Employment Status and Legal Protection of eSports Players

In recent years, with the rapid development of the eSports industry, discussions regarding the legal status of players have intensified.
eSports organizations need to carefully consider whether players qualify as “workers” under the Japanese Labor Standards Act or the Japanese Labor Union Act when entering into contracts with them.

The legal regulations applicable to contracts between organizations and players are determined on a case-by-case basis, considering the actual conditions of service provision. This includes factors such as whether there are time and location constraints on the players, the degree of command and supervision over the players, and the method and amount of compensation.

Legal Interpretation of the Worker Status of Athletes

Article 9 of the Japanese Labor Standards Act defines a “worker” as “a person who is employed in a business or office and is paid wages, regardless of the type of occupation.”
Additionally, Article 2, Paragraph 1 of the Japanese Labor Contract Act also stipulates that a “worker” is “a person who is employed by an employer to work and is paid wages.”

Considering these definitions, when examining traditional professional sports, the prevailing view is that professional athletes in sports like baseball and soccer do not qualify as “workers” under the Japanese Labor Standards Act and the Japanese Labor Contract Act.
The reasons for this include the unique expertise of professional athletes, the limited duration of service provision, the compensation structure based on annual salary or performance-based pay, and the high remuneration for top athletes.

Consideration of eSports Players’ Status as “Workers”

Determining whether players belonging to eSports teams qualify as “workers” under Japanese law is a crucial issue for the organizations they are affiliated with, as it imposes various obligations on them as employers.
If players are deemed “workers” under the Japanese Labor Standards Act and the Japanese Labor Contract Act, the team management organizations, as “employers,” must comply with statutory working hours, minimum wage, and other regulations.
Additionally, if the organization unilaterally terminates a contract with a player, it may be considered an abuse of dismissal rights.

The Unique Legal Status of eSports Players

The way eSports players operate has distinct personalityistics compared to traditional athletes.
Since their activities primarily occur online, they experience relatively less physical movement and constraints. However, they often have obligations not typically seen in traditional sports, such as internet streaming and social media engagement.
Additionally, some players participate in multiple game titles or simultaneously work as streamers, leading to a more diverse range of employment forms than in traditional sports.

Specific forms of activity include players who belong to a team and receive a fixed monthly salary of 250,000 yen while participating in tournaments, players affiliated with game manufacturers and working as part of corporate operations, and independent players who secure sponsorship contracts.
Even among players who are part of a team, the nature and extent of directives from the team, the conditions of temporal and spatial constraints, and the methods of determining compensation vary depending on individual cases.

Criteria for Determining Worker Status from Case Law

In examining case law, the Japanese Sumo Association case (Tokyo District Court, March 25, Heisei 25 [2013], Rohan No. 1079, p. 152) determined that the contractual relationship between sumo wrestlers and the Japanese Sumo Association is not an employment contract but rather an unnamed contract under private law with the nature of a bilateral contract for compensation. Therefore, the principle of abuse of dismissal rights does not apply to recommendations for retirement made to wrestlers.

On the other hand, a different judgment was made in relation to the Japanese Labor Union Act.
In the Japanese Professional Baseball Organization case (Tokyo High Court, September 3, Heisei 16 [2004], Rohan No. 879, p. 90), professional baseball players were recognized as “workers” under the Japanese Labor Union Act, and the players’ association was deemed a “labor union” under the same act.
As a result, rights such as the right to organize and the right to collective bargaining, as stipulated by the Japanese Labor Union Act, are guaranteed to professional sports players. Consequently, the affiliated organizations cannot refuse collective bargaining with players regarding working conditions and other related matters.

Practical Guidelines for Determining Worker Status

As a general criterion, if the player’s performance is left to their skill and discretion, with minimal time and location constraints outside of games and practice sessions, and if a salary system or performance-based pay structure is adopted, where top players receive high compensation, it is likely that they will not be considered “workers” under the Japanese Labor Standards Act and the Japanese Labor Contract Act, similar to other professional athletes.

Conversely, if there are detailed instructions and commands regarding the player’s performance and related duties, and if working hours and locations are strictly managed, with a fixed amount of compensation paid regardless of performance, the likelihood increases that they will be considered “workers” under the Japanese Labor Standards Act and the Japanese Labor Contract Act.

Key Considerations in Contracts Unique to eSports

Unlike traditional sports, contracts for eSports athletes need to meticulously define the rights and obligations related to digital content, such as game streaming rights, the handling of image rights, and restrictions on statements made on social media.
Additionally, given the frequent opportunities to participate in international competitions, careful attention must be paid to the choice of governing law and jurisdiction.

Compliance with Other Legal Regulations

Even when Japanese labor laws do not apply, contracts with players are still subject to other legal regulations.
Excessively strict transfer restrictions or non-compete obligations may be deemed invalid as violations of public order and morals under Article 90 of the Japanese Civil Code (Minpō).
Additionally, the Japanese Fair Trade Commission has pointed out that restrictions on players’ economic activities could raise issues under the Japanese Antimonopoly Act.

In conclusion, eSports organizations are required to individually and specifically examine which legal regulations apply to their contracts with players, taking into account the actual circumstances of their activities, while also considering the opinions of experts such as lawyers.
Particularly, it is crucial to design detailed contracts that consider the unique rights and obligations of the digital age and the international activity environment.