Employment law in Japan: 10 surprising facts

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The traditional Japanese idea of “lifetime employment”, with a full-time employee working for the same employer until retirement, has been eroded in recent years. What does the Japanese employment relationship look like in 2016? Sarah Anderson highlights 10 notable facts for global employers that have an interest in the third-largest economy in the world.

1. Pay

Statutory minimum wages are set at the level of each of Japan’s 47 prefectures (the country’s main geographical/administrative units).

They are also set for some specific industries, usually at prefecture level.

It is common practice for employers to pay “regular” full-time employees on open-ended contracts commuting expenses, meal allowances, housing allowances, family allowances and bonuses, as well as a retirement allowance on termination of employment.

2. Work rules

In workplaces with 10 or more employees, the employer must establish written “work rules”, stipulating conditions of employment that apply to all employees at the workplace and constitute part of their employment contracts.

If an employment contract provides for employment conditions below the standards set by the work rules, the relevant provisions of the contract are invalid and the corresponding work rules apply.

Employers must file their work rules with the Labour Standards Inspection Office.

3. Annual leave

Employees become entitled to paid annual leave after six months of continuous service with the same employer.

The initial annual entitlement for full-time employees is 10 working days of leave. This increases each year, up to a maximum of 20 days after six-and-a-half years’ continuous service.

Employees lose entitlement to annual leave in respect of any year of service during which they do not report for work on at least 80% of scheduled working days.

4. Public holidays

There are generally 16 national public holidays a year, including Children’s Day, Greenery Day, Respect for the Aged Day and the Emperor’s Birthday.

It is very common for employers to treat national holidays as non-working days.

However, employers are not required by the law to give employees either paid or unpaid time off on national holidays.

5. Childcare leave

An employee is entitled to take childcare leave in respect of a child under the age of one year for whom the employee has care responsibilities.

Both parents can take childcare leave, at the same time or separately, but the maximum period of leave is generally 12 months.

However, an employee may take leave for up to 18 months under certain special circumstances, such as where it is not possible to enrol the child at a daycare centre because of a lack of spaces.

During childcare leave, employees are not entitled to be paid by their employer, but may be entitled to receive a benefit from the public Employment Insurance scheme.

6. Equal opportunities

Discrimination in recruitment and selection is prohibited on grounds of sex, age and disability; however, there is a relatively wide range of exceptions to the prohibition of age discrimination.

For example, an employer may recruit only individuals under an applicable mandatory retirement age or specifically recruit young people with the aim of the long-term development of human resources in the organisation.

Discrimination is also prohibited in employment on grounds including sex, disability, nationality (including ethnicity), creed and social status, but not age.

7. Employment quota for people with disabilities

Employers with 50 or more employees are required to ensure that people with disabilities account for at least 2% of their employees.

Employers that employ more than 100 employees on a regular basis and fail to meet the quota must pay a levy for each “missing” disabled employee required to achieve the quota.

Employers that employ more than 100 employees on a regular basis and exceed the quota are entitled to receive grants for each disabled employee in excess of the quota.

8. Recruitment

There is a specific route into employment for high school and university graduates.

Employers customarily begin the recruitment process for these graduates around 16 months before they expect the employment to start, and make job offers to suitable candidates during this period.

9. Transfers of undertakings

There is no automatic transfer of employees from a selling business to a buying business in the case of a business assignment (broadly equivalent to the transfer of an undertaking).

In a business assignment, if the seller and buyer intend that the employment contracts of any employees will be transferred, this must be agreed specifically by them.

The employees concerned must also give consent to the transfer of their employment contracts from the seller to the buyer.

Where consent is given, the employee retains their existing terms and conditions of employment.

10. Data protection

Legislation on the protection of personal information currently applies only to “business operators” – including employers – that operate a database or databases containing personal information relating to more than 5,000 individuals.

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