Employment contract not renewed in Japan? Your options

Non-renewal or dismissal before your contract ends?

• Dismissal before the contract end date: to end a fixed-term contract during its term, the employer needs "unavoidable circumstances" (Labour Contract Act, Art. 17(1)). This is a stricter standard than for dismissing an employee on an indefinite-term contract. Even if the employer calls it "non-renewal", unilaterally ending a fixed-term employment contract before its expiry date is assessed as a dismissal during the term (for the difference from merely bringing forward your last working day while the contract runs to its expiry date, see the dates section of Fired in Japan?).
• Non-renewal: in principle the contract ends when the term expires. However, where (1) the contract has been repeatedly renewed so that non-renewal is substantially equivalent to a dismissal, or (2) you have reasonable grounds to expect renewal, a non-renewal that lacks objectively reasonable grounds and is not considered appropriate in general social terms is not allowed, and the contract is deemed renewed on the same terms as before (Labour Contract Act, Art. 19). A reasonable expectation of renewal can exist even under a first contract.
• In both cases (1) and (2), the protection of Article 19 requires that you request renewal before the term expires, or request a new contract without delay after expiry (there is no such requirement for a dismissal during the term). No particular form is needed, and the fact that your objection to non-renewal has reached the employer is also relevant, but to preserve evidence, tell the employer by email or in writing that you are requesting renewal.
• What Article 19 produces is a fixed-term contract on the same terms as before, including the term. It does not automatically become an indefinite-term contract (for conversion, see section 4).

Can you challenge the non-renewal?

First, check whether Article 19 applies, based on the history of repeated renewals or a reasonable expectation of renewal. Then examine the employer's reasons for refusing renewal and how it has acted. A reasonable expectation of renewal does not by itself mean the non-renewal will be disallowed.

• The number of renewals and the total period. How renewals were actually handled (a meeting and a new contract each time, or automatic renewal).
• The nature of the work (ongoing, or temporary and project-specific; the same work as permanent staff).
• What the employer said (at hiring or renewal, for example "we want you to stay long-term" or "we will renew next year"). The job advertisement and what was explained at recruitment are also relevant.
• What the contract and written statement of working conditions say. In addition to whether and on what criteria renewal may occur, check any cap on the total contract period or number of renewals (a renewal cap). For contracts concluded or renewed from April 2024, whether there is a renewal cap, and its content, must be stated. If the employer introduces or lowers a cap after the first contract, it must explain the reasons in advance.
• Stating a renewal cap, or explaining the reasons for introducing or lowering one, does not by itself make a non-renewal valid. Even if you have signed a clause such as "this is the final renewal", the earlier renewal history, the explanations given and the circumstances in which you signed are all examined. If you are being asked to submit a resignation or sign an agreement, also see Asked to resign in Japan?.
• How other fixed-term employees in the same position are treated. Whether the reason for non-renewal (performance, conduct, budget, reorganisation) is specific and based on facts. For business-related non-renewals, the need for cuts and the availability of other measures are also examined, but the employer is not always held to the same steps as for a redundancy dismissal of a permanent employee; the assessment reflects the actual pattern of employment and renewal.

Are you entitled to notice and written reasons?

• If your contract has been renewed three or more times, or you have been employed continuously for more than one year (including where the first contract itself exceeds one year), the employer must give at least 30 days' notice of non-renewal (Standards on the conclusion, renewal and non-renewal of fixed-term labour contracts). This does not apply where it was made clear in advance that the contract would not be renewed.
• For non-renewals covered by the Standards, if you request a certificate of reasons after the notice or after the non-renewal, the employer must issue it without delay. The certificate must state the reason for not renewing — the end of the work, downsizing and so on — rather than simply "expiry of the term".
• The Standards are a ministerial notice issued under the Labour Standards Act and are enforced through advice and guidance by the Labour Standards Inspection Office. A breach of the notice requirement does not automatically make the non-renewal invalid, nor does it automatically give rise to statutory notice pay. Conversely, the fact that the employer complied with the notice requirement, or that non-renewal was stated in advance so that the requirement did not apply, does not by itself exclude the application of Article 19.

Can you apply for an indefinite-term employment contract?

How to apply and when the new contract starts

• If the total period of two or more fixed-term employment contracts with the same employer, counting contract periods that have started, exceeds five years, you can apply for conversion to an indefinite-term employment contract at any time before your current contract expires (Labour Contract Act, Art. 18). The test is the total of contract periods that have started, not the years you have actually completed (for example, if a three-year contract is renewed so that the total becomes six years, you can apply from the first day of the second contract). Under this five-year rule, if the total of started contract periods, including the current contract to its expiry, is exactly five years, the right to apply has not yet arisen.
• Conversion takes effect by your application: the employer is deemed to have accepted, and an indefinite-term employment contract begins on the day after your current contract expires. It requires your application; nothing converts automatically just because five years have passed, and it is not a matter for the employer's discretionary approval. Conversion does not automatically give you the same treatment as regular employees: apart from the term, your conditions stay the same unless otherwise provided. A request for renewal and an application for conversion are different statements.
• If your right to apply has arisen, you can apply during your current contract term even after being notified of non-renewal. Check whether you have the right even if the employer has not told you. Neither the employer's approval nor a prescribed form is legally required. If you want to convert and have the right, make sure your application reaches the employer before the current contract expires, and keep a record of its content and delivery. Do not let the application period pass while waiting for an internal procedure or the employer's reply. An application that meets the requirements creates an indefinite-term contract starting the day after the current contract expires, and a notice of non-renewal does not by itself end that indefinite-term contract.
• Not only at the renewal at which the right first arises but at every later renewal of a fixed-term contract while the right exists, the employer must state the opportunity to apply and the terms that will apply after conversion.
• Having a limited period of stay does not by itself exclude you from the conversion rule, and conversion does not automatically extend your period of stay.

Gaps between contracts and how contract periods are counted

• Gaps: if there is a gap of six months or more, as a rule, with no fixed-term contract with the same employer, the contract periods before the gap are no longer counted. Where the total contract period before the gap is less than one year, a shorter gap can have the same effect. School holidays while your contract continues are not gaps for this purpose. If your contract ends at the end of the school year and the period without a contract with the same employer is less than one month, that gap alone does not remove the earlier periods from the count (the gap itself is not counted).
• A non-renewal shortly before the five-year point is assessed in light of your reasonable expectation of renewal and the employer's explanations. Adding a renewal cap after the fact to avoid conversion, or creating an artificial gap with a promise of re-hiring, are circumstances relevant to whether the non-renewal is valid.

Exceptions to the five-year rule

• University researchers and faculty: for researchers at universities and similar institutions, and for faculty engaged on fixed terms under the Act on Fixed-Term Appointment of University Teachers, the five years become ten if the statutory requirements are met. Working at a university, or the label "fixed-term appointment", does not by itself decide whether the exception applies. Teachers whose work is mainly teaching can fall within it. Check your employer and duties, and also the nature of the educational and research organisation and its fixed-term appointment rules. The ten-year exception does not guarantee ten years of renewals.
• Highly paid specialists: where the requirements are met — specialist knowledge, expected annual income of JPY 10.75 million or more, work on a project expected to be completed within a period exceeding five years, and certification of the employer's plan — there is an exception under which the right to apply does not arise for up to ten years (Act on Special Measures for Fixed-term Employees with Specialist Knowledge). This "highly skilled professional" is unrelated to the "Highly Skilled Professional" status of residence.
• Continued employment after mandatory retirement age: where an employee aged 60 or over continues to be employed by the same employer or a related employer after mandatory retirement age, and the plan certification and other requirements are met, the period of continued employment is not counted.

Agency work and contractor arrangements

When your agency assignment ends

• If you want to keep working after your assignment ends, tell the staffing agency (haken-moto) your wish and the working conditions you are looking for, and keep a record. Also check whether the dispatch contract with the school or client is being terminated early or simply not renewed at expiry.
• Check the period of your assignment at the client and the period of your employment contract with the agency separately. If your assignment ends but your employment contract with the agency is still running, that contract does not automatically end.
• If the client terminates the dispatch contract early for its own reasons, the client too must take measures to secure your employment, such as finding you a new assignment or bearing the cost of a leave allowance (Worker Dispatching Act, Art. 29-2). If the agency dismisses you during a fixed-term contract, that is assessed under Labour Contract Act Art. 17; if it does not renew at expiry, under Art. 19.
• Separately, the agency has employment-stabilisation obligations (Art. 30). For fixed-term agency work subject to the assignment period limit, these are mandatory where you are expected to be assigned to the same organisational unit for three years and want to continue, and are best-efforts obligations where the expected period is one year or more but less than three. Even if your assignment to one organisation is shorter than a year, you may be covered by the best-efforts obligation if you have been employed by the agency for a total of one year or more. The assignment period limit and stabilisation measures are separate from renewal of your contract with the agency and from conversion to an indefinite-term contract. Ask the agency which measures apply to you and what they involve. Depending on your category, they include asking the client to employ you directly, or offering a new assignment on reasonable terms. Where the measures are mandatory, a refused request for direct employment is not enough on its own; the agency must then take another measure.
• Applications for conversion to an indefinite-term contract are made to the agency. If your employment with the same agency continues, a change of client does not by itself reset the count.

Are you an employee despite a contractor agreement?

• Even if you have signed a service or outsourcing agreement with a school or company yourself (as some ALTs do), whether you are an employee is judged as a whole from the substance, not the contract's name: whether you are free to refuse work, whether you receive instructions on how to do it, how far your time and place of work are controlled, the nature of your pay, and whether you can have someone else do the work.
• Where instead you are employed by a company that has a contracting arrangement with the school, the position is different. Your status as an employee is usually not in doubt; if the school gives you instructions directly, the arrangement may in substance be worker dispatching. That alone, however, does not automatically create an employment relationship with the school.
• For a genuine independent contractor arrangement, check the terms of the contract and, where its requirements are met, the Freelance Act.

What to do before or after your contract expires

• Before and after expiry: if you want renewal, tell the employer before expiry that you are requesting it, and keep a record. If the contract has already expired, request a new contract without delay and seek advice at the same time. If you want to convert and have the right, make sure your application reaches the employer during the current term without waiting for approval or a form (section 4). Ask for the reasons for non-renewal in writing. Record what has been said about renewal and in meetings. If you do not accept the non-renewal, the earlier you act, the more options you keep.
• Documents to bring to a consultation: past fixed-term contracts (as far as you have them), renewal documents, written statements of working conditions, the job advertisement and what was explained at recruitment, notices introducing or changing a renewal cap, records of any conversion application, the work rules, the non-renewal notice, certificate of reasons and emails with the company, payslips, and for agency workers, your employment contract with the agency and the written statement of assignment conditions; for university staff, the fixed-term appointment rules and any explanation of the exception. Not having all the documents is no reason to delay seeking advice.
• Ways to resolve the dispute: negotiation, conciliation (assen) at the Labour Bureau, labour tribunal proceedings, litigation. Where Article 19 disallows a non-renewal, a fixed-term contract on the same terms as before is deemed to exist, and the period for which wages can be claimed is checked against the renewed term and what happens afterwards. In some cases the matter is settled by agreeing a payment and the end of employment. For the procedures and options for contesting the end of employment, see our guide "Unfair Dismissal in Japan — Advice for Employees".

• Unemployment benefits: even where you leave because a contract expired, you may qualify as a "specified qualified recipient" or a "specified-reason leaver" depending on whether you wanted renewal, whether renewal was expressly stated, and the renewal and employment history. Separately from whether you can challenge the non-renewal, show Hello Work your contract and your record of requesting renewal, and check the stated reason for separation. For the procedure, see Fired in Japan?.
• Status of residence: the notifications required after non-renewal and the conditions for staying depend on your status. Check the status and expiry date on your residence card, the notifications you must make, and the procedure for working for a new employer. See Fired in Japan? for details.

Terminology used in this article

• fixed-term employment contract — an employment contract with an agreed end date
• non-renewal at the end of a fixed-term employment contract (yatoidome) — distinguished from dismissal during the term
• the contract expires / contract expiration — the end date arriving (not equated with the validity of refusing renewal)
• termination — general term; the article specifies dismissal, mutual agreement or expiry; dismissal before the contract end date = dismissal during the term
• conversion to an indefinite-term employment contract — takes effect by the employee's application where the statutory requirements are met; not the employer's discretionary approval
• agency work (haken) / staffing agency — employed by the agency and working under the client's direction ("temp agency" avoided; agency employment is not necessarily short-term or fixed-term)
• independent contractor — the individual's own service contract (distinguished from a contracting company that employs the individual)
• renewal cap — a limit on the number of renewals or the total contract duration (stating a cap does not by itself decide the validity of ending the contract)
• cooling-off — not used as a heading; explained as gaps between contracts and how contract periods are counted

Related articles

• Right after a dismissal: Fired in Japan? What to do next
• Procedures and options for contesting the end of employment: Unfair Dismissal in Japan — Advice for Employees (existing guide)
• Asked to submit a resignation or sign an agreement: Asked to resign in Japan?
• Negotiating separation terms: Severance pay in Japan

Get advice about your contract non-renewal — We review your renewal history, the employer's explanations and your contracts, and assess whether you can challenge the non-renewal or apply for conversion.

References

• Labour Contract Act, Arts. 17(1), 18(1) and (2), 19 and 21
• Standards on the conclusion, renewal and non-renewal of fixed-term labour contracts (MHLW Public Notice No. 357 of 2003, as amended by Public Notice No. 114 of 2023, in force 1 April 2024), Arts. 1, 2 and 3; Labour Standards Act, Art. 14(2) and (3)
• Labour Standards Act, Art. 22(1) (certificate on leaving; not the direct basis for reasons for non-renewal); Ordinance for Enforcement of the Labour Standards Act, Art. 5 (statement of renewal caps and conversion opportunities from April 2024); ministerial ordinance under Labour Contract Act Art. 18(2) (gaps between contracts)
• Act on Special Measures for Fixed-term Employees with Specialist Knowledge (highly paid specialists; continued employment after retirement age under Art. 8(2)); Act on Fixed-Term Appointment of University Teachers, Art. 7(1); Act on the Promotion of Science, Technology and Innovation, Art. 15-2(1)
• Worker Dispatching Act, Arts. 29-2 and 30; Ordinance for Enforcement, Arts. 25 and 25-2
• Employment Insurance Act, Arts. 13(3) and 23(2); Ordinance for Enforcement, Arts. 19-2(i), 36(vii) and 36(vii-2); Hello Work, "Scope of specified qualified recipients and specified-reason leavers"
• MHLW, FAQ on the indefinite-term conversion rule, Q4 and Q10; Immigration Control Act, Arts. 19-16, 21 and 22-4
• Reference cases (with limits; both decided before Labour Contract Act Art. 19 was enacted): Toshiba Yanagicho Factory case (Supreme Court, First Petty Bench, 22 July 1974, Minshu Vol. 28 No. 5, p. 927); Hitachi Medico case (Supreme Court, First Petty Bench, 4 December 1986, Shumin No. 149, p. 209; Rodo Hanrei No. 486, p. 6)
• Reference case on the conversion exception: Hagoromo Gakuen case (Supreme Court, First Petty Bench, 31 October 2024, 2023 (Ju) No. 906; Shumin No. 271, p. 199)

This article is general information, not legal advice on your situation. Figures and procedures are as at the time of writing and may change. We do not handle applications, changes or notifications concerning status of residence; if you wish, we can refer you to a specialist who handles immigration matters.

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This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.