Distinction Between Blue-Collar and White-Collar Workers

Japanese law does not adopt a formal legal framework that distinguishes between “blue-collar” and “white-collar” workers as overarching categories. Rather than relying on broad classifications, the regulatory framework generally focuses on the nature of the work performed, the industry, and the working conditions.

However, certain areas of regulation may reflect distinctions similar to those between blue-collar and white-collar work.

• For example, occupational safety and health regulations are typically tailored to industry-specific risks and working environments, often addressing hazards associated with physical or site-based work. In addition, provisions under the Labour Standards Act relating to the protection of minors and women have historically been designed with factory-based labour in mind.
• Conversely, more recent developments in working time regulation, such as the highly skilled professional system and discretionary working hour systems described in 1.3 Working Hours, are generally aimed at employees engaged in professional or knowledge-based work, and can be seen as reflecting the characteristics of white-collar employment.

Other Employee Statuses

In practice, Japanese law recognises several categories of employees based on their legal status or the structure of their employment relationship, rather than on a blue-collar/white-collar distinction. Common examples include:

• managerial and supervisory (kanrishoku) employees – employees in positions of supervision or management are exempt from certain provisions relating to working hours, rest periods and days off;
• seconded (shukko) employees – individuals who maintain an employment relationship with both the sending and receiving entities, while being subject to the direction and supervision of the latter; and
• dispatched (haken) workers – employees who are employed by a dispatching agency but work under the direction and supervision of the user enterprise.

These classifications reflect the functional and contractual diversity of employment relationships in Japan.

Indefinite-Term and Fixed-Term Contracts

In Japan, employment contracts are broadly categorised into fixed-term contracts (where the term of employment is specified) and indefinite-term contracts (where no term is specified). As a general rule, a fixed-term contract may not exceed three years, although certain exceptions apply. In addition, depending on factors such as the number of renewals and the duration of employment, an employer may be required to provide advance notice if it decides not to renew a fixed-term contract.

Formation of an Employment Contract

The formation of an employment contract does not require a written agreement:

• a contract is deemed valid upon the mutual offer and acceptance of the parties, and no consideration is required; and
• signatures or registration formalities are also not mandatory.

Nevertheless, in practice, written agreements are commonly used to ensure the clarity of the contractual terms.

Terms Must Be Included in a Written Notice of Employment Conditions

Even though a written agreement is not required, employers are required to provide a written notice of employment conditions (rodo joken tsuchisho). The notice must clearly specify certain statutory working conditions at the time of hiring, including wages, working hours and other prescribed matters. 

Where these terms are properly disclosed to employees at the time of written notification, it is permissible to specify them by reference to the applicable work rules (shugyo kisoku).

Statutory working hours are generally limited to 40 hours per week and eight hours per day, excluding rest periods. However, Japanese law provides a number of exceptions and flexible working arrangements:

• Certain businesses employing fewer than ten employees may require them to work up to 44 hours per week under a special statutory exception.
• In addition, employers may adopt variable working hour systems on a weekly, monthly or annual basis. By entering into a labour-management agreement (or, in the case of a one-month variable working hour system, by stipulating the relevant matters in the work rules), employees may be scheduled to work in excess of the ordinary daily or weekly limits during specified periods, provided that the statutory requirements are satisfied.
• Employers may also implement a flexitime system by entering into a labour–management agreement specifying certain statutory matters (and, in some cases, filing the agreement with the Labour Standards Inspection Office). Under such a system, employees may determine their own work start and end times within an agreed settlement period.

Overtime and Holiday Work

Employees may be required to work overtime or on holidays if the employer and employee representatives conclude a labour–management agreement. Such agreements permit overtime and holiday work, subject to the following statutory limits:

• For ordinary employees (other than certain categories of workers, such as physicians, who are subject to special rules), overtime work is generally limited to 45 hours per month and 360 hours per year.
• In exceptional circumstances where there are temporary and special business needs, overtime work may be extended, provided that –
1. overtime and holiday work do not exceed 100 hours per month;
2. overtime work does not exceed 720 hours per year; and
3. overtime work in excess of 45 hours per month occurs no more than six times per year.
• In both ordinary and exceptional circumstances, the combined average of overtime and holiday work calculated over any period of two to six consecutive months must not exceed 80 hours per month.

Employers may also require overtime or holiday work where temporary necessity arises due to extraordinary circumstances, such as natural disasters, other emergencies, or urgent public needs.

Calculation of Hours Worked

As a general rule, employers must accurately track and calculate employees’ hours worked. However, Japanese law recognises several deemed working-hour systems under which actual hours worked need not be calculated.

Deemed working-hour system for off-site work (jigyojyogai minashi rodo jikan-sei)

Under this system, employees who perform their duties outside the employer’s premises, and whose working hours cannot be readily determined, are deemed to have worked the prescribed number of hours, rather than their actual working hours.

This system may also apply to remote workers who work from home, provided that all the following conditions are satisfied:

• the work is performed at the employee’s residence, where the employee ordinarily conducts personal daily activities;
• the information and communication devices used for the work are not required by the employer to remain constantly connected; and
• the work is not carried out based on the employer’s specific instructions given on an ongoing basis.

Discretionary working hour systems

Japanese law also provides for discretionary working-hour systems (sairyo rodo-sei). Under the professional discretionary working-hour system, employees engaged in certain highly specialised professional occupations may be deemed to have worked a predetermined number of hours regardless of the actual time spent working. Under this system, employees engaged in planning, analysis and decision-making functions at a company’s headquarters or similar business operations may likewise be deemed to have worked the prescribed hours if the statutory requirements are met.

Minimum Wage

Japan has two types of statutory minimum wages: regional and industry-specific. Regional minimum wages are established for each prefecture, while industry-specific minimum wages apply to designated industries and are generally set at a higher level than the applicable regional minimum wage.

Minimum wages are prescribed on an hourly basis. Any agreement providing for wages below the applicable minimum wage is void to the extent of the shortfall, and the employment contract will be deemed to provide for wages at the statutory minimum wage level.

Bonuses

The determination and payment of bonuses are generally left to agreement between the employer and employee. Japanese law does not require the payment of bonuses, nor does it provide for a mandatory 13th-month salary or similar statutory entitlement.

Remuneration

Subject to compliance with minimum wage requirements and other employment laws, remuneration is generally determined by agreement between the parties, and there is no system of routine government or third-party approval of wage levels. However, where a reduction in remuneration constitutes a disadvantageous change to working conditions, the employer must satisfy the requirements for a valid disadvantageous modification of employment conditions under Article 9 or 10 of the Labour Contracts Act.

Vacation and Vacation Pay

Employees who satisfy the statutory eligibility requirements are entitled to paid annual leave. The minimum entitlement is prescribed by law and increases according to the employee’s length of service and attendance rate. Employees are generally free to use annual leave for any purpose, and unused statutory annual leave may generally be carried forward for up to two years.

Required Leave for Maternity, Disability, Childcare, Illness, etc

Japanese law also provides for various statutory leave entitlements, including maternity leave, childcare leave, paternity leave and family care leave. Maternity leave is mandatory during certain periods before and after childbirth, while eligible employees are entitled to take childcare, paternity and family care leave under the applicable statutory framework.

Employers are generally not required to continue paying wages during maternity leave, childcare leave, paternity leave or family care leave. However, employees may be entitled to receive benefits from Japan’s public health insurance and employment insurance systems, which cover most employees on a mandatory basis, subject to the relevant statutory eligibility requirements.

By contrast, Japan does not have a general statutory sick leave regime. Whether employees are entitled to paid or unpaid sick leave is therefore largely determined by the employer’s policies, collective agreements or work rules.

Confidentiality and Non-Disparagement Obligations

These obligations are commonly included in employment contracts and termination agreements. Japanese law does not impose specific statutory restrictions on such provisions. However, contractual clauses that are excessively broad, contrary to public policy, or that improperly restrict employees from exercising statutory rights may be unenforceable. For confidentiality obligations during employment, refer to 3.1 Data Privacy Law and Employment.

Post-employment confidentiality obligations are also generally enforceable, particularly with respect to trade secrets and other confidential business information. Employees may be liable for damages caused to their employer through wilful misconduct or negligence.

Validity of Non-Compete Obligations

Japanese law distinguishes between non-compete obligations during employment and those that apply after termination.

During employment

During employment, non-compete obligations are generally enforceable. Where a non-compete obligation is expressly provided for in work rules or an employment agreement, employees are bound by such obligations. Even in the absence of an express provision, employees are generally considered to owe duties of loyalty and good faith to their employer as part of the employment relationship. Accordingly, competitive activities that conflict with the employer’s interests are generally prohibited during employment.

Post-employment

Following termination of employment, the duties arising from the employment relationship no longer apply. Accordingly, post-employment non-compete obligations are not implied by law and must generally be based on a contractual agreement between the parties (except where liability may arise under general tort principles or the Unfair Competition Prevention Act – refer to 3.1 Data Privacy Law and Employment).

Japanese courts do not regard post-employment non-compete covenants as void per se. However, because such restrictions limit an employee’s constitutional freedom to choose an occupation, their enforceability is assessed on a case-by-case basis. Relevant factors include the duration of the restriction, the geographical scope, the range of restricted activities, the employee’s position and responsibilities, and whether the employee receives any form of compensation in exchange for the restriction. The requirement for compensation is not equivalent to the concept of consideration under US law. Rather, Japanese courts consider compensation as one of several factors in assessing the overall reasonableness of a restraint.

Accordingly, Japanese courts have upheld certain post-employment non-compete covenants even where no specific compensation was provided, particularly where the scope of the restriction was relatively limited.

Japanese law does not recognise a doctrine equivalent to the US “blue pencil” doctrine. Nevertheless, courts have occasionally adopted a narrow interpretation of overly broad restrictive covenants and enforced them within a reasonable scope.

Remedies

During employment

Where a non-compete obligation is stipulated in work rules or other employment regulations, a breach may constitute grounds for disciplinary action. Employers may also, where permitted under applicable retirement allowance rules, reduce or withhold retirement benefits in connection with serious breaches of non-compete obligations. In addition, employers may seek injunctive relief and damages arising from an employee’s breach.

Post-employment

Where a valid post-employment non-compete covenant exists, employers may seek injunctive relief and damages for breach of contract.

Even in the absence of an express non-compete agreement, former employers may in certain circumstances pursue tort claims against former employees.

Japanese courts have recognised that post-employment competition conducted by improper means, or otherwise exceeding the bounds of fair competition, may give rise to tort liability and an award of damages.

Validity of Non-Solicitation Covenants

In Japan, non-solicitation covenants are more commonly discussed as restrictions on the solicitation of employees. The legal analysis is broadly similar to that applicable to non-compete covenants discussed in 2.1 Non-Competes. Such restrictions may be divided into those applicable during employment and those applicable following termination.

During employment

During employment, employees are generally considered to owe duties of loyalty and good faith to their employer. As part of those duties, employees are generally expected to refrain from soliciting their colleagues, customers or other business relationships for competing purposes. In addition, where non-solicitation obligations are expressly prescribed in work rules or employment agreements, a breach may constitute grounds for disciplinary action.

Post-employment

Questions frequently arise regarding the enforceability of post-employment non-solicitation covenants agreed during the course of employment. As with post-employment non-compete covenants, the validity of such restrictions is not determined by any bright-line rule.

Rather, the courts assess the covenants in light of all relevant circumstances, including the nature and manner of the solicitation, whether the former employee actively encouraged the employer’s personnel to leave their employment, whether the former employee requested employees to remove or disclose confidential information, the number of employees solicited, and the commercial impact of the solicitation on the former employer. Particularly aggressive or abusive solicitation activities are more likely to be regarded as unlawful.

The disclosure or removal of confidential information in connection with the solicitation may also give rise to liability under the Unfair Competition Prevention Act, in addition to any contractual claims arising from the non-solicitation covenant itself (see 3.1 Data Privacy Law and Employment.)

Remedies

The remedies available for breaching a non-solicitation covenant are broadly similar to those available for breaching a non-compete covenant.

During employment

Where a non-solicitation obligation is prescribed in work rules or other employment regulations, a breach may constitute grounds for disciplinary action.

Employers may also, where permitted under applicable retirement allowance rules, reduce or withhold retirement benefits in connection with serious misconduct. In addition, employers may seek injunctive relief and damages arising from the employee’s conduct.

Post-employment

Where a valid post-employment non-solicitation covenant exists, employers may seek injunctive relief and damages for breach of contract. The former employer may also pursue other available claims, including those based on the misuse of confidential information or other unlawful conduct associated with the solicitation activities.

Duty of Confidentiality

Employees are generally understood to owe a duty of confidentiality as an implied obligation arising from the employment relationship. This duty is also commonly set forth in company work rules or employment regulations.

Accordingly, if an employee discloses a company’s confidential information to a third party, the employee may be subject to disciplinary action and may also be liable for damages based on a breach of the employment contract.

For post-employment confidentiality obligations, see 1.5 Other Employment Terms.

Trade Secret Protection

In addition, the Unfair Competition Prevention Act provides legal protection for data and other business information. Under the law, a company’s trade secrets – defined as technical or business information useful for business activities, such as manufacturing or sales methods, or other operational information, that is managed as confidential and not publicly known – are protected against various forms of misappropriation.

The law permits claims for damages and injunctive relief in cases involving, among other things, the acquisition of trade secrets through improper means, the use or disclosure of trade secrets acquired through improper means, and the use or disclosure of trade secrets for the purpose of obtaining an improper benefit or causing harm to the company concerned.

Furthermore, criminal penalties may be imposed for the unauthorised acquisition of trade secrets and for the use or disclosure of such trade secrets for the purpose of obtaining an improper benefit or causing harm to a company.

Privacy Protection

With respect to privacy protection, the Act on the Protection of Personal Information (APPI) establishes the relevant legal framework. When collecting personal information relating to employees or other individuals, a company must specify and publicly disclose the purpose of use in advance. Personal information may generally be used only within the scope of the stated purpose.

As a general rule, the consent of the individual concerned is required for any use beyond the stated purpose or for disclosure to third parties.

Categories of Residence Status

Foreign nationals wishing to work in Japan must hold a residence status that permits employment activities.

The following residence statuses permit employment activities within the scope of the activities specified for the relevant status:

• diplomat;
• official;
• professor;
• artist;
• religious activities;
• journalist;
• highly skilled professional;
• business manager;
• legal/accounting services;
• medical services;
• researcher;
• instructor;
• Engineer/Specialist in Humanities/International Services;
• intra-company transferee;
• nursing care;
• entertainer;
• skilled labour;
• technical intern training;
• specified skilled worker; and
• designated activities, including holiday work, and foreign-national nurses and certified care workers admitted under economic partnership agreements (EPAs).

In addition, the following residence statuses permit employment activities without restrictions on the scope of work:

• permanent resident;
• spouse or child of a Japanese national;
• spouse or child of a permanent resident; or
• long-term resident.

By contrast, the following residence statuses do not generally permit employment activities:

• cultural activities;
• temporary visitor;
• student;
• trainee; or
• dependent.

The Technical Intern Training Program and the New Employment for Skill Development Program

The current Technical Intern Training Program is scheduled to be abolished and replaced by the Employment for Skill Development Program (Ikusei Shuro System) from April 2027.

Under the current programme, restrictions apply to both the period of stay and the occupational fields in which foreign nationals may engage. Under the new programme, foreign nationals will generally be permitted to work for up to three years. Following completion of the programme, participants may transition to the Specified Skilled Worker status, which may allow a longer period of residence.

The new system will apply to 17 designated industrial sectors and will introduce a Japanese-language proficiency requirement equivalent to approximately the A1 (beginner) level under the Common European Framework of Reference for Languages (CEFR).

In addition, transfers to another employer, which have historically been restricted under the Technical Intern Training Program, will generally be permitted after one year of employment (or, in certain sectors, after two years), provided that the statutory requirements are satisfied.

The registration and notification requirements depend on the foreign worker’s immigration status.

• Foreign nationals working under work-authorised statuses such as Engineer/Specialist in Humanities/International Services must obtain and maintain the appropriate residence status.
• By contrast, foreign nationals holding unrestricted statuses, such as permanent resident, are not subject to work-related immigration restrictions.

Additional Requirements

Additional requirements apply to foreign workers accepted under the Technical Intern Training Program and, following the end of its term, the Employment for Skill Development Program. These programmes are subject to a separate regulatory framework, including approval of the applicable training or skill development plan and compliance with reporting and supervisory requirements.

Regardless of immigration status, employers must file notifications regarding the hiring and termination of foreign-national workers with the Public Employment Security Office (officially known as “Hello Work” in Japanese). Employers must also comply with the applicable social insurance, health insurance and employment insurance requirements as for Japanese employees.

In Japan, there are no specific statutory regulations governing mobile work (ie, work performed outside the employer’s premises). Employees generally engage in mobile work in accordance with their employer’s instructions or the internal rules established by the company.

Mobile work became widespread during the COVID-19 pandemic. However, since the pandemic subsided, many employers have come to believe that productivity is enhanced when employees work together in person at the workplace. As a result, many companies have scaled back mobile work arrangements and now permit these only on a limited basis.

One of the principal issues associated with mobile work is the handling of the employer’s confidential information outside the workplace. Employees owe a duty of confidentiality as an implied obligation arising from the employment relationship, and this obligation applies equally when working remotely. In practice, companies typically protect confidential information by implementing measures such as restricting access to data and prohibiting the printing of confidential materials.

From an occupational health and safety perspective, it is important for employers to appropriately manage employees’ working hours. In the case of mobile work, employers often rely on employees’ self-reporting of hours worked. However, government guidelines recommend that employers take reasonable steps to verify the actual hours worked, including having supervisors periodically review employees’ work assignments and workload, rather than relying solely on self-reporting.

There is also no difference in the application of Japan’s social security system based on whether an employee performs mobile work. Employees engaged in mobile work remain subject to the same social security rules and coverage as employees working on the employer’s premises.

In Japan, relatively few companies offer a formal sabbatical leave programme (ie, an extended leave of absence from work). However, some companies, as part of their employee benefits programmes, permit employees to undertake activities such as overseas study and provide financial assistance to cover part of the associated expenses.

In such cases, employers may wish to ensure that employees remain with the company for a certain period after returning from their studies. Accordingly, some employers have considered imposing a condition requiring employees to immediately reimburse the company for the financial assistance received if they resign within a specified period after returning to work.

However, Article 16 of the Labour Standards Act provides that: “An employer must not form a contract that prescribes a monetary penalty for breach of a labour contract or establishes the amount of compensation for loss or damage in advance.” Japanese courts have held that requiring employees to reimburse a company for such expenses solely because they resign before completing the prescribed period of service constitutes an unlawful liquidated damages provision and is therefore invalid.

Accordingly, many companies instead adopt a different arrangement. Rather than providing financial assistance subject to a repayment condition, the company extends a loan to the employee to finance the overseas study or similar programme. Although the employee is initially obliged to repay the loan, the company agrees to waive all or part of the repayment obligation if the employee continues to work for the company for a specified period after returning. This structure is generally regarded as more consistent with Article 16 of the Labour Standards Act.

Promotion of Secondary Employment

With Japan’s declining and ageing population leading to labour shortages, secondary employment (side jobs) has become more common.

For employees, secondary employment offers the opportunity to engage in additional work without leaving their primary company. It enables them to acquire new skills and experience, develop their careers, and pursue work that reflects their personal interests and aspirations. From the primary employer’s perspective, secondary employment may also be beneficial, as employees can gain knowledge and experience that may not be available within the company and apply those skills to their primary job.

On the other hand, concerns have been raised that engaging in multiple jobs may result in excessively long working hours, potentially jeopardising employees’ health. There are also concerns that employees may use or disclose their primary employer’s confidential information at their secondary place of employment.

In response to these developments, the Japanese government has issued guidelines on matters such as the management of working hours and monitoring the health of employees who engage in secondary employment.

Diverse Working Arrangements

Working arrangements in Japan have become increasingly diverse, driven by the widespread adoption of mobile work and web-based meeting systems, as well as government initiatives to support pregnancy, childcare and work–life balance in response to the country’s declining birth rate.

Even for regular employees, an increasing number of companies have introduced flexitime systems, under which employees are permitted to determine their own work start and end times within prescribed parameters (see 1.3 Working Hours). In addition, the Child Care and Family Care Leave Act has been amended several times to strengthen support for employees with childcare or family caregiving responsibilities. These amendments have expanded the availability of childcare leave, family care leave, leave arrangements after returning to work, and reduced working hour systems, among other measures.

At the same time, a growing number of individuals are choosing to work as freelancers, whose working arrangements are not subject to the same working time restrictions as regular employees. Because freelancers are generally treated as independent contractors rather than employees, they do not benefit from the extensive protections afforded under Japanese labour laws. To address this, Japan has enacted the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators, which provides freelancers with certain statutory protections in their dealings with clients.

Constitutional and Statutory Framework

Article 28 of the Constitution of Japan provides that: “The right of workers to organise and to bargain and act collectively is guaranteed.” Accordingly, the constitution guarantees workers the right to form labour unions, the right to engage in collective bargaining with employers, and the right to take collective action, including strikes.

Article 2 of the Labour Union Act defines labour unions as “organisations, or federations thereof, formed voluntarily and composed mainly of workers for the main purposes of maintaining and improving working conditions and raising the economic status of the workers”. A fundamental requirement under the law is that a labour union must be an independent organisation, free from employer domination or interference.

Protection of Union Activities

Legitimate union activities are afforded both criminal and civil immunity under the Labour Union Act (Articles 1(2) and 8). Specifically, workers and labour unions are exempt from criminal liability for lawful union activities, and employers may not seek damages for losses arising from legitimate acts of collective bargaining or other lawful union activities.

Collective Bargaining Obligations

An employer may not refuse a request for collective bargaining made by a labour union without justifiable reason. While the employer is under no obligation to accept the union’s demands, it is required to bargain in good faith. Accordingly, even where the employer intends to reject the union’s proposals, it is expected to provide reasonable explanations and, where appropriate, disclose relevant information or materials to support its position.

Unfair Labour Practices

Employers are prohibited from engaging in unfair labour practices, including treating employees disadvantageously because they are members of a labour union or have engaged in union activities, interfering with the formation or administration of a labour union, and failing to bargain in good faith during collective bargaining.

Remedies Before Labour Relations Commissions

Any labour union that believes it has been subjected to an unfair labour practice may file an application for relief with the Labour Relations Commission established in the applicable prefecture. The commission has the authority to investigate the matter and, where appropriate, issue remedial orders against the employer.

Characteristics and Current Trends of Japanese Unions

In Japan, the vast majority of labour unions are enterprise unions, organised on a company-by-company basis. As such, they serve not only as organisations representing employees’ interests in seeking improvements to working conditions, but also as co-operative partners that work together with management to enhance the company’s performance.

In recent years, organised labour–management conflicts have become less common, while individual employment disputes between employees and employers have increased. At the same time, union membership has continued to decline. As of 2025, the labour union membership rate in Japan stood at 16%, and the overall trend has been one of gradual decline.

As noted in 6.1 Unions, the vast majority of labour unions in Japan are enterprise unions. Accordingly, labour–management negotiations within a company are generally conducted by the labour union. That is, unlike in some European countries, Japanese law does not provide for a statutory employee representative body with general authority to consult or negotiate with the employer on behalf of employees.

Under the current Japanese legal framework, however, employers are required to designate employee representatives at each workplace for certain statutory purposes.

For example, where employees are required to work overtime beyond the statutory working hours or on statutory days off, the employer must conclude a labour–management agreement with the employee representative at each workplace pursuant to Article 36 of the Labour Standards Act.

In addition, when an employer establishes or amends its work rules, they must be filed with the Labour Standards Inspection Office, and the employer is required to attach the opinion of the employee representative to the filing, pursuant to Article 90 of the Labour Standards Act.

The employee representative is either:

• the labour union representing a majority of employees at the relevant workplace, where such a union exists; or
• a person representing the majority of employees at that workplace, where no majority union exists (in the latter case, the majority representative must be selected through a democratic process).

These employee representatives, however, do not necessarily aggregate or represent the views of individual employees at the workplace, nor do they act as legal representatives of the workforce in the same manner as works councils in some European jurisdictions. Nevertheless, in recent years, there has been increased discussion in Japan as to whether the employee representative system should be reformed so that it can play a more meaningful role in facilitating labour–management communication and reflecting employees’ views in the workplace.

Formation and Duration of Collective Agreements

A collective agreement becomes legally effective only when it is put in writing and is either signed by or bears the names and seals of both parties concerned (Article 14 of the Labour Union Act).

Where a collective agreement specifies a fixed term, the maximum permissible term is three years. If no term is specified, either party may terminate the agreement by giving at least 90 days’ prior notice (Article 15 of the Labour Union Act).

Normative Effect of Collective Agreement

There are generally no statutory restrictions on the matters that may be included in a collective agreement. However, provisions establishing the standards concerning working conditions and other matters relating to the treatment of workers constitute the normative provisions of the agreement. Under Article 16 of the Labour Union Act, any provisions of an individual employment contract that conflict with such normative provisions are void, and the corresponding provisions of the collective agreement prevail.

Interaction With Work Rules

Work rules also must not conflict with a collective agreement. If the work rules are inconsistent with the terms of a collective agreement, the competent administrative authority may order the employer to amend the work rules pursuant to Article 92 of the Labour Standards Act.

Scope of Application

As a general rule, a collective agreement applies only to members of the labour union that concluded the agreement. However, where at least three quarters of the regularly employed workers of the same category at a particular workplace become subject to the same collective agreement, the agreement is also extended to the remaining workers of the same category employed at that workplace (Article 17 of the Labour Union Act).

Extension of Collective Agreements

Furthermore, where certain statutory requirements are satisfied, the Minister of Health, Labour and Welfare or the relevant prefectural governor may determine that the same collective agreement will apply throughout a particular region. In practice, however, such regional extensions are extremely rare. As explained above, the vast majority of labour unions in Japan are enterprise unions organised on a company-by-company basis, and therefore collective agreements are generally concluded at the individual company level rather than on an industry-wide or regional basis.

The standards governing the validity of dismissals differ depending on whether the dismissal is an ordinary dismissal, a disciplinary dismissal, a redundancy dismissal, or the termination of a fixed-term employee before the expiration of the agreed term.

Ordinary Dismissal

The validity of an ordinary dismissal is assessed under the doctrine of abuse of the right to dismiss, which is codified in Article 16 of the Labour Contracts Act. Under that provision, a dismissal is void if it lacks objectively reasonable grounds and is not considered appropriate under generally accepted social standards.

Accordingly, the employer must demonstrate not only the existence of the facts relied upon as grounds for dismissal, but also that those grounds justify termination of employment. In determining whether a dismissal is valid, courts consider a wide range of circumstances, including the nature and seriousness of the employee’s misconduct or performance deficiencies, the degree of fault attributable to the employee, the damage caused to the employer, whether the employee acted intentionally or in bad faith, whether mitigating circumstances exist, and whether an appropriate process was followed before the dismissal.

Disciplinary Dismissal

A disciplinary dismissal, which is the most severe form of disciplinary sanction imposed in response to employee misconduct, is subject to the same general doctrine of abuse of rights. However, Japanese courts apply particularly strict scrutiny to disciplinary dismissals.

As a general rule, a disciplinary dismissal may be imposed only where the relevant conduct falls within the disciplinary grounds set out in the employer’s work rules. In addition, the employer is generally expected to provide the employee with notice of the alleged misconduct and an opportunity to present their explanation before the disciplinary dismissal is imposed.

Redundancy Dismissal

The validity of a redundancy dismissal is also assessed under Article 16 of the Labour Contracts Act. Accordingly, a dismissal for economic reasons will be void if it lacks objectively reasonable grounds or is not considered socially appropriate. Japanese courts have developed a specific body of case law governing redundancy dismissals. In assessing their validity, courts typically consider:

• the necessity of the workforce reduction;
• the employer’s efforts to avoid dismissal;
• the reasonableness of the employee selection criteria; and
• the appropriateness of the consultation and dismissal procedures followed by the employer.

While there is academic debate as to whether all four requirements must be satisfied or should instead be weighed as factors in an overall assessment, parties are generally expected to submit evidence and arguments regarding each of these elements.

Termination of Fixed-Term Employment Contracts

The foregoing principles primarily apply to indefinite-term employment relationships.

Different rules apply to fixed-term employment contracts. Because the parties have agreed in advance to a specified contract term, Article 17 of the Labour Contracts Act provides that an employer may not terminate a fixed-term employee before the expiration of the contract term unless there are unavoidable circumstances justifying the termination.

As a general rule, an employer must provide at least 30 days’ prior notice before dismissing an employee. If the employer does not provide the required notice, it must pay a dismissal notice allowance equal to at least 30 days’ average wages. Where the notice period is less than 30 days, the employer must pay average wages corresponding to the shortfall. For example, if an employee is given only ten days’ notice, the employer must pay an amount equal to 20 days’ average wages as a dismissal notice allowance (Article 20 of the Labour Standards Act).

In addition, if an employee requests a certificate stating the grounds for dismissal, the employer must promptly provide such certificate (Article 22 of the Labour Standards Act).

Except in limited circumstances prescribed by law (such as certain cases of summary dismissal), no approval from a government authority or other third party is generally required to effect a dismissal.

As discussed in 7.2 Notice Periods, an employer is generally required to provide at least 30 days’ prior notice before dismissing an employee. A dismissal effected without such notice is commonly referred to as a summary dismissal.

However, a summary dismissal does not violate Article 20 of the Labour Standards Act if the employer either:

• pays a dismissal notice allowance equal to at least 30 days’ average wages; or
• obtains approval from the competent Labour Standards Inspection Office that payment of the dismissal notice allowance is not required because the dismissal is attributable either to force majeure making continuation of the business impossible, or to reasons attributable to the employee.

A summary dismissal may arise in connection with any of the categories of dismissal discussed in 7.1 Grounds for Termination, including ordinary dismissals, disciplinary dismissals, and dismissals of fixed-term employees prior to the expiration of the contract term.

Accordingly, when assessing the validity of a summary dismissal, it is necessary not only to examine compliance with Article 20 of the Labour Standards Act, but also to consider the substantive validity of the dismissal under the abuse-of-the-right-to-dismiss doctrine or, in the case of a fixed-term employment contract, Article 17 of the Labour Contracts Act.

An employer and an employee may mutually agree to terminate the employment relationship through a termination (separation) agreement. Japanese law does not prescribe specific statutory requirements governing the validity of termination agreements.

However, the employee’s manifestation of intent to agree to the termination is subject to the general rules of the Civil Code relating to the validity of declarations of intent. Accordingly, a termination agreement may be void or subject to rescission where the employee’s consent was affected by factors such as mental reservation, mistake, fraud or duress.

In addition, the validity of a termination agreement may be examined from the perspective of public policy. A termination agreement that is contrary to public policy and morals may be held unenforceable.

Furthermore, some court decisions have examined whether an employee’s agreement to resign or terminate employment was made based on the employee’s free and voluntary will. In this context, the courts may consider the circumstances in which the agreement was reached and whether the employee was under undue pressure when expressing their intention to leave employment.

Japanese law prohibits dismissal in a number of circumstances. Major examples include:

• dismissal during a period of absence from work due to a work-related injury or illness and for 30 days thereafter (Article 19 of the Labour Standards Act);
• dismissal during maternity leave taken before or after childbirth and for 30 days thereafter (Article 19 of the Labour Standards Act);
• dismissal on the grounds of nationality, creed or social status (Article 3 of the Labour Standards Act);
• dismissal in retaliation for reporting violations of labour law to the Labour Standards Inspection Office (Article 104 of the Labour Standards Act);
• dismissal on the grounds that an employee is a member of a labour union or has engaged in lawful trade union activities (Article 7 of the Labour Union Act);
• dismissal on the grounds of sex, marriage, pregnancy, childbirth, maternity leave or other protected circumstances relating to pregnancy and childcare (Articles 6 and 9 of the Equal Employment Opportunity Act);
• dismissal on the grounds that an employee has applied for or taken childcare leave, family care leave, childcare leave at birth (paternity leave), or other statutory childcare- or family care-related leave (various provisions of the Child Care and Family Care Leave Act);
• dismissal of a part-time employee who is treated as comparable to a regular employee solely because of their status as a part-time employee (Article 8 of the Part-Time and Fixed-Term Employment Act); and
• dismissal in retaliation for making a protected whistle-blower report (Article 3 of the Whistleblower Protection Act).

A dismissal implemented in violation of these statutory protections will generally be void and may expose the employer to damages and other remedies under the applicable legislation.

Assessment of Validity

As discussed in 7.1 Grounds for Termination, the validity of a dismissal is assessed under the doctrine of abuse of the right to dismiss or, in the case of a fixed-term employment contract, Article 17 of the Labour Contracts Act.

In dismissal litigation, the employee generally bears the burden of alleging and proving the facts that support the employee’s claim, while the employer bears the burden of alleging and proving facts that justify or negate that claim. In practice, courts assess the validity of the dismissal based on the parties’ respective factual allegations and evidence.

Remedies

The remedies available depend on the nature of the claim. In an action seeking a declaration that a dismissal is void, the principal remedy is a judicial determination that the employee continues to hold their employment position with the employer. In addition, employees commonly seek payment of wages that would have been earned during the period following the dismissal.

Employees may also pursue damages claims, including claims based on tort principles where the circumstances justify such relief.

Japanese law does not provide a single comprehensive anti-discrimination statute. Claims may be brought under various statutory provisions depending on the protected characteristic involved:

• Article 3 of the Labour Standards Act prohibits discriminatory treatment with respect to wages, working hours and other working conditions on the grounds of nationality, creed or social status; and
• separate statutes address sexual discrimination, pregnancy- and childcare-related disadvantageous treatment, disability discrimination, and unreasonable disparities between regular and non-regular employees.

The employee generally bears the burden of proving the facts supporting a discrimination claim, although the courts may draw inferences from circumstantial evidence depending on the case. Japanese law does not recognise a burden-shifting framework or a mixed-motive doctrine comparable to those developed under US law.

Available remedies include declaratory relief, reinstatement or other corrective measures where appropriate, recovery of unpaid wages and damages. Discriminatory measures that violate mandatory statutory provisions may be held void. Certain violations of the Labour Standards Act may also give rise to criminal penalties.

Court Proceedings by Videoconference

Not only in employment litigation but also in civil litigation generally, many court hearings may be conducted by web conference using Microsoft Teams, subject to certain procedural exceptions. As a result, parties and their counsel are frequently able to participate in court proceedings remotely without appearing in person at the courthouse.

Electronic Filing System for Civil Proceedings

Recent amendments to the Code of Civil Procedure and related legislation have significantly advanced the digitalisation of civil court proceedings. Since 21 May 2026, court documents that were previously filed by mail or facsimile may generally be submitted electronically via the internet.

The electronic filing platform, known as “mints”, is used for filing documents with the courts and receiving documents from the courts electronically:

• Filing of pleadings and evidence – pleadings and documentary evidence may be submitted through mints in electronic format, including PDF files. In the case of complaints and certain other initiating documents, users may either upload documents directly, or complete and submit prescribed online forms through the system.
• Payment of court fees – court filing fees are no longer paid by affixing revenue stamps. Instead, payments are generally made electronically, including through internet banking and ATM-based payment systems. In addition, separate postal charges are no longer required.
• Mandatory use by legal representatives – attorneys and other litigation representatives designated by law are generally required to submit documents electronically through mints. Where a party represented by counsel commences proceedings by paper filing, despite being subject to the electronic filing requirement, the filing may in principle be treated as procedurally defective.

Some proceedings are not yet covered by the electronic filing system – at present, certain labour-related proceedings are not fully integrated into the electronic filing framework. In particular, labour tribunal proceedings, arbitration proceedings, and administrative conciliation procedures, as discussed in 9.1 Litigation, are not currently subject to online filing through mints.

Individual Employment Disputes

• In addition to ordinary civil litigation, Japan provides a specialised Labour Tribunal System (Rodo Shinpan Seido) for the resolution of individual employment disputes:
1. The system is intended to provide a prompt and efficient resolution of employment disputes.
2. Labour tribunal proceedings are conducted by a panel consisting of one judge and two labour relations experts representing management and labour perspectives.
3. As a general rule, proceedings are designed to be concluded within three hearing sessions. The tribunal first attempts to resolve the dispute through mediation. If a settlement cannot be reached, the tribunal issues a determination. A party dissatisfied with the tribunal’s determination may file an objection, in which case, the matter proceeds to ordinary civil litigation.
• Japan also maintains an Individual Labour Dispute Resolution System (Kobetsu Rodo Funso Kaiketsu Seido) administered by government authorities, including prefectural Labour Bureaus and Dispute Adjustment Commissions. This system provides labour consultations, administrative guidance and conciliation services for disputes relating to employment conditions and other related matters. 
• In addition, labour relations commissions in many prefectures offer conciliation procedures for individual employment disputes.

Collective Labour Disputes

With respect to collective labour disputes, Labour Relations Commissions have authority to conduct proceedings concerning alleged unfair labour practices. Labour Relations Commissions may also assist parties in resolving disputes through conciliation, mediation and arbitration procedures.

Class Actions and Representation

Japanese law does not provide a class action system specifically for employment disputes. However, multiple employees may participate in the same court proceedings as co-plaintiffs, and claims involving large numbers of plaintiffs or defendants are permitted. Parties may also represent themselves in employment-related court proceedings without appointing legal counsel.

Under Article 4 of the Supplementary Provisions to the Arbitration Act, arbitration agreements relating to future individual employment disputes that were entered into on or after the effective date of the Arbitration Act (1 March 2004) are currently unenforceable.

This rule was adopted to protect employees in light of the imbalance in bargaining power between employers and employees and the fact that arbitration has not traditionally been a widely used method of dispute resolution in Japan. As a result, pre-dispute arbitration agreements are generally not an effective means of requiring employees to arbitrate individual employment disputes.

Japanese law does not prescribe a fixed percentage or amount of attorneys’ fees that may be recovered by a successful party.

In claims for damages, particularly tort claims, the courts sometimes award an amount corresponding to approximately 10% of the damages awarded as attorneys’ fees. However, there is no uniform rule, and the recoverable amount varies considerably depending on the circumstances of the case.