Laid off in Japan? Redundancy dismissals and your options

What does "laid off" mean in your case?

• Even if the company calls it a layoff or redundancy, check whether you are receiving a notice of dismissal, a proposal to end employment by mutual agreement, or a temporary suspension of work (in English, "lay-off" can also mean a temporary suspension; for pay and status during a suspension, see Fired in Japan?). This article focuses on dismissal for business-related workforce reductions.
• If you work through a staffing agency (haken), the elimination of your position at the client company or the end of your assignment is separate from the end of your employment contract with the agency. Ask the agency how your future assignments and employment will be handled (see the agency-work section).
• Japan has no rule that allows dismissal simply because there is a business reason. A redundancy dismissal is invalid if it lacks objectively reasonable grounds and is not considered appropriate in general social terms (Labour Contract Act, Art. 16).
• If it is a request to resign, you are not obliged to agree (Asked to resign in Japan?). For assessing and negotiating a package, see Severance pay in Japan. Dismissal before a fixed-term contract ends is subject to a different standard (Labour Contract Act, Art. 17) (Employment contract not renewed in Japan?).

How redundancy dismissals are assessed in Japan

• (1) Need for workforce reduction: Is the business in a situation where reducing headcount is necessary? Even if the company as a whole is profitable, the poor performance of a division or a business reorganisation can be relied on, but the degree of necessity must be consistent with the scale of the cuts.
• (2) Efforts to avoid dismissal: Transfers, secondments, hiring freezes and voluntary departure schemes are examples of measures to avoid dismissal. There is no rule that all of them must be taken in a set order; the question is whether the employer considered the measures it could reasonably have taken in light of its size, the contract, available positions and the employee's abilities. "The position no longer exists" is not enough; whether reassignment to other duties was considered is important. Ordering a transfer outside an agreed limited scope of duties without your consent is different from proposing alternative duties and seeking your agreement. Even where duties or place of work are limited by agreement, that does not by itself mean the employer need not propose alternatives or consider measures to avoid dismissal.
• (3) Reasonableness of selection: Check whether the criteria for selecting those affected are objective and reasonable and were applied fairly. Selection that uses a reorganisation as a pretext to remove a particular individual is a problem, but the fact that only one person is affected does not by itself make the selection unreasonable.
• (4) Procedure: Did the employer explain and consult with employees or the union about the necessity, timing, scale and method? Whether or not you belong to a union, check what explanation and consultation you personally received; if you are a union member, also check the explanation and consultation with the union and compliance with any procedure in the collective agreement. In addition, check whether the work rules or collective agreement require prior consultation or consent, what they cover, and whether they were followed.
• Some courts treat these four points as requirements and others as factors to be weighed together. Either way, the starting point is to check the specific facts and the employer's conduct on each of the four points. For example, the fact that no voluntary departure scheme was offered does not by itself decide whether the dismissal is valid. If the case is litigated, the employer must plead and prove the specific facts that support the grounds for dismissal.

Global layoffs: your employer and applicable law

• First, confirm the official name of the company that is party to your employment contract. A Japanese subsidiary is a separate legal entity from its foreign parent, whereas a Japanese branch of a foreign company is not a separate entity — the foreign company itself is usually the employer.

• A headquarters decision to reduce headcount (sometimes called a RIF, or reduction in force) does not by itself make a dismissal valid. Nor is a dismissal necessarily invalid because the Japan business is profitable. Check specifically who the employer is, how the business is structured, the concrete need for the reorganisation, why people in Japan are being cut, what alternatives were considered, and how other employees are being treated. Offering a package calculated under a global formula does not by itself make a dismissal valid; on the other hand, the compensation and outplacement support offered can, together with other factors, be relevant to whether the dismissal is valid (for whether to accept the terms, see Severance pay in Japan). If you are told the company is "withdrawing from Japan", check whether that means closing a division or branch, dissolving the Japanese subsidiary, or the employer ceasing business altogether. When looking at other roles, distinguish roles with the same employer from roles at a separate group company; an internal vacancy elsewhere in the group does not guarantee a transfer or hiring. If the company is leaving Japan, also check whether the employing entity will continue to exist, who is liable to pay unpaid wages or any agreed sum, and whom to contact and claim against afterwards. For payment terms and recovery, see the severance article.

• A contract with a foreign entity or a clause choosing foreign law does not necessarily exclude the protection of Japanese law. If the place where you provide your work under the contract is Japan, Japanese law is presumed to be the law most closely connected with the contract, and even where foreign law has been chosen, you can have specific mandatory provisions of Japanese law applied by expressing to your employer your intention that they apply (Act on General Rules for Application of Laws, Art. 12(1) and (2); where no law was chosen, Art. 12(3)). Separately, regulations such as the Labour Standards Act that apply to businesses in Japan cannot be avoided simply by agreeing to foreign law. Direct contracts with a foreign company that has no base in Japan, or work partly performed abroad, need to be examined individually against the contract and the actual working arrangements. See the severance article for more.

• One reason employers proceed by a request to resign with a package rather than a redundancy dismissal is the difficulty of satisfying the requirements for a redundancy dismissal. However, the fact that an offer has been made is not proof that the grounds for dismissal are weak.

Voluntary separation schemes and severance offers

• A voluntary departure scheme presupposes that applying is your free choice. Conduct that effectively forces you to apply raises the question of unlawful pressure to resign (Asked to resign in Japan?).
• When an application under a voluntary scheme becomes binding depends on the scheme documents and application form, how they were explained, and the exchanges before and after applying. Under some schemes the agreement is formed when the company accepts your application; under others, the application itself is your acceptance of the company's offer. Before applying, check whether company approval is required, whether you can withdraw, and the terms — the additional payment, end date, outplacement support and so on. If the scheme is limited to "applicants approved by the company", applying does not guarantee acceptance. If you have already applied, do not assume you can withdraw simply because the company has not replied; see section 6 of Asked to resign in Japan?.
• Not applying to a voluntary scheme does not by itself make a later redundancy dismissal valid. That the employer ran a scheme is one factor in assessing its efforts to avoid dismissal. Unreasonable scheme terms, or improper pressure to apply, are also taken into account.
• For checking and negotiating the contents of a package (how the additional payment is calculated, end date, paid leave, equity compensation, stated reason for separation, release of claims), see Severance pay in Japan.

What if your position is eliminated during probation?

• During probation, an employment contract has normally already been formed. Being on probation does not by itself make a dismissal for workforce reduction any easier. The right of termination reserved during probation exists to assess suitability after hiring; it is not a basis for easier business-related cuts.

• If the reason is position elimination, it is assessed from the redundancy perspectives: business necessity, measures to avoid dismissal, selection, and explanation and consultation. If you were hired only recently, also check the duties and business plans explained at hiring against the reason now given, what changed in between, and whether alternative roles were considered. The short time since hiring does not by itself decide whether the dismissal is valid.
• A "three-month probationary period" and a "three-month fixed-term contract" are different. Check whether your contract has a fixed term, and whether the end date you have been given falls during the term or at its expiry.
• Even during probation, once you have been employed for more than 14 days, the employer must in principle give 30 days' notice or pay average wages for the shortfall in notice (Labour Standards Act, Arts. 20 and 21). Within the first 14 days, the validity of the dismissal is still assessed separately.
• For the general standards on dismissal during probation and refusal of regular employment, see "Unfair Dismissal in Japan — Advice for Employees".

What to ask and document before responding

• Asking the company for an explanation, or waiting for its reply, does not by itself extend the deadline for responding to the terms offered. If you need more time, ask for an extension and confirm whether it has been granted (Asked to resign in Japan?).
• Confirm in writing whether you are receiving a notice of dismissal, a request to resign, or an invitation to apply for a voluntary scheme. If it is a dismissal, request a certificate stating the reasons for dismissal (Labour Standards Act, Art. 22).
• Ask the company three things: why the reduction is necessary, why you were selected, and whether other roles were considered. Record the answers. If you are offered another role, check whether it is a proposal or a work order, how the employer, duties, place of work and pay would change, and the deadline for your reply; record your own reply and reasons as well.
• Collect, to the extent you can lawfully obtain and keep them: the reorganisation or closure notice, organisation charts before and after, the explanation of selection criteria, internal job postings and vacancies for similar roles, transfer proposals and your replies, and the voluntary scheme documents.
• If you do not agree to leave, say so in writing. If you are considering a package, distinguish "considering" from "agreeing".
• For the ways to contest a dismissal, wage claims after dismissal, unemployment benefits and immigration procedures, see "Unfair Dismissal in Japan — Advice for Employees" and Fired in Japan? What to do next. If you may contest the dismissal, seek advice early, because you will need to secure evidence and plan for living costs.

Terminology used in this article

• layoff — used as the company's or reader's term; check whether it means a permanent end of employment or a temporary suspension
• redundancy dismissal — introduced as dismissal for business-related workforce reductions (seiri kaiko); not equated with UK-style redundancy
• RIF (reduction in force) — a workforce-reduction programme; the label, or a headquarters decision, does not by itself make a dismissal valid under Japanese law
• restructuring — business reorganisation (does not necessarily involve dismissals)
• position elimination — does not automatically end the employment contract
• voluntary separation — the company's name for its scheme (legally, termination by mutual agreement or similar)
• early retirement — limited to schemes based on age or retirement timing (a general scheme is a voluntary departure scheme)
• furlough — temporary suspension with employment maintained (not necessarily unpaid)
• garden leave — release from work while employment continues (distinguish last working day, end date and pay)
• WARN — not used for Japanese rules (the US federal WARN Act excludes foreign sites: 20 CFR 639.3(i)(7))

Related articles

• The whole picture on validity and procedure: Unfair Dismissal in Japan — Advice for Employees (existing guide)
• Asked to leave: Asked to resign in Japan?
• Assessing the package: Severance pay in Japan
• Right after a dismissal: Fired in Japan? What to do next
• Non-renewal and agency work: Employment contract not renewed in Japan?

Discuss your layoff and options with an employment lawyer — We review the company's explanation and documents and assess the need for cuts, alternatives, selection and procedure.

References

• Labour Contract Act, Art. 16 (validity of redundancy dismissals) and Art. 17(1) (dismissal during a fixed term)
• Labour Standards Act, Arts. 20 and 21 (notice of dismissal and the probation exception) and Art. 22 (certificate of reasons for dismissal)
• Act on General Rules for Application of Laws, Art. 12 (paragraphs 1 and 2 where foreign law is chosen; paragraph 3 where no law is chosen)
• Worker Dispatching Act, Art. 2(i) (the employment relationship in agency work; Arts. 29-2 and 30 are covered in the non-renewal article)
• Supreme Court, Second Petty Bench, 26 April 2024 (2023 (Ju) No. 604; Shumin No. 271, p. 109): no authority to order a transfer contrary to an agreed limitation on duties
• MHLW, Employment Guidelines (koyo shishin), survey of case law on redundancy dismissals (pp. 27–30)
• Reference cases (with limits): Toyo Sanso case (Tokyo High Court, 29 October 1979, Rodo Hanrei No. 330, p. 71); Royal Insurance Public Limited Company case (Tokyo District Court, 31 July 1996, Rodo Hanrei No. 712, p. 85); Singapore Development Bank case (main action) (Osaka District Court, 23 June 2000, Rodo Hanrei No. 786, p. 16)
• Both the "four requirements" and "four factors" approaches exist in the case law; no trend is asserted. The Kyushu Nissei Denki case is not listed because the full text has not been checked

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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