Explaining the Revised Rules for Clarifying Employment Conditions through the Notification of Employment Conditions Effective April (Reiwa 6) 2024

In recent years, a variety of work styles have become more accepted. However, Japan is experiencing a rising trend in labor issues, such as the mass termination of researchers in March of Reiwa 5 (2023), cases of physician overwork leading to suicide, and foreign labor problems.

Amidst these issues, significant changes are set to take place in April of Reiwa 6 (2024) due to the amendments to the ‘Japanese Labor Standards Act Enforcement Regulations’ and the ‘Standards on the Conclusion, Renewal, and Termination of Fixed-Term Labor Contracts (Termination Standards)’. These changes will affect the explicit terms of employment conditions. The purpose of these amendments is to facilitate the transition of fixed-term contract workers to permanent contracts and to clarify the employment rules for a diverse range of regular employees. It is anticipated that these revisions will provide an opportunity for both employers and employees to confirm employment conditions with each other, thereby preventing disputes, and making it easier to develop careers and achieve work-life balance.

This article will explain the key points to be aware of regarding the revised rules for the explicit notification of employment conditions, including who should receive the notice of employment conditions and when, as well as the obligation to provide explanations.

What is a Notice of Employment Conditions?

A Notice of Employment Conditions is a document that employers are required to provide to employees to explicitly state the terms of employment, in accordance with Article 15 of the Japanese Labor Standards Act. These conditions include various aspects related to employment such as wages, working hours, break times, holidays, social insurance, and employee benefits.

This “Notice of Employment Conditions” is a document that employers are legally required to notify their employees of, and it is not a document based on mutual agreement. On the other hand, an employment contract is a document concluded by agreement between the employer and the employee, but it is not a document required by law.

Items 1 to 6 listed below are considered “absolute explicit items” and are extremely important conditions and matters that must be explicitly stated in writing when starting work. This document is referred to as the “Notice of Employment Conditions.” Additionally, if requested by the employee, these conditions can also be explicitly stated through electronic means such as fax or email, instead of in writing.

Items 7 to 14 are considered “relative explicit items,” and they can be explicitly stated orally.

1. Duration of the employment contract
2. Criteria for renewing a fixed-term employment contract (total contract period or number of renewals)
3. Place of work and duties to be performed (including the scope of changes)
4. Start and end times of work, presence of overtime work, break times, holidays, leave, etc. (including shift system, variable working hours system, flextime system, discretionary work system, and deemed working hours system outside the workplace)
5. Wages, salary increases
6. Retirement (including reasons for dismissal)
7. Retirement allowance
8. Wages paid on a temporary basis (excluding retirement allowance), bonuses, and minimum wage amounts, etc.
9. Costs to be borne by the worker for meals, work supplies, and others
10. Safety and hygiene
11. Vocational training
12. Compensation for disasters and assistance for injuries or illnesses outside of work
13. Awards and sanctions
14. Leave of absence
15. Others (such as social insurance systems)

While the format for stating employment conditions is flexible, the Ministry of Health, Labour and Welfare provides a model format for the “Notice of Employment Conditions,” which you can refer to here[ja].

With the amendments enforced on April 1, Reiwa 6 (2024), three new items have been added as mandatory employment condition disclosure items. These amended disclosure items are also required to be stated during the recruitment process.

Three New Items Added to the Mandatory Disclosure of Employment Conditions and the Duty to Explain

Due to amendments in the laws regarding the mandatory disclosure of employment conditions and the duty to explain, three items have been added to the “absolute disclosure items.” Let’s discuss each of these individually.

Scope of Changes in Work Location and Duties

The revised law now requires employers to explicitly state not only the initial work location and duties but also the scope of any potential changes (Japanese Labor Standards Act Enforcement Regulations Article 5, Paragraph 1, Item 1-3).

“Work location and duties” refer to the place of work and the tasks that an employee is expected to perform immediately after being hired.

“Scope of changes” refers to the range of work locations and duties that may be altered during the term of the employment contract. This includes the target locations and duties for transfers or secondments, but does not cover temporary changes such as support work in other departments.

If there are no changes from the initial work location and duties, the “scope of changes” should explicitly state this fact.

For example, if an employee is expected to telework immediately after being hired, the “work location” should specify the employee’s home or a satellite office where teleworking is possible. If teleworking is anticipated during the employment contract period, the “scope of changes” must explicitly include these locations.

On the other hand, for positions without specific limitations on work location or duties (such as general positions), it is necessary to disclose all possible work locations and duties. To prevent disputes, it is crucial to clarify the “scope of changes” as much as possible and to share the understanding between employers and employees.

Existence and Details of Renewal Limits

“Existence and details of renewal limits” essentially mean that when making changes to the contract terms that are disadvantageous to part-time or contract employees, such changes must be explicitly stated in writing.

When employing fixed-term contract workers (such as civil servants on term appointments, part-timers, temporary staff, contract employees, dispatched workers, and re-employed retirees), if there is a limit on the total duration of the contract or the number of renewals, this limit must be explicitly stated (Japanese Labor Standards Act Enforcement Regulations Article 5, Paragraph 1, Item 1-2).

Furthermore, if there is an intention to introduce or shorten the renewal limit during the fixed-term contract period, employers are obligated to explain the reasons to the employees in advance (Standards on Termination of Employment Article 1).

Conversely, when removing or extending the renewal limit, there is no obligation to explain the reasons, as this does not result in a disadvantage to the employee.

Opportunity to Apply for Indefinite-term Conversion and Post-conversion Employment Conditions

The obligation to disclose the opportunity to apply for indefinite-term conversion (the right to request conversion to an indefinite-term contract) at the time of renewal of a fixed-term contract and to disclose the employment conditions after conversion has been mandated (Japanese Labor Standards Act Enforcement Regulations Article 5, Paragraphs 5 and 6; Labor Contract Act Article 18; Labor Standards Act Article 15; Revised Labor Standards Act Enforcement Regulations Article 5, Paragraph 1, Items 1-11, excluding Item 1-2).

In this context, employers are also required to explain matters that take into account a balance in accordance with the actual work situation, such as the content of the work, the degree of responsibility, and the scope of changes, in line with the purpose of Labor Contract Act Article 3, Paragraph 2 (Standards on Termination of Employment Article 5).

Reference: Ministry of Health, Labour and Welfare | Are You Prepared for the Changes to the Rules on Disclosing Employment Conditions Starting April 2024?[ja]

Targeted Individuals for the Amendment of the Labor Conditions Notification Rule

The amendment to the Labor Conditions Notification Rule applies to all workers, as well as to those on fixed-term employment contracts.

All Workers

All workers refer to individuals employed in any type of job (excluding some public servants) and employment status, used by a business or office, including family members living together if they work under control and receive compensation. This encompasses anyone who is paid wages.

Among the amended items of the Labor Conditions Notification, the “scope of changes to the workplace and job duties” applies to all workers.

Fixed-Term Employment Contract Workers

Among the amended items of the Labor Conditions Notification, the “existence and details of the renewal limit” and “opportunities to apply for indefinite-term conversion and labor conditions after conversion” apply to workers on fixed-term employment contracts.

A fixed-term labor contract refers to an employment contract that has a specified duration. The maximum duration for a single contract term is generally set at three years. For highly skilled professionals and workers over the age of 60, the maximum is set at five years (Japanese Labor Standards Act, Article 14, Paragraph 1).

On the other hand, an indefinite-term labor contract refers to an employment contract without a specified duration.

Typically, a mandatory retirement age is set (prohibited for those under 60), which means employment continues until that age is reached. Under the Japanese Act on Stabilization of Employment of Elderly Persons, there is an obligation to employ those who wish to work up to the age of 65, and an effort obligation up to the age of 70.

Below, we will explain the timing for issuing the notification of labor conditions for each type.

Timing for Issuing the Notice of Working Conditions

There are three cases when the Notice of Working Conditions should be issued:

At the Time of Conclusion and Renewal of All Employment Contracts

Under the revised Japanese Labor Standards Act, the timing for issuing a notice of working conditions, which includes “the scope of changes to the workplace and job duties,” is at the time of conclusion of all employment contracts, regardless of the contract period, and at the time of renewal of fixed-term employment contracts.

At the Time of Conclusion and Renewal of Fixed-Term Employment Contracts

Under the revised Japanese Labor Standards Act, the timing for issuing a notice of employment conditions, specifically regarding “the existence and details of renewal limits,” is at the time of conclusion and renewal of fixed-term employment contracts.

Renewal of Contracts Triggering the Right to Request Permanent Employment

The timing to issue a notice of employment conditions, including “the opportunity to apply for permanent employment and the conditions after conversion to permanent employment,” is when renewing a fixed-term employment contract that triggers the right to apply for conversion to permanent employment.

The permanent employment conversion system was newly introduced following the amendment of the Japanese Labor Contract Act (Heisei 25 (2013)) in April 2013.

The permanent employment conversion system allows workers, who meet certain criteria, to convert their fixed-term employment contracts into permanent ones upon their request. The system aims to “prevent the abusive use of fixed-term employment contracts by employers (such as arbitrary termination or cooling-off periods) and to ensure employment stability.”

Specifically, fixed-term employees who have renewed their contract with the same employer at least once and whose cumulative contract period exceeds five years are eligible to apply for conversion to a permanent employment contract (Japanese Labor Contract Act, Article 18).

The effective period to exercise the right to apply for permanent conversion is within the duration of the fixed-term contract in which the right arises (one year), so attention is necessary.

The conversion to a permanent employment contract takes effect the day after the expiration date of the fixed-term contract to which the application was made (the beginning of the seventh year). Employers cannot refuse this application from the worker.

Regarding the employment conditions after conversion to permanent employment, they remain the same as before, except for the contract duration, unless there is a “specific provision (change)” to the contrary.

The permanent employment conversion system includes the following three exceptions:

• Researchers and faculty members at universities and research and development corporations, etc.
• Highly skilled professionals
• Elderly workers with continued employment

Below, we will explain the requirements for each of these exceptions.

Exception for Researchers and Faculty Members at Universities and Research and Development Corporations, etc.

For researchers and faculty members at universities and research and development corporations, etc., the second requirement for the permanent conversion rule, “the cumulative contract period,” has been set to exceed ten years (Japanese Act on Stipulation of Fixed Term for Researchers at Universities, etc., Article 7).

Although the cumulative contract period started on April 1, 2013, the mass termination of researchers became a social issue before the right to apply for permanent conversion arises in April 2023.

Exception for Highly Skilled Professionals (with Defined Annual Income and Scope)

The exception for highly skilled professionals applies when they have been engaged in specific fixed-term projects (projects) for more than five years with a first-type certified employer. The cumulative contract period for the permanent conversion rule becomes the duration of the project (which varies by project), and during this period, the right to apply for permanent conversion does not arise. This special measure is limited to a maximum of ten years (Japanese Act on Special Measures for Fixed-Term Employees, Article 8, Paragraph 1).

Exception for Elderly Workers with Continued Employment

There is no upper age limit set for the permanent conversion rule. Therefore, elderly workers aged 65 and over are also subject to it, with some exceptions.

The exception for elderly workers with continued employment is a special measure that prevents the right to apply for permanent conversion from arising during the employment period with the same or group company employer after reaching the retirement age, under a second-type certified employer (Japanese Act on Special Measures for Fixed-Term Employees, Article 8, Paragraph 2).

Summary: Consult a Lawyer Regarding the Notification of Employment Conditions

In this section, we have explained the background and key points to note concerning the amended rules for the explicit statement of employment conditions in the Notification of Employment Conditions, which came into effect in April of Reiwa 6 (2024).

When entering into or renewing an employment contract, it is crucial to clearly state the employment conditions to the worker and issue a Notification of Employment Conditions to prevent disputes. For risk management related to labor-management disputes concerning employment contracts, we recommend consulting with lawyers who are well-versed in corporate legal affairs.

Guidance on Measures by Our Firm

Monolith Law Office is a law firm with high expertise in both IT, particularly the internet, and legal matters. In recent years, as work styles diversify, there has been a growing focus on labor-related laws. Our firm offers solutions for managing “digital tattoos.” Please refer to the article below for more details.

Areas of Practice at Monolith Law Office: Corporate Legal Affairs for IT & Startups[ja]