company based on a dispatch contract between the agency and the client. While there are many complicated issues in this type of employment, you may assume you will be treated as a permanent employee or a contract employee depending on the employment contract between you and the agency.

As explained, Japanese employment law is employee-friendly. Still, you may be fired as a matter of fact, not law. Both employers and employees are often not aware of legal consequences of their actions.

[3] Article 19 of Labor Contracts Act.

If, however, such an employee takes legal action claiming for invalidity of dismissal (or non-renewal in case of contract workers meeting the above-mentioned criteria), there generally is a good chance to win compensation. Coronavirus is not a non-rebuttable excuse.

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, June. 2020.
Read more original and informative articles here.

Published: Jun 12, 2020 / Last Updated: Jul 14, 2020

Comments are closed.