Explaining the Laws that Operators of Side Job Matching Sites Should Understand

From April 1, 2019 (Heisei 31), the Japanese Work Style Reform Law has been gradually implemented, enabling workers to choose various work styles, and as a result, the number of people engaging in side jobs has increased.

With the increase in people taking on side jobs, the demand for side job matching sites has also risen.

In this article, we will explain the laws that operators of side job matching sites should understand in order to manage their sites.

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What is a Side Job Matching Site?

A side job matching site is a service that connects individuals who want to engage in side jobs with companies that are interested in hiring such individuals.

There are two main types of side job matching sites. One type matches individuals and companies through employment contracts, while the other type matches them through other forms of contracts, such as outsourcing contracts.

In this article, we will focus on side job matching sites that match individuals and companies through non-employment contracts, such as outsourcing contracts. In other words, we will discuss side job matching sites that target freelancers.

How Does a Side Job Matching Site Work?

There are various mechanisms for side job matching sites. Typically, the operator of the side job matching site introduces companies to individuals who want to engage in side jobs based on their preferences.

As for the revenue model of side job matching sites, the operator may collect registration fees or listing fees from companies. Another possible method is to collect a referral fee from the company in the form of a percentage of the remuneration offered by the company when a match is made.

In the following, we will explain the points that operators of side job matching sites should be aware of from a legal perspective.

Relationship with Job Introduction under the Japanese Employment Security Act

As an operator of a side job matching site, it is necessary to first consider the relationship with job introduction under the Japanese Employment Security Act.

Permission is required to conduct a paid job introduction business

Article 30, Paragraph 1 of the Japanese Employment Security Act stipulates as follows:

(Permission for Paid Job Introduction Business)
Article 30: Anyone who wishes to conduct a paid job introduction business must obtain permission from the Minister of Health, Labour and Welfare.

From the above provision, if you fall under the category of a paid job introduction business, you need the permission of the Minister of Health, Labour and Welfare. If you do not obtain this permission, you will be in violation of Article 30, Paragraph 1 of the Japanese Employment Security Act.

If you violate Article 30, Paragraph 1 of the Japanese Employment Security Act, you may be sentenced to imprisonment for up to one year or a fine of up to 1 million yen (Article 64, Item 1 of the Japanese Employment Security Act).

Criteria for determining whether a side job matching site falls under job introduction

So, what kind of actions fall under “job introduction”?

The definition of “job introduction” is stipulated in Article 4, Paragraph 1 of the Japanese Employment Security Act as follows:

(Definition)
Article 4: In this Act, “job introduction” refers to receiving applications for job offers and job seekers, and facilitating the establishment of an employment relationship between the job offerer and the job seeker.

The key point in the above provision is the phrase “facilitating the establishment of an employment relationship”.

From this phrase, it can be understood that the Japanese Employment Security Act targets the establishment of an employment relationship, and that contract work agreements, etc., are not subject to the regulations of the Japanese Employment Security Act.

However, even if it does not formally fall under job introduction, there may be cases where it is considered to fall under job introduction in substance.

Therefore, it is necessary to carefully examine whether the service content of the side job matching site falls under job introduction.

The Ministry of Health, Labour and Welfare has published “Standards for the Classification of Job Information and Job Seeker Information Provided by Private Companies on the Internet and Job Introduction”, which stipulates the following content:

Ⅲ Job information and job seeker information provided on the Internet falls under job introduction in any of the following cases:
1. The information provider selects and processes the content of the information provided or the recipient of the information without basing it on objectively set search criteria.
2. The information provider contacts job seekers about job information or job offerers about job seeker information.
3. When relaying communication between job seekers and job offerers through the information provider’s website, the content of the communication for the purpose of communication is processed.
Ⅳ In addition to Ⅲ, if it is judged from the content of advertisements by the information provider, the content of contracts between the information provider and job seekers or job offerers, etc., that the information provider is introducing job seekers or job offerers, and the provision of job information and job seeker information on the Internet is part of this, it falls under job introduction as a whole.

(Source: Ministry of Health, Labour and Welfare “Standards for the Classification of Job Information and Job Seeker Information Provided by Private Companies on the Internet and Job Introduction”[ja])

First of all, as a premise, merely providing job information or job seeker information, without receiving applications for job offers or job seekers, and without facilitating the establishment of an employment relationship, i.e., “information provision”, does not fall under job introduction.

However, with the development of the Internet, there are increasing services whose content cannot be clearly classified as side job matching site services.

In other words, even in cases where you are not explicitly facilitating the establishment of an employment relationship, if you are providing job information and job seeker information, and you meet the criteria published by the Ministry of Health, Labour and Welfare, you may be judged as job introduction, so caution is required.

Relationship with the Disclosure of Working Conditions, etc. under the Japanese Employment Security Act

Article 5-3, Paragraph 1 of the Japanese Employment Security Act stipulates as follows:

(Disclosure of Working Conditions, etc.)
Article 5-3: Public employment security offices, specified local public entities, job introduction businesses, those who recruit workers, those who are entrusted with recruitment, and worker supply businesses must each disclose the content of the work to be performed, wages, working hours, and other working conditions to job seekers, those who intend to become workers in response to recruitment, or workers to be supplied when introducing jobs, recruiting workers, or supplying workers.

In relation to Article 5-3, Paragraph 1 of the Japanese Employment Security Act, if a side job matching site does not fall under job introduction or worker recruitment, there will be no violation.

However, as mentioned earlier, depending on the service content of the side job matching site, even if the service is formally provided for freelancers, it may be judged to fall under job introduction or worker recruitment in substance.

Therefore, as an operator of a side job matching site, it is important to thoroughly check the service content of your own side job matching site.

Contents of Terms of Use that Operators of Side Job Matching Sites Should Prepare

As an operator of a side job matching site, it is necessary to pay attention to the provisions of the terms of use to avoid being held legally responsible by individuals seeking side jobs and companies.

Specifically, within the terms of use, it is necessary for the operator of the side job matching site to explicitly state that they will not become a party to contracts such as outsourcing agreements.

Furthermore, as an operator of a side job matching site, while you can connect individuals seeking side jobs and companies, it is difficult to guarantee the performance of the individuals seeking side jobs. Therefore, it is considered desirable to explain in advance to the companies that it is difficult to guarantee the quality of the work of the individuals seeking side jobs.

Summary: Laws that Operators of Side Job Matching Sites Should Understand

In this article, we have explained the laws that operators of side job matching sites should understand.

For side job matching sites aimed at freelancers, it is necessary to carefully scrutinize the content of the service and ensure that it is not deemed as job introduction or similar.

Such judgments require specialized knowledge, so we recommend consulting with a lawyer who possesses such expertise.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the internet, and law. Side job matching services have been attracting attention recently, and careful management is required. The need for legal checks is increasingly growing. Our firm analyzes the legal risks of businesses that have already started or are about to start, based on various legal regulations, and aims to legalize them as much as possible without stopping the business. Details are described in the article below.