Employment Law in Japan

“We have heard that once you hire someone in Japan, you can never let them go.” “Can we simply apply our global HR policies to our Japanese operation?” These are the questions we hear most often from executives establishing a presence in Japan. Japanese employment law is not an unpredictable risk. It is a risk that preparation makes manageable.

Japanese employment law differs substantially from the law of most other jurisdictions. It differs from the at-will framework of the United States, and it also differs in important respects from the law of European countries, which — like Japan — require justification for dismissal. There are documented cases in which foreign companies executed headquarters-driven personnel decisions without translating them into Japanese legal requirements, and found themselves facing union disputes, reinstatement orders, press coverage and public protest.
At the same time, the belief that “no one can be terminated in Japan” is not accurate either. Japanese courts have upheld dismissals by Japanese subsidiaries of foreign companies where the employer kept proper records and followed the correct sequence of steps. Japanese employment law is not an unpredictable risk; it is a risk that preparation makes manageable.
This page sets out what foreign executives should understand first about employment law in Japan, and then explains the support we can provide. All of our services are delivered in English, and all documents are produced in parallel English and Japanese.

Four Things to Understand Before You Hire in Japan

There is a great deal to know about employment law in Japan. If we select on the basis of what causes real damage when a company proceeds without knowing it, the list comes down to four points. In each case, intuitions formed under the law of your home country will not serve you.

A Dismissal Is Void
Where a dismissal is found unlawful, the consequence in the United States is primarily monetary compensation, and in most European countries that require cause for dismissal, the matter is likewise resolved by a compensation payment. Japan is different. A dismissal requires objectively reasonable grounds and must be appropriate in general societal terms (Article 16 of the Labor Contracts Act). Without these, the dismissal is void. The employee therefore remains employed, and the company must accept the employee back and pay all wages retroactively from the date of dismissal to the present. The longer the dispute continues, the larger the amount becomes.
“Manager” Does Not Mean Exempt
Japan has a concept comparable to the U.S. exempt classification, and to the managerial exclusions found in European working-time regimes: the “supervisory or managerial employee” under the Labor Standards Act. Its scope, however, is extremely narrow, and it is determined by actual circumstances rather than job title. Titles such as “Team Lead,” “Associate Director” and “Section Manager” have been said almost never to satisfy the test. If you transplant your existing job architecture and exclude everyone above a certain grade from overtime pay, you may face claims for three years of unpaid overtime, brought retroactively.
You Can Face a Union Without Having One
In the United States, a union that wins majority support becomes the exclusive bargaining representative. In Europe, works councils and sector-level collective agreements are typically at the centre of collective labour relations. Japan works differently from both. An employee may join, individually, an external (community-based) union that exists outside your company, and that union may then demand collective bargaining with you. Even where the union has only one member among your employees, you may not refuse collective bargaining without proper grounds.
Online Reputation Drives Recruiting
In Japan, reviews posted by current and former employees on employer-review sites and social media occupy an unusually important place in how candidates choose employers. It is standard practice for candidates to check these sources before applying and before accepting an offer. If damaging posts are left unaddressed, the effect is not limited to brand image: it appears directly as fewer applicants and more declined offers. The less established your name is in Japan, the greater the effect.

Is It True That You Cannot Terminate Anyone in Japan?

As set out above, a dismissal in Japan carries the risk of being held void, and concern on this point is well founded. But the opposite extreme — that dismissal in Japan is impossible — is not accurate either.

In the Amazon Japan case (Tokyo District Court, November 6, 2025), an employee had been hired mid-career at an annual salary of 15 million yen at the second-highest job grade, and was dismissed on ordinary grounds after approximately eighteen months on the basis of performance. The Tokyo District Court treated the employer’s conduct — soliciting the employee’s resignation on stated terms, including severance, before proceeding to dismissal — as an effort to avoid dismissal. Finding that the employee had failed to perform the role and responsibilities of the position, that his refusal to accept his supervisor’s guidance was entrenched, and that there was little prospect of improvement, the court upheld the dismissal.

What this case shows is that where an employer defines the expected role, documents its guidance, and solicits resignation on stated terms, it can prevail in Japan.

The converse, however, is equally important: none of these steps can be assembled after a problem arises. The expected role must be built into the employment contract and job architecture at the point of hiring; the record of guidance must be built into the format of your performance review process. Producing a document titled “statement of expected role” only after a problem employee has emerged yields evidence that is visibly after the fact. This is why preparation for Japanese employment law must begin before your entity is established.

What Makes Japanese Employment Law Different

When foreign companies encounter employment problems in Japan, the cause is usually not ignorance of a particular rule. It is that the underlying premises of the system are different, and the company applies its headquarters practice without noticing.

In the table below we use the United States as the point of comparison, because the contrast with Japan brings out the features of Japanese law most clearly. Employment law in the United States, however, is primarily state law, and it differs substantially from one state to another — on non-competition covenants, overtime, notice obligations and much else, the position in one state tells you little about the position in another. A table headed simply “the United States” would therefore be misleading.

We have accordingly taken a single state as the example: California. We choose it for two reasons. First, a significant proportion of the technology companies now establishing operations in Japan are headquartered there, so it is the system those readers actually work within. Second, California sits at the most employee-protective end of the American spectrum. If the distance between Japan and California is as set out below, the distance between Japan and most other states is greater still. If your operations are based elsewhere, the direction of each difference described here will hold, and in most cases the difference will be larger, not smaller.

Issue	California (as an example of a U.S. state)	Japan
Basic principle of employment	At-will employment is the statutory default (Labor Code section 2922). Dismissal without stated reason is permitted, subject to the Fair Employment and Housing Act, anti-retaliation statutes and contract	Doctrine of abusive dismissal (Article 16 of the Labor Contracts Act). Objectively reasonable grounds and appropriateness in general societal terms are required
Workforce reduction	Relatively free to implement, provided notice obligations are met. Cal-WARN requires 60 days’ notice for covered layoffs, and applies at lower thresholds than the federal WARN Act	Assessed strictly against four elements: necessity of the reduction, efforts to avoid dismissal, reasonableness of selection, and appropriateness of procedure
Consequence of unlawful dismissal	Primarily monetary — back pay, front pay, emotional distress damages and, in FEHA claims, punitive damages. Reinstatement is available but rarely ordered	The dismissal is void. Declaratory confirmation of employment status (reinstatement) and payment of back pay for the dismissal period are the default outcome
Notice of dismissal	No general notice obligation apart from Cal-WARN. Final wages are due immediately on termination, and late payment attracts waiting-time penalties	30 days’ notice, or payment in lieu of at least 30 days’ wages
Severance pay	No statutory obligation	No statutory obligation. In practice, however, a severance premium is customarily added when resignation is agreed
Removal of directors	Governed by the law of the state of incorporation, which for most companies is Delaware rather than California. Removal by shareholders or the board, subject to contractual indemnities and severance	Removal by shareholder resolution is possible, but without just cause the company is liable in damages (Article 339(2) of the Companies Act)
Working hours and overtime	Daily as well as weekly overtime: 1.5× beyond 8 hours in a day and 2× beyond 12 hours, in addition to the weekly threshold. Exempt status requires both a duties test and a salary at least twice the state minimum wage for full-time work. Meal and rest break premiums apply	8 hours per day, 40 hours per week. Overtime requires an Article 36 agreement — an agreement with employees that must be concluded and filed with the Labor Standards Inspection Office. Premium pay of at least 25% (at least 50% beyond 60 hours per month). The scope of “supervisory or managerial employee” is extremely narrow
Limitation period for unpaid wages	Three years for statutory wage claims, extendable to four years where claims are brought under the unfair competition statute	Three years for the time being (five years in principle). In litigation there is also exposure to an additional payment awarded by the court
Internal rules	Handbook-based. There is no filing requirement, though certain written policies and individual written notices of wage terms are mandatory	Any workplace with 10 or more employees on a regular basis must prepare, file and make known its work rules. Changes unfavourable to employees require consent or objective reasonableness
Trade unions	Exclusive representation by a union with majority support, under the federal National Labor Relations Act	If even one employee joins an external (community-based) union, the company may not refuse a demand for collective bargaining without proper grounds
Harassment	Litigation risk centred on the FEHA and Title VII. Periodic sexual harassment prevention training is mandatory for employers above a low headcount threshold	Preventive measures against power harassment, sexual harassment, harassment related to pregnancy and childcare, and others are mandatory for employers. Measures against customer harassment become mandatory from October 2026
Whistleblowing and retaliation	Labor Code section 1102.5, alongside numerous federal statutes. Once the employee shows that protected activity was a contributing factor, the employer must prove by clear and convincing evidence that it would have acted in any event	Whistleblower Protection Act. From December 2026, dismissals and disciplinary action within one year of a report are presumed retaliatory, and criminal penalties apply
Non-competition	Void, with narrow exceptions such as the sale of a business — and void regardless of where the contract was signed. Among the strictest positions in the United States	Enforceable in principle, but reasonableness is assessed strictly — scope, duration, geography and compensating consideration — against the constitutional freedom to choose one’s occupation
Forums for disputes	The Civil Rights Department and the Labor Commissioner, representative actions under the Private Attorneys General Act, litigation, and arbitration (pre-dispute employment arbitration agreements are common and enforceable)	The Labor Standards Inspection Office, conciliation by the Prefectural Labour Bureau, the labor tribunal (a court procedure, with a maximum of three hearing dates in principle), and litigation. Pre-dispute arbitration agreements do not function well in employment disputes in practice

Differences from European Countries

In many European jurisdictions, dismissal requires justification, as it does in Japan; on this point European law is closer to Japanese law than U.S. law is. What differs decisively is the consequence when a dismissal is not found justified. In most European countries the employment relationship can be brought to an end by payment of compensation calculated by reference to length of service and similar factors. Japan has no statutory mechanism by which an employer can resolve a void dismissal through payment of money. The default is reinstatement and back pay, and the employer cannot unilaterally elect a monetary resolution. On this single point, Japan is stricter than Europe.

The architecture of collective labour relations also differs. A number of European jurisdictions require the establishment of a works council, or prescribe consultation procedures for workforce reductions. Japan has no equivalent standing employee-representative body. Instead, as noted above, collective negotiation arises in the form of an unexpected demand for collective bargaining from an external union. Experience of consulting a works council at home does not translate into readiness for Japan.

On non-competition, a further note is required, and it applies regardless of jurisdiction. In Japan, the enforceability of a non-competition covenant is assessed on the totality of the circumstances: whether there is a legitimate business interest to protect, the employee’s position, the scope, duration and geographical reach of the restriction, and whether compensating consideration was provided. Courts have held a non-competition covenant void where it lacked both geographical limitation and compensating consideration (Tokyo District Court, November 9, 2009). Note that here the risk runs in both directions. A company accustomed to California, where such covenants are essentially unavailable, may assume there is nothing to be gained by including one in Japan — when in fact a narrowly drawn covenant supported by compensating consideration can be enforced. A company accustomed to a state where such covenants are freely enforceable may transplant its standard clause and find that the breadth of the clause renders the whole of it void.

Issues Foreign Companies Commonly Encounter

Headquarters Policy Does Not Transfer
At the Japanese subsidiary of a major foreign technology company, employees who learned of a global workforce reduction formed a union under an external labour organisation, as has been reported. In another reported matter, a foreign airline closed a call centre in Japan and dismissed its Japanese employees; this led to an order from a labour relations commission to withdraw the dismissals, and to a court order for reinstatement and payment of substantial wages. In each case, a decision taken at headquarters was implemented without being translated into Japanese legal requirements.
Article 36 Agreements Are Overlooked
Before you may require overtime, you must conclude an Article 36 agreement and file it with the Labor Standards Inspection Office. Requiring statutory overtime without that filing is itself unlawful. Separately, any workplace with 10 or more employees on a regular basis must prepare, file and make known its work rules. Both obligations are easily missed in the rush of launching operations, and neither can be cured retroactively.
Retroactive Claims for Unpaid Overtime
The limitation period for unpaid wages in Japan is three years for the time being (five years in principle). If you have defined the scope of managerial employees too broadly, a departing employee may claim three years of overtime in a single action. Where several former employees claim at once, the figure can far exceed expectations — and in litigation a court may order an additional payment of up to the same amount again.
Dispute Procedures Move Quickly
The Japanese labor tribunal is a court procedure in which a panel of a judge and two lay experts, one from labour and one from management, hears the case over a maximum of three hearing dates in principle. Rapid resolution is an advantage for employers. But the preparation window before the first hearing is short, and the company’s decision-maker may be required to attend and to decide on settlement on the spot. Who attends, and how much settlement authority that person holds, cannot be worked out after a dispute has begun.

Dismissal Rules and Designing the Exit

An employer dismissing an employee in Japan must show objectively reasonable grounds under Article 16 of the Labor Contracts Act; without them, the dismissal is void. Dismissal for business reasons is assessed more strictly still. Case law requires four elements — necessity of the workforce reduction, efforts to avoid dismissal, reasonableness of the selection, and appropriateness of the procedure — with particular weight given to whether the employer made its best efforts to avoid dismissal. Even where the ground is poor performance, whether the employee was given an opportunity to improve, and whether that process was documented, are decisive factors.

For this reason, the principal exit in Japanese practice is not unilateral dismissal but agreed resignation following resignation solicitation. It is commonly reported that employers offer a severance premium of several months’ to approximately one year’s salary in this context.

Viewed through the lens of your home system, this may look like paying money you are not obliged to pay. But set against the risk of reinstatement and back pay following a void dismissal, and against the time and executive attention required to reach that point, it is frequently the rational choice. The “cost of exit” in Japan is best understood not as a question of whether dismissal is permitted, but as an estimate: how large a premium, over how long a period, brings the matter to an end.

There are also respects in which Japan is more favourable than your home jurisdiction. Compared with the United States generally — and California in particular, where representative wage-and-hour actions are a significant source of exposure — Japan has no jury system, and exposure to punitive damages and class or representative actions is comparatively limited.

Managerial Employees and the Status of Your Country Manager

Japan’s counterpart to the U.S. exempt classification is the “supervisory or managerial employee” under the Labor Standards Act. Its scope, however, is extremely narrow, and it is determined by actual circumstances rather than job title: whether the person stands in a position integrated with management, whether the person has discretion over working hours, and whether the person receives treatment commensurate with that position. Transplanting your job architecture and excluding everyone above a given grade from overtime pay does not work in Japan. This is not a problem confined to U.S. companies: if you are entering from a jurisdiction that excludes managers from working-time rules, the same verification is required.

Note also that late-night premium pay applies even to supervisory or managerial employees. And without a concluded and filed Article 36 agreement, requiring statutory overtime is itself unlawful. Concluding such an agreement requires the lawful election of a representative of the majority of employees, and defects in that election process are a further point frequently overlooked by foreign companies.

A second matter to settle at the time of establishment is the legal status of your country manager. Japanese law treats directors and employees very differently on departure. A director may be removed by shareholder resolution, but where removal occurs mid-term without just cause, the company is liable for the resulting damage (Article 339(2) of the Companies Act). An employee, by contrast, is protected by the strict dismissal rules described above.

Whether the head of your Japanese entity is appointed as a director, engaged as an employee, or holds both positions concurrently (a director concurrently serving as an employee — a status without a direct equivalent in many jurisdictions) materially changes your exposure on departure. In most cases this choice is made for reasons of registration convenience or headquarters organisational charts. Yet it is at the point of ending the relationship, several years later, that the choice proves decisive.

Legal Changes Taking Effect in 2026

A cluster of legal changes affecting employment arrangements in Japan takes effect in 2026. For companies with existing operations this means a compliance burden. For companies establishing operations now, it is an opportunity: you can design your framework on the basis of the amended rules from the outset.

Customer Harassment Measures
From October 1, 2026, measures to prevent customer harassment, and measures to prevent sexual harassment directed at job applicants and others, become obligations of employers. They apply to every employer with at least one employee; there are no transitional exemptions by company size. Guidelines adopted on February 26, 2026 specify what is required: articulating a policy, establishing a consultation system, responding after the fact, and deterrence measures. There is no direct penalty, but where an employer does not comply with a recommendation, its name is published.
Amended Whistleblower Protection Act
Effective December 1, 2026. Dismissal or disciplinary action taken because of a whistleblowing report is punishable by imprisonment of up to six months or a fine of up to 300,000 yen, and a corporation may be fined up to 30 million yen. In addition, dismissal or disciplinary action taken within one year of a report is presumed to have been taken because of the report, shifting the burden of proof to the employer. Where a performance improvement plan or a dismissal is contemplated in respect of an employee who has made a report, the process must be managed with particular care.
Labor Standards Act Reform
The first major reform of the Labor Standards Act in roughly forty years was not submitted to the ordinary Diet session in 2026, but the underlying questions remain under consideration: limits on consecutive working days, mandatory rest intervals between shifts, designation of statutory days off, and guidelines on a “right to disconnect.” Where your operation involves shift work, or work conducted across a time difference with headquarters, working-time arrangements should be designed with these prospective changes in view.
Information Distribution Platform Act
Effective April 1, 2025. Large platform operators with more than 10 million monthly active users must establish a channel for removal requests and, in principle, determine and notify their response within seven days. Removal requests against major domestic platforms have accordingly become more effective. Sites hosted offshore or operated anonymously, however, continue to require legal proceedings outside Japan.

Employment Disputes in the Age of AI, and the Reality in Japan

In the United States, the United Kingdom, Ireland and elsewhere, employees have begun using generative AI to bring claims. Commentators report a growing number of employees who have AI draft pre-litigation demand letters, agency complaints and pleadings, and who then litigate without counsel. In Ireland, employment dispute filings rose 44%, from 7,316 in 2024 to 10,559 in 2025, and practitioners regard AI tools — which make it easier to file without representation — as one contributing factor. The International Bar Association has likewise noted an increase in lengthy submissions that have the appearance of legal documents but contain little factual content, making them difficult to investigate and answer.

We do not, however, expect a comparable surge in Japan. Legal fees for labor tribunal proceedings in Japan are comparatively modest, and cost is not the principal barrier to bringing a claim. Whether an employee brings a dispute turns more on personal motivation and psychology, and a high proportion of matters are resolved consensually through conciliation at the Prefectural Labour Bureau or at the labor tribunal. The statistics bear this out: new labor tribunal filings in 2024 were slightly down on the previous year, and have remained in the three-thousands since 2009.

The pre-litigation stage is another matter. At the stage of internal complaints, approaches to external unions and applications for conciliation, lengthy submissions drafted by AI and dense with legal terminology are likely to become more common in Japan as well. In fiscal year 2025, total labour consultations reached 1,198,010 — above one million for the eighteenth consecutive year — and among civil individual labour disputes, “bullying and harassment” was the most common subject matter for the fourteenth consecutive year. The underlying volume of complaints is, and has long been, very large.

We maintain a standard protocol for responding to such submissions. The premise is that the substance of a complaint must be addressed in good faith, irrespective of whether the document was drafted by AI. On that basis, we separate legal characterisation from specific factual allegations, request particularisation where facts are missing, apply the statutory procedures for harassment and whistleblowing as applicable, and structure the response so as to avoid an escalating exchange of lengthy documents.

What a Japanese Lawyer Is Needed For

Engaging a law firm is not your only option for putting a Japanese employment framework in place. You might use an Employer of Record so that you do not employ anyone directly; you might instruct a certified social insurance and labour consultant to prepare rules and handle administrative filings; you might have a translation agency render your headquarters policies into Japanese. We recommend deciding in advance where those alternatives suffice, and where a lawyer is required. There are four things only a Japanese lawyer can do.

Only a Japanese Attorney May Act for You
Representation in legal matters within Japan is reserved to those qualified as attorneys in Japan. In responding to a demand for collective bargaining from a union, to an investigation by the Labor Standards Inspection Office, to conciliation at the Prefectural Labour Bureau, and in labor tribunal and court proceedings, only a Japanese attorney may act for the company. This does not change where your home-country counsel is familiar with Japanese conditions. That is why there is value in securing a Japanese lawyer who already understands your situation in ordinary times, rather than beginning the search once a dispute has arisen.
Documents Designed for a Dispute
Drafting a set of rules and making those rules capable of withstanding challenge are different tasks. Work rules and employment contracts can be drafted so as to satisfy the statutory content requirements. Whether they function when a resignation solicitation or a dismissal is contested depends on how the expected role is articulated, how the rules connect to the performance review process, and what format the record of guidance takes. The dismissal in the Amazon Japan case was upheld because those records existed. Documents used in ordinary times need to be designed by someone who knows how they are tested in contentious ones.
Translating Policy into Japanese Law
Your global policies exist for reasons. When they are adapted to Japanese law, simply deleting the unlawful parts destroys the objective headquarters was pursuing. Rebuilding them in a form that preserves that objective while remaining executable under Japanese law requires understanding what system the policy was written against, and then reconstructing it under Japanese law. This is not translation; it is substitution of one legal framework for another.
Employment and Online Problems Are Continuous
In Japan, employment disputes are taken to social media and employer-review sites, where they affect recruiting. Removal requests and petitions for disclosure of sender information require legal proceedings; and any attempt to suppress communications that constitute legitimate union activity or protected whistleblowing invites liability for unfair labor practice or for detrimental treatment of a whistleblower. Ensuring that your employment strategy and your online strategy do not contradict each other is difficult to achieve when the two are handled by separate advisers.

The Japan Employment Readiness Package

With the foregoing in mind, MONOLITH LAW OFFICE offers the Japan Employment Readiness Package for foreign companies establishing operations in Japan. Its purpose is to enable your leadership, before the entity is set up, to understand precisely what must be accepted, what can be prevented through preparation, and how much time and cost a dispute would involve — and to put the necessary framework in place in English.

Four principles underlie its design. First, that you should be able to begin with a short briefing and add services in stages as required. Second, that we should show you how something can be done, and what it costs in time and money, rather than reciting a list of prohibitions. Third, that the package should be capable of standing alone while also allowing coordination with your home-country counsel where you wish. Fourth, that employment matters and online reputation matters should be handled together.

Module	When	Scope and deliverables
A. Executive Briefing	Pre-entry. Headquarters leadership (and home-country counsel, if desired)	Differences from your home system, exit costs, labor tribunal simulation, 2026 legal changes. English slides, Q&A memo, risk map
B. Entry Setup Kit	Entity establishment through first hire	Employment structure, contracts, work rules, labor-management agreements, harassment and whistleblowing systems, policies. Bilingual document set, checklist
C. Separation Playbook	Post-hire. Workforce adjustment and performance issues	Japanese-style PIP, resignation solicitation, localising a global RIF, director departures. Operating manual, interview scripts, agreement templates
D. Reputation & Online Shield	Prevention and crisis	Monitoring of online posts, removal and disclosure, offshore-hosted sites, communications policy. Policies, response workflow, representation
E. Ongoing Retainer	Continuing	English-language advice on demand, union and Labor Standards Inspection Office response, AI-generated claims, dispute representation. Monthly reports, consultation records

Typical patterns of engagement include taking Module A alone at the stage of evaluating entry; taking A and B together at the point of establishment; and taking C, D and E on a continuing basis thereafter. If you already have a Japanese entity, we can begin with a diagnostic under Module B: a review of your existing contracts and internal rules.

A. Executive Briefing

A session for your headquarters leadership, running two to three hours, designed to convey the overall shape of Japanese employment law. We hold it online as a matter of course, at a time that fits your home time zone. Your home-country counsel is welcome to attend.

The session begins with an overview of the differences between your home system and Japan. It then covers the cost of exit — the expected duration, cost, level of executive involvement and settlement range at each stage, from agreed resignation through Prefectural Labour Bureau conciliation, the labor tribunal and litigation; a labor tribunal simulation based on a hypothetical matter; the design of your country manager’s status; the 2026 legal changes; AI and social media; and finally the respects in which Japan is more favourable than your home jurisdiction.

What we care about most in this session is not producing a list of things that cannot be done in Japan. What leadership needs in order to decide is not a catalogue of prohibitions but an estimate of what costs how much time and money. If you need a problem employee to leave, how many months of severance premium, over what period, brings an agreed resignation to a close? If the matter is contested and reaches the labor tribunal, how many times must an executive attend, and how much settlement authority must that person hold, by when? Our aim is that you leave with those figures, before you enter the market.

B. Entry Setup Kit

Before your first hire, we bring the foundations — contracts, work rules and job architecture — into conformity with Japanese law. These are the elements that are difficult to correct later. Work rules in particular warrant careful initial design, because changing them to employees’ disadvantage is subject to constraints. All deliverables are produced in parallel English and Japanese.

Employment and Organisational Design
We work through whether to use secondees from headquarters, local hires, appointment as directors, or an Employer of Record, and we design the status of your country manager. We then fix the range of positions to be treated as supervisory or managerial employees, and design overtime arrangements for the remainder — including the lawful structuring of a fixed overtime allowance. Working-time arrangements appropriate to your industry, the design of probationary periods, and your policy on fixed-term employment are also covered.
Contracts and Internal Rules
Employment contracts and written statements of working conditions (including the items that must be specified under the rules applying from April 2024); work rules; wage rules; retirement allowance rules; secondment rules; the Article 36 agreement and other labor-management agreements (including lawful election of the employee representative); confidentiality undertakings; non-competition and non-solicitation provisions; and, for research- and development-led businesses, rules on employee inventions.
Harassment and Whistleblowing Systems
We establish policies against power harassment, sexual harassment and harassment related to pregnancy and childcare, together with consultation channels and post-incident procedures. This includes the customer harassment policy and response manual required from October 2026, and the establishment of an internal reporting channel — including how it connects to your global hotline — with rules conforming to the amended Whistleblower Protection Act.
Policies and Data
Social media and external communications policy (designed so as not to impede legitimate union activity or protected whistleblowing); internal generative-AI usage policy; and rules on monitoring and log management. We also address the cross-border transfer of employee personal data where it is held in your headquarters HR system, and, where AI recruitment or evaluation tools are used in Japan, verification under the Employment Security Act and the Act on the Protection of Personal Information.

C. Separation Playbook

When you need an employee to leave, this module gives you a procedure prepared in advance: not your home-country process transplanted, but the lowest-cost route that is actually executable under Japanese law. It is the area in which foreign executives express the most concern, and it is the core of the package.

For performance issues, we design a Japanese-adapted performance improvement process: putting the expected role and objectives in writing, providing regular feedback, and structuring the record of guidance — together with consideration of transfer and retraining, and how documenting those steps operates as an effort to avoid dismissal. Using the Amazon Japan case and comparable decisions as source material, we identify the specific facts required for a dismissal to be upheld, and build them into the format of your performance review process.

For resignation solicitation, we define the boundary beyond which the practice becomes unlawful — persistent meetings, language injuring the employee’s sense of dignity — and provide interview scripts in English and Japanese, the design of the number, length and attendance of meetings, the level of the severance premium, outplacement support, and the use of garden leave. Templates for the separation agreement include full and final settlement, confidentiality, non-disparagement and non-disclosure provisions.

For localising a global RIF, we design the steps to bring headquarters policy into conformity with Japanese law: soliciting voluntary redundancies, selection criteria, and union engagement. Where dismissal for business reasons becomes unavoidable, we verify satisfaction of the four elements.

The module also covers director departures (removal, non-reappointment at the end of a term, or solicited resignation, with an assessment of damages exposure in each case) and employees who have made whistleblowing reports (a verification procedure for personnel actions within one year of a report, given the statutory presumption, and how to keep records capable of establishing grounds unrelated to the report).

D. Reputation & Online Shield

Employment disputes do not remain confined to protests and leafleting. They are taken online: reviews posted by former employees, accusations on social media and, in the most serious cases, attack sites established anonymously on offshore servers by former employees.

What requires particular attention in Japan is that reviews posted by current and former employees occupy an unusually important place in how candidates choose employers. It is standard practice for candidates to check the working environment, hours, workplace relationships and management attitudes on such sites before applying and before accepting an offer. Where damaging posts are left unaddressed, the consequence is not limited to brand image: it appears directly as fewer applicants and more declined offers.

Online rights infringement is one of our principal practice areas. In ordinary times we monitor online posts concerning your company name and the names of your officers, manage information at the point of departure, reconfirm confidentiality obligations, and design non-disparagement provisions in separation agreements. In a crisis we handle removal requests to review sites, social media and message boards, petitions for disclosure of sender information, claims for damages, criminal complaints where warranted, and proceedings against offshore-hosted and anonymously operated attack sites, coordinating with local counsel for proceedings outside Japan. Because headquarters cannot read the Japanese-language content of these posts, we report the results of monitoring in English.

There is, however, a limit. Communications that constitute legitimate union activity or protected whistleblowing cannot be suppressed. Attempting to do so invites liability for unfair labor practice or for detrimental treatment of a whistleblower. Drawing that line — responding to unlawful infringement with legal measures, and to legitimate criticism with institutional improvement and good-faith engagement — is what this module is for.

Reputation Management

E. Ongoing Retainer

Continuing support during the operating phase. We provide a standing English-language channel for advice by email and video conference, available to headquarters and to your Japanese entity alike.

Specifically, we handle responses to demands for collective bargaining from unions, responses to investigations and corrective guidance from the Labor Standards Inspection Office, first-response support for AI-generated claims, and representation in Prefectural Labour Bureau conciliation, labor tribunal proceedings and litigation (moving to a separate engagement where a dispute arises). We also circulate updates on Japanese employment law reform in English on a regular basis.

Japanese employment law continues to change: 2026 alone brings mandatory customer harassment measures and the amended Whistleblower Protection Act into force. It is not realistic for a headquarters legal department to track Japanese legislative developments continuously. The purpose of this arrangement is to maintain a state in which you receive those developments in English and know which of your own rules need to change.

Working with Your Home-Country Counsel

The package is designed to stand alone. Where you have counsel at home, we can also coordinate with them as required.

As noted above, representation in negotiations and proceedings in Japan is reserved to those qualified as attorneys in Japan, so even where your home-country counsel is familiar with Japanese conditions, we will need to handle matters on the ground in Japan. That said, there are situations in which it is smoother to route communications with your leadership through your home-country counsel. We are able to accommodate either approach.

Role	Home-country counsel (where coordinating)	MONOLITH LAW OFFICE
Relationship with headquarters	Continues as before	Advises and acts on Japanese law, sharing information as required
Explanation to leadership	Explains from the perspective of home-country law and headquarters policy	Explains Japanese practice directly in the Executive Briefing; can also route this through home-country counsel on request
Rules and contracts	Confirms consistency with global policy	Prepares bilingual versions conforming to Japanese law
Negotiations and proceedings in Japan	—	Union response, regulatory response, labor tribunal and litigation representation
Home-country issues	Assesses effects under home-country law (disclosure, global policy and similar)	Shares the Japanese facts and procedural position

Why MONOLITH LAW OFFICE

Technology and Cross-Border Work
MONOLITH LAW OFFICE is a Tokyo firm specialising in IT, the internet and international transactions. Our founding attorney, Toki Kawase, was previously an IT engineer, and our understanding of how technology businesses operate is a core strength. We advise on the basis of how businesses in data centres, cloud, AI, SaaS and semiconductors are actually structured.
One-Stop Service in English
Foreign-qualified attorneys practise at the firm, and we work in English from initial consultation through drafting of internal rules to dispute representation. Because deliverables are produced in parallel English and Japanese, your headquarters legal team and your Japanese HR staff can work from the same document.
Employment and Reputation Together
Online rights infringement is one of our principal practice areas. Where an employment dispute moves online, removal requests, petitions for disclosure of sender information and proceedings against offshore-hosted sites are executed under the same command structure as the employment work. This is an area in which instructing separate advisers reliably produces conflicting positions.
Data and AI
We advise on the cross-border transfer of employee data to headquarters, internal use of generative AI, and the lawfulness of AI recruitment and evaluation tools — the issues that arise specifically for technology companies. We are able to examine the specification of a system itself, against the Act on the Protection of Personal Information, the Employment Security Act and the prohibition of discriminatory treatment.

Fee Structure

Executive Briefing
from$1,000per session
A two- to three-hour session covering the overall shape of Japanese employment law. Your home-country counsel is welcome to attend. The fee varies with the number of attendees and the depth of preparation required; we are glad to confirm it in advance.
Entry Setup Kit
Fixed Feeby scale
Set by reference to headcount, number of sites and number of documents. If you already have a Japanese entity, we can begin with a diagnostic review of your existing contracts and internal rules.
Ongoing Retainer
Contact Us
A monthly retainer with a cap on consultation time, including English-language advice on demand, union and Labor Standards Inspection Office response, and regular updates on legal change. Dispute representation is charged separately. The Separation Playbook and Reputation & Online Shield are quoted per matter.

How We Begin

Initial Call
Online. We ask about your plans for Japan, the headcount you envisage, the characteristics of your industry, and your concerns. Your home-country counsel is welcome to join.
Proposal and Quotation
We propose a combination of modules and a schedule, setting out the scope of each in writing. If you are undecided, you may begin with the Executive Briefing alone.
Executive Briefing
We deliver the briefing to your leadership, with your home-country counsel if you wish. It runs two to three hours online, at a time that suits your time zone.
Building the Framework
Through the Entry Setup Kit, we put the rules and systems in place before hiring begins. All deliverables are produced in parallel English and Japanese, for both of your teams.
Continuing Support
We support you through the operating phase, on exit strategy, and in a crisis. Advice is available in English on demand, and we circulate updates on legal change.

Frequently Asked Questions

Q. Is it really impossible to terminate an employee in Japan?
You cannot terminate without stating a reason, as you can in the United States; and unlike most European jurisdictions, Japan offers no statutory mechanism for ending the employment relationship by payment of compensation. That said, termination is not impossible. Japanese courts have upheld dismissals by Japanese subsidiaries of foreign companies where the employer defined the expected role, documented its guidance, and solicited resignation on stated terms. In practice, most matters are resolved by agreed resignation with a severance premium.

Q. What is the labor tribunal?
It is a court procedure in which a panel comprising a judge and two lay experts, one from labour and one from management, hears the case over a maximum of three hearing dates in principle. It is not arbitration, and it is available without any agreement between the parties. Most cases conclude by conciliation, so resolution within a relatively short period can be expected. Note, however, that the preparation window before the first hearing is short, and the company’s decision-maker is frequently required to attend.

Q. Can we translate our headquarters employment contract and handbook and use them in Japan?
We would not recommend it. At-will provisions, non-competition covenants and arbitration clauses may be unenforceable or restricted in Japan. Separately, any workplace with 10 or more employees on a regular basis must prepare and file work rules under Japanese law — an obligation that a translated handbook does not satisfy.

Q. If we have no union internally, can we disregard union matters?
No. If an employee joins an external union, the company may not refuse a demand for collective bargaining without proper grounds, even where that union has only one member among your employees.

Q. If we use an Employer of Record, do we still need to address Japanese employment law?
The EOR provider assumes the formalities of the employer role, but because your organisation directs the work in substance, the practical issues — working-time management, harassment response, performance evaluation and guidance — remain yours. There are also limits to scaling headcount while remaining on an EOR arrangement, and at the point of converting to direct employment the framework must be built in any event.

Q. An employee has sent us a submission apparently drafted by AI. How should we respond?
The substance of the complaint must be addressed in good faith, irrespective of how the document was drafted. We separate legal characterisation from specific factual allegations, request particularisation, and apply the statutory procedures for harassment and whistleblowing as applicable. We maintain a protocol for this first response.

Q. A former employee is criticising us on social media. Can we have it removed?
Where the content constitutes unlawful infringement — defamation or invasion of privacy, for example — removal requests and petitions for disclosure of sender information are available. Communications that constitute legitimate union activity or protected whistleblowing cannot be suppressed, and attempting to do so creates risk. We will review the content and propose an appropriate response.

Japanese employment law has features that distinguish it from the law of most other jurisdictions. Those differences, however, are manageable if you understand them before you enter. The period before your first hire is when the smallest investment produces the greatest effect.