Dismissed or asked to resign by a foreign-capital (gaishikei) company in Japan? What to check, and what does not change

1. The protections of Japanese law, and checking the applicable law

• Who your employer is. A Japanese subsidiary (kabushiki kaisha or godo kaisha) is a legal entity separate from its foreign parent. A Japanese branch of a foreign company is not a separate entity; in that case the foreign company itself is usually the employer. Check the official name of the company named as your employer in your contract, and distinguish it from the group brand and from the office you report to. If you were seconded or posted to Japan from abroad, also check whether your employment with the sending company continues, what your assignment letter says about the end of the Japan assignment and repatriation, and which contract the company says is being terminated — the end of a Japan assignment and the end of your employment are not necessarily the same thing. These points determine who can dismiss you, who owes you money and whom you negotiate with (Laid off in Japan?, section 3).
• The dismissal test is the same. A dismissal that lacks objectively reasonable grounds and is not considered appropriate in general social terms is invalid (Labour Contract Act, Art. 16). A business reason decided abroad, an "at-will" clause in an English-language contract, or the fact that the parent company is foreign does not change this test. For redundancy dismissals, the four points examined — the need for workforce reduction, efforts to avoid dismissal, the reasonableness of the selection and the procedure — are explained in Laid off in Japan?, section 2.
• A foreign governing-law clause. Under Japan's choice-of-law rules, if Japan is the place where you are to work under the employment contract, Japanese law is presumed to be the law most closely connected with that contract; the presumption can be rebutted. If Japanese law is the most closely connected law, specific mandatory provisions of Japanese law also apply to the matters they govern when you notify your employer that you wish to rely on them, even if another country's law governs the contract (Act on General Rules for Application of Laws, Art. 12). Separately, agreeing to foreign law does not displace the regulatory requirements that govern workplaces in Japan, including those under the Labour Standards Act. The foreign-law clause does not disappear. Get advice promptly on which mandatory provisions to invoke; it is advisable to identify those provisions and notify your employer in writing, keeping a record, although Article 12 does not itself require written notice.
• A foreign-court clause. Under Japanese law, an agreement that gives foreign courts exclusive jurisdiction over future individual employment disputes is subject to statutory restrictions: if the place of work under your employment contract is in Japan, you can generally bring an employment claim against your employer before the Japanese courts (Code of Civil Procedure, Arts. 3-4(2) and 3-7(6)). A clause that covers a dispute that has already arisen — for example a jurisdiction clause in a settlement of your dismissal — and a clause that you yourself invoke, by suing in the agreed court or by relying on it when your employer sues, need separate assessment. Arbitration clauses are also checked separately (Severance pay in Japan, section 4).
• Notice and notice pay. Unless an exception applies, an employer that gives less than 30 days' notice of dismissal must pay an amount equal to the statutory average daily wage for each day by which the notice falls short of 30 days (Labour Standards Act, Arts. 20 and 21). Receiving statutory notice pay does not, by itself, settle whether you have accepted the dismissal; the documents and exchanges around the payment are also relevant (Severance pay in Japan, section 1).
• Work rules, contracts and group handbooks. Check your employment contract and the work rules (shugyo kisoku) and related regulations that apply to you. A global handbook or policy issued by the parent company may or may not form part of your terms: that depends on whether and how it has been incorporated into your contract, whether it was made known to employees, whether its content is reasonable, and how it relates to statute and to the other rules that apply to you. Ask how the work rules can be inspected and request a copy of the provisions you need.

2. What to check at a foreign-capital employer

The legal tests do not change because your employer is foreign-owned. What follows is a list of matters that call for specific checking in these cases, because the decisions, documents and payments often involve entities and rules outside Japan.

• Involvement and approvals of an overseas headquarters. A headcount reduction, a reorganisation or a decision to end an individual's employment may be decided outside Japan, with the local HR team carrying out the implementation. Check three things: the authority of the people you are dealing with to change the terms, and who has to approve any change; what a deadline is based on — a requirement of Japanese law, or an internal timetable; and the specific reason why your position in Japan is being cut, which is one of the points examined under Japanese law (Laid off in Japan?, section 3). Internal approval requirements and the company's legal authority to bind itself are different questions. An agreement made by your employer's legal representative may bind the company even without internal headquarters approval; the representative's authority, any express condition that headquarters must approve, and whether you knew of any restriction all need to be checked. The point is to know who can actually agree terms with you.
• PIPs and proposals to end employment. Japanese law has no statutory form or duration for a PIP; its purpose and use vary from company to company. Where a group-wide PIP template is used, check its stated purpose, what the company says will follow if the targets are not met, and how it is being applied in Japan. Running a PIP, or a failure to meet its targets, does not by itself make a dismissal valid: the validity of a dismissal for underperformance is assessed on the job and level of performance that were agreed, the specific content and seriousness of the shortfall, the opportunities to improve and the company's own response. A proposal to leave by agreement may be made during or at the end of a PIP; it is a proposal, not a dismissal. See Put on a PIP in Japan?.
• How packages are calculated, and the separation agreement. An offer may be calculated under a group-wide formula — for example a number of weeks' or months' pay per year of service — and presented in an English-language separation agreement drafted to a global template. Japanese law does not prescribe a formula for a severance package. But before treating the figure as a starting point for negotiation, check whether your contract, the applicable rules or a collective agreement already give you a right to a retirement allowance or other payment on a set basis: money you are already owed is different from the additional payment now being proposed, and the two should be assessed separately (Severance pay in Japan, section 1). In the agreement, check whether there are clauses on release of claims, confidentiality, non-disparagement (clauses restricting critical statements about the company), non-competition, and governing law and dispute resolution, and what each covers (Severance pay in Japan, section 4). In particular, check whether the release extends to claims against the parent company or affiliates and to your rights under any equity plan.
• Equity compensation under a parent company plan. RSUs, stock options and similar awards may be granted under a plan of the parent company or another group entity, under a separate award agreement. Check who granted the award, which documents govern it, and how it relates to your employment contract; do not assume that the employment contract's terms carry over. Check the vesting dates and the plan's conditions for continued service, the post-termination exercise window for options, forfeiture and clawback terms, and who must approve any change. Setting the employment end date after a vesting date does not necessarily satisfy the plan's continued-service requirement: plans may define the end of service differently from the legal end of employment, and may exclude periods of garden leave, so check the last working day, the employment end date, the plan's definition of the end of service, and the treatment of garden leave. Because the award agreement is a contract with a different party, its governing-law, jurisdiction and arbitration clauses are checked separately from those of the employment contract (Severance pay in Japan, sections 3 and 4).
• Explanations based on other countries' rules. You may be told, on the basis of the rules of another country or a group policy, that employment can be ended on notice or with a payment. The validity of a dismissal in Japan is a separate question that has to be checked under Japanese law.
• Job descriptions, specialist and senior hires. Where you were hired for a defined role or at a senior or specialist level, the job description, what was explained at recruitment and the agreed role and expected level of performance are relevant to how a performance-based dismissal is assessed, and to what alternatives to dismissal the employer should consider. Check these documents; the point is not that a different standard applies to foreign-capital employers, but that the agreed terms shape the assessment.
• Small Japan offices. Where the Japan office is small, "your position no longer exists" may be presented as self-evident. Under Japanese law the questions remain whether the reduction was necessary, what alternatives were considered — including other roles with the same employer — why you were selected and what explanation and consultation you received. A vacancy at another group company is not the same as a transfer offer from your employer, although how such vacancies and any offer of transfer are treated as measures to avoid dismissal is assessed in each case.
• If the company is leaving Japan. Check whether this means closing a branch, dissolving the Japanese subsidiary, or the employer ceasing business altogether, and who will be liable to pay wages and any agreed sum, when, and whom you can contact after the withdrawal (Laid off in Japan?, section 3; Severance pay in Japan, section 4).
• Language and procedure. Documents may exist in English and Japanese; check which version prevails. Negotiation can be conducted in English where the other side agrees to it; labour tribunal proceedings and litigation are conducted in Japanese (Court Act, Art. 74), so check what translation or interpreting will be needed and its cost.

3. What does not change

• The test for a valid dismissal, the rules on notice and notice pay, and the rules on fixed-term contracts and non-renewal are the same as at a Japanese company (Labour Contract Act, Arts. 16, 17 and 19; Labour Standards Act, Arts. 20 and 21).
• A request to resign is a request. Your employer cannot end your employment by mutual agreement unless you agree. Declining the request does not by itself end your employment; any later dismissal or other action must be assessed separately (Civil Code, Art. 522) (Asked to resign in Japan?).
• A signed separation agreement is, in principle, binding. Whether an agreement was validly formed, and whether it can be challenged on grounds such as mistake, fraud or duress, is assessed under the general rules (Civil Code, Arts. 93, 95 and 96); the safe course is not to sign until the document has been checked.
• Your employer's foreign parentage does not remove your claims for unpaid wages, overtime or statutory notice pay (Labour Standards Act, Arts. 20, 24 and 37). As a rule, you can bring a civil claim against your employer arising from your employment before the Japanese courts if the place of work under your employment contract is in Japan (Code of Civil Procedure, Art. 3-4(2)).
• Working for a foreign-owned company does not in itself prevent you from using labour tribunal (rodo shinpan) proceedings or litigation in Japan (Labour Tribunal Act, Arts. 1 and 2).
• While you consider a proposal, your obligations at work continue. Declining to agree to a proposed departure is different from refusing reasonable work instructions or ignoring a PIP; keep responding to the latter (Put on a PIP in Japan?).

4. Two objectives: keeping the job, or leaving on acceptable terms

Start by deciding, at least provisionally, whether you want to remain employed, or would leave if the terms were acceptable. Keeping both possibilities open for a period is also a workable approach, provided your correspondence with the company is written accordingly.

• Keeping the job. If the dismissal lacks objectively reasonable grounds, you can seek confirmation that the employment relationship continues, through negotiation, labour tribunal proceedings or litigation (Labour Contract Act, Art. 16). If the dismissal is invalid, you may also be entitled to wages for periods when you were unable to perform your work for reasons attributable to your employer (Civil Code, Art. 536(2)). A claim for post-dismissal wages requires examination of your willingness and ability to work, the reasons why work was not performed, and the period claimed; whether your employment has otherwise ended, including by a valid agreement to leave, is a separate issue. Negotiations and court proceedings may also end in a settlement that sets the terms of a departure: court statistics show that approximately two-thirds of labour tribunal cases concluded nationwide in 2025 ended in a settlement through conciliation. The terms of any settlement depend on the legal arguments and evidence, time, cost and the circumstances of both sides.
• Leaving on acceptable terms. If you have decided to leave, or would do so on the right terms, the questions are the terms: the additional payment and its breakdown, the end date and its effect on bonus, vesting and social insurance, garden leave (including pay and benefits during it), unused paid leave, the stated reason for separation, references and internal records, the scope of the release, outplacement, and payment terms. Whether the proposed terms can be changed is considered in light of the legal grounds for contesting the termination and the evidence, any payments already owed to you, and the circumstances and timetables of both sides. For how to assess and negotiate a package, see Severance pay in Japan, sections 2 and 6.
• Objecting and negotiating at the same time. It is possible to state an objection to the validity of the dismissal, in writing and with specifics, while negotiating the terms of a departure. What you should not do is sign, or state, anything that could be read as consent to the termination or as a release of claims before you have decided.
• Approvals and deadlines. A departure from a group template may require approval from headquarters; build that into your timetable. Ask for any extension of a deadline in writing, and confirm whether it has been granted; asking does not by itself extend it.

5. What to check first when you receive a notice or proposal

1. Get the documents. Ask for the proposal, the reasons and any deadline in writing, in English and Japanese if both exist. If you have been dismissed or given notice of dismissal, you can request a certificate stating the reasons for dismissal (Labour Standards Act, Art. 22); a request to resign alone does not trigger this statutory right.
2. Do not sign or consent yet. Do not sign a document that includes consent to leaving or a release of claims until it has been checked. If you are still considering, distinguish acknowledging receipt or understanding the explanation from agreeing to leave, and say so.
3. Confirm your employer and who can agree terms. Which entity employs you (and, if you were seconded, whether another employment continues); who in Japan can agree terms; whether internal approval is needed and from whom.
4. Preserve your own records lawfully. Keep the documents that concern your own terms of employment and the action taken against you — contract, offer letter, work rules, payslips, PIP documents, appraisals, correspondence about the termination, equity award documents — with attention to your authority to access them and to your confidentiality obligations. Do not bulk-transfer customer or other confidential information or circumvent access restrictions; where you are unsure whether material may be taken, ask how to preserve it before doing so (Fired in Japan?).
5. Check the dates. Reply deadline, proposed end date, bonus and vesting dates, the date your health insurance and pension coverage ends, and any immigration notification required for your status of residence and its deadline. We do not handle immigration matters, but these deadlines affect your timetable.
6. Take advice before agreeing. Before you agree to the end of your employment or to final terms, take advice. Stating an objection, or continuing to respond to a PIP, is not the same as agreeing.

6. Frequently asked questions

My contract says it is governed by the law of another country and that disputes go to the courts there. Can I still rely on Japanese law?

A foreign governing-law clause does not automatically remove the protection of Japanese labour law. Where Japanese law is the law most closely connected with the employment contract, its specific mandatory provisions can also apply if you notify your employer that you wish to rely on them. Agreements giving foreign courts exclusive jurisdiction over future employment disputes are subject to statutory restrictions; clauses covering an existing dispute, and cases in which you invoke the agreed jurisdiction, require separate assessment (Act on General Rules for Application of Laws, Art. 12; Code of Civil Procedure, Arts. 3-4(2) and 3-7(6)). Have the clauses checked before you decide how to respond on the basis of them.

Headquarters has decided a global reduction in force. Does that make my dismissal valid in Japan?

No. A headquarters decision does not by itself make a dismissal valid. The need for the reduction, the alternatives considered, the selection and the procedure are still examined under Japanese law. See Laid off in Japan?.

The company offered "X weeks per year of service". Is that the standard in Japan?

Japanese law does not prescribe a formula for a severance package. First check whether your contract, the applicable rules or a collective agreement already entitle you to a retirement allowance or other payment on a set basis; that is separate from the additional payment now proposed. Whether the proposal can be changed depends on the legal issues and evidence, any payments already owed, and the circumstances and timetables of both sides.

I do not want to keep the job. Can I still contest the grounds?

You can have the validity of the dismissal assessed and negotiate the terms of your departure at the same time. Note that in a claim for confirmation of status or for post-dismissal wages, your willingness and ability to work and any agreement you have already made are examined, so tell your adviser your real objective.

My RSUs vest next quarter. Can the end date be moved?

The end date is negotiable, but whether an extended end date satisfies the plan's conditions for the vesting date depends on the plan: check how the plan defines the end of service, whether garden leave counts, and who must approve a change. See Severance pay in Japan, section 3.

Related articles

• Position eliminated in a global restructuring: Laid off in Japan?
• Assessing and negotiating the package: Severance pay in Japan
• On a PIP: Put on a PIP in Japan?
• Asked to leave: Asked to resign in Japan?
• Fixed-term contract not renewed: Contract not renewed?
• Told you are dismissed: Fired in Japan?
• Is the dismissal valid: Unfair Dismissal in Japan — Advice for Employees

Discuss your situation
We represent English-speaking employees of foreign-capital (gaishikei), multinational and Japanese companies in negotiations with employers, labour tribunal proceedings and litigation — whether you want to keep your job or to negotiate the terms of your departure. The first 30 minutes of your initial consultation are free; see our consultation terms.

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References

• Labour Contract Act, Arts. 7, 10, 12, 16, 17(1) and 19
• Labour Standards Act, Arts. 20, 21, 22 and 106
• Civil Code, Arts. 522 and 536(2)
• Act on General Rules for Application of Laws, Art. 12
• Code of Civil Procedure, Arts. 3-4(2) and 3-7(6); Arbitration Act, Supplementary Provisions, Art. 4 (a special rule for arbitration agreements concerning future individual labour disputes)
• Labour Tribunal Act, Arts. 1 and 2; Court Act, Art. 74

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.