JAPAN: An Introduction to Employment: Bengoshi

As a result of recent developments in Japan’s labour and employment laws of Japan, including regulations on working hours and whistle-blowing, as well as global developments in respect of workplace diversity and employee well-being, the employment-law-related advice and assistance sought by clients have become more diverse. In line with these trends, labour and employment law practice has kept up-to-date with Japanese and global market practices, in addition to keeping current with the constantly changing legal environment. This article provides an outline of some of the recent key hot topics in the Japanese labour market.

Whistle-Blowing 

In Japan, the Whistle-Blower Protection Act (WPA) – enacted in 2004 – provides protection for whistle-blowers. Among other forms of protection, the WPA prohibits dismissal or unfair treatment of any kind against employees who disclose – in the public interest – information regarding any violation or potential violation of certain Japanese laws as designated by the WPA.

To facilitate whistle-blowing and to protect whistle-blowers from retaliation, the WPA was amended in June 2022. Under the amended WPA, employers who generally employ more than 300 employees are required to:

- implement measures necessary for the adequate handling of whistle-blowing; and

- designate a point person in charge of receiving whistle-blowing complaints, conducting investigations, and implementing remedial measures.

Employers who generally employ 300 employees or fewer, on the other hand, are only required to make efforts to satisfy these requirements.

Since the enactment of the amended WPA, there has been a rapid rise in the number of clients –particularly large organisations – facing whistle-blowing complaints. The assistance provided to these clients includes conducting investigations on whistle-blowing complaints and implementation of remedial measures.

Harassment 

Since 2007, employers have been required under Japanese law to implement measures for the prevention of sexual harassment. As of 2017, employers are also required under Japanese law to implement measures for the prevention of maternity harassment – ie, workplace behaviour that adversely affects the working environment of employees who:

- request for, or make use of, benefits or measures concerning pregnancy, delivery, childcare or family nursing care; or

- are pregnant or have given birth.

The law was further amended to require employers to implement measures for the prevention of power harassment – ie, workplace behaviour that:

- takes advantage of a person’s superior position to cause distress;

- goes beyond what is reasonable and necessary in the course of work; and

- harms the working environment of other employees.

These amendments in law have been applicable to large-scale organisations since June 2020 and to SMEs since April 2022.

Ever since the aforementioned legislative amendments were put in place, there has been a significant increase in the number of clients facing harassment complaints, particularly power harassment complaints. The assistance provided to these clients includes the conduct of investigations of complaints, as well as the implementation of remedial measures.

Workplace Diversity 

An employer can freely choose the person it wishes to employ under the Constitution of Japan. With that said, there are laws and regulations that impose certain restrictions on this freedom for purposes of ensuring workplace diversity. By way of example, employers with more than a certain number of employees are required to ensure that the proportion of disabled employees among their workforce exceeds the “legal employment rate”, which is 2.5% as of April 2024. Additionally, employers are obliged to implement measures for the employment of the older workers up to the age of 65. Furthermore, in order to promote the employment of women by organising and disclosing information to create a good working environment for women, employers with 101 or more workers are required by law to publish certain information related to their employment of women.

Remote Work 

During and after the COVID-19 pandemic, an increasing number of companies began adopting arrangements for remote work or hybrid work (ie, a work model that enables employees to work partly at the office and partly from home or some other location). This development was partly the result of the government-led “reform of working practices” initiative to encourage diversity in HR, thereby facilitating inclusion in the workforce of employees who would otherwise be excluded, such as those with child-rearing or family caregiving responsibilities. As a result, more requests were received from clients to advise on and draft proper internal rules on the recording of working hours, expenses for remote work, data security, use of office devices and equipment during remote work, and other such matters.

Regulations on Working Hours 

Under the Labour Standards Act (LSA), the standard working hours of employees in Japan must not exceed eight hours per day and 40 hours per week. Employees who work beyond such daily or weekly standard working hours are entitled to extra wages for overtime work. In compliance with these legal requirements, employers in Japan typically require their employees to keep certain prescribed working hours (eg, 9am to 6pm with a one hour break in between). With the recent popularisation of remote work, however, there has been an increase in the number of companies that allow or are in the process of making changes to give their employees more flexibility in terms of working hours.

The LSA actually allows employers to adopt flexible working hour systems (eg, flextime system) as exceptions to the aforementioned overtime regulations, provided these employers meet certain conditions, such as the execution of a labour management agreement. However, companies often allow employees to work flexibly (regardless of the prescribed working hours), without satisfaction of the legal requirements. As a result, these companies have inadvertently accumulated unpaid overtime payments. In view of this, it is important for employers to fully understand and comply with the relevant legal requirements so as to be able to enjoy flexibility without incurring undue overtime payments.

Amendments to the Labour Standards Ordinance 

Following amendments to the Labour Standards Ordinance (LSO) that came into effect as of 1 April 2024, the labour regulatory framework in Japan has been expanded to include matters relating to the terms and conditions of employment that employers must explicitly indicate to employees when concluding and/or renewing contract of employment. The newly added matters that must be explicitly made known to employees can be categorised into those that apply to all employees (ie, the scope of changes in the place of work and a description of work duties and responsibilities) and those that apply to employees with fixed-term employment contracts (ie, the existence and terms of any limit on the renewal of the employment contract, the employee’s entitlement to apply for conversion of their employment contract to one of indefinite term, and the terms and conditions of employment after such a conversion). Following these amendments to the LSO, more clients are receiving assistance in the revision of their template employment contracts.

Employee Well-Being 

According to a report released by a study group of the Ministry of Health, Labour and Welfare in 2019, “well-being” is a concept that encapsulates good physical, mental and social health, with individual rights and rights of self-realisation guaranteed. To create an environment that empowers employees to enjoy a healthy and fulfilling life, in which a diverse workforce can play an active role, an increasing number of companies are promoting initiatives to:

- reduce long working hours to help their employees to achieve work–life balance and maintain good health;

- improve the treatment of non-regular employees; and

- ensure diverse work-styles and the like.

Such initiatives are commendable and in line with global trends. Companies wishing to improve their operations would be advised to do so by prioritising employees’ well-being.