Litigation & Dispute Resolution

Employment Disputes in Japan: A Guide for Employers

Employment disputes in Japan tend to surprise companies whose experience is elsewhere. A dismissal that would be routine in another jurisdiction may not be effective here, notice and severance do not make it so, and a single employee can bring a union to the table. The forums are unfamiliar as well: a tribunal that usually finishes within a few hearings, an administrative body that inspects rather than adjudicates, and a commission that deals only with union matters.

The first document to arrive — a demand letter, a tribunal application, a request to bargain, a notice of inspection — also carries the shortest deadline, and what is done in the first days often determines the range of outcomes available later.

This page is written for employers: the Japanese company and, where there is one, the parent that has to understand what is happening. It sets out the first steps, how the main categories of dispute are judged under Japanese law, the procedures through which they are resolved, and what collective bargaining and administrative inspection involve. Advice for employees on dismissal is dealt with separately in “Unfair Dismissal in Japan — Advice for Employees”.

What to check first

The following are the points to establish when a claim, an application or a demand arrives. An enquiry at an early stage, before a position has been taken, is welcome.

What has been received, and by when a response is due — the document itself, the identity of the sender, and any date for a hearing or a reply. Some deadlines are short and are set by the tribunal or the court rather than by the other side.
The employee’s status and history — the form of the contract, the period of employment, the position held, the wage structure, and any warnings, transfers or changes of duties along the way.
What actually happened — the sequence of events, who was involved, and what was said and by whom, distinguishing what can be evidenced from what is recollected.
The documents that exist — the contract of employment, the work rules and any wage regulations, attendance and payroll data, evaluation records, notices given to the employee, and internal correspondence.
The employee’s current position — whether they are working, absent or have left, and whether anything needs to be done now about their duties, their access, or the safety of those around them.
Who is handling it — who inside the company decides, who speaks to the employee, and who communicates with a union, an authority or the other side’s lawyer. Where an overseas parent is involved, what is reported upwards and in what form.
Anything already said or offered — statements made in a meeting, a figure mentioned, or a document already provided. These are difficult to withdraw and shape what follows.
Whether the same issue extends to others — where the dispute concerns wages, working hours or a rule of general application, whether the position is the same for other employees.

Where a matter is already under way, we start from where it stands rather than from the beginning.

Contents

The first days, and the forum you are in
The main categories, and how Japanese law judges them
Negotiation, the labour tribunal and litigation
Collective bargaining and the labour commission
Labour standards inspection offices
How we work with you
Frequently Asked Questions

The first days, and the forum you are in

Identify the deadline before anything else

The first task is not to decide the merits but to establish what has arrived and what it requires. A letter from a lawyer may set its own date for reply, which is negotiable. A labour tribunal application does not: the court fixes the first hearing and the date by which the employer’s written response and evidence must be filed, and that period is short. A request for collective bargaining, and a notice from a labour standards inspection office, each carry their own expectations. Establishing which of these you are dealing with, and what the timetable is, comes before any view on whether the claim is well founded.

Preserve the material while it is still complete

Attendance and payroll data, the contract, the work rules in force at the relevant time, evaluation records, notices given to the employee and internal correspondence are gathered at the outset. Two points matter more than completeness. The version of the work rules that applied at the time, rather than the current version, is often the relevant one. And what is recorded is separated from what is remembered: a chronology built from documents can be relied on, while one built from recollection tends to move as the case develops.

The forums, and how they differ

Employment matters in Japan are dealt with in several different places, and they are not alternatives to one another in any simple sense. The same underlying facts can produce a tribunal application, a demand to bargain and an inspection, at the same time and to different standards.

Forum	Who brings it	What it decides	What it means for the employer
Direct negotiation and administrative conciliation	The employee, or a lawyer acting for them.	Nothing is decided; the parties may reach an agreement.	The terms and the wording of any settlement matter, including what is covered and what is released.
Labour tribunal	Either party to an individual civil employment dispute, by application to the district court, although applications are most commonly made by employees.	A panel of one professional judge and two tribunal members with specialised knowledge and experience of employment relations examines the case, usually over a small number of hearings, and proposes a resolution; failing that, it issues a determination.	The written response and the evidence are due on a short timetable set by the court, and the case moves quickly once it starts.
Litigation	Either party. Litigation also follows automatically where a timely objection is made to a labour tribunal determination.	The court determines the claim, with fuller pleadings, documentary evidence and, where necessary, examination of witnesses.	A longer process, in which the contemporaneous records nevertheless remain central.
Provisional disposition	A party applying separately, before or during the principal proceedings.	Interim protection, granted on a prima facie showing of the right to be preserved and of the need to avoid substantial harm or imminent danger.	The response is required on a shorter footing than in ordinary litigation.
Collective bargaining and the labour commission	A union, which may be one the employee joined recently and which may have only that one member at the company.	Bargaining itself decides nothing; the labour commission adjudicates applications for administrative relief from alleged unfair labour practices.	Refusing to bargain without justifiable reason is itself a problem, separate from the merits of the underlying dispute.
Labour standards inspection office	The authority, on inspection or following a report.	Compliance with the legislation within its jurisdiction; guidance and corrective recommendations may follow.	Not a forum for resolving the individual dispute, but findings there affect the wider position.

Which of these arise depends on the case, and more than one may run at the same time.

The main categories, and how Japanese law judges them

Dismissal, non-renewal and discipline

This is where expectations formed elsewhere are most often wrong. Under Japanese law a dismissal that lacks objectively reasonable grounds, and that is not regarded as appropriate in general social terms, is an abuse of the right to dismiss and is void. Two consequences follow. Giving notice, or paying in lieu of it, does not make a dismissal effective — it satisfies a different requirement altogether. And a dismissal held void does not convert into a payment: the employment relationship is generally treated as having continued. The employee may also be entitled to pay for the intervening period, although how much and for how long can be affected by matters such as the employee’s ability and willingness to work and any earnings obtained elsewhere in the meantime.

What is examined is therefore the substance and the process: what the employee actually did or failed to do, whether the employer raised it with them, what opportunity to improve was given, whether lesser measures were considered, and whether comparable cases were treated the same way. Where the reason is economic rather than personal, the courts assess the necessity of the reduction, the efforts made to avoid dismissals, the reasonableness of how those affected were selected, and the adequacy of the explanation and consultation. A disciplinary dismissal requires a sufficient basis in the work rules that apply, and is assessed in light of the facts established, the procedure followed, and whether the measure is objectively reasonable and socially acceptable. As a general rule, a disciplinary measure cannot validly be imposed unless the type of misconduct and the measure itself have a basis in work rules that apply and have been properly communicated to employees.

For fixed-term employment, the question is different but related. Where the relationship has in substance become continuous, or where the employee had reasonable grounds to expect renewal, and the employee applies within the required period for renewal or for the employment to continue, the employer may not refuse without objectively reasonable grounds that are regarded as appropriate in general social terms. Where a refusal fails that test, the contract is treated as renewed on the same terms. The history of renewals, what was said at each of them, and how the contract was administered in practice all bear on whether the statutory conditions are met.

Unpaid wages and overtime

Claims for unpaid overtime are common, and the same issues recur. Whether time counts as working time turns on whether the employee was under the employer’s direction or control, so the question is not only how hours were recorded but whether the attendance, access, system and self-reported records actually capture that time. For a fixed allowance said to cover overtime, what matters is whether its amount and its scope are clearly identifiable and distinguishable from ordinary wages, and whether any shortfall against the premium pay actually due was paid. The allowances that belong in the base for calculating premium pay are examined separately. And where employees are treated as managerial, whether they genuinely qualify is assessed by reference to their responsibilities, their authority, their involvement in management, their discretion over their own working time and their remuneration — not the job title. Even where an employee does qualify, the entitlement to late-night premium pay remains.

Some claims arise from one employee’s own working pattern, but the arrangements in question often apply to others as well, in which case a single claim raises a question about the workforce and not only about the individual. Whether that wider question is addressed, and how, is a decision in its own right.

Harassment

Japanese law requires employers to take measures against harassment in the workplace, including having a route for complaints, investigating them and responding. Two distinct questions arise when a complaint is made: whether the conduct occurred and how it should be characterised, and whether the employer’s own response was adequate. An employer can face liability on the second even where its conclusion on the first was defensible.

The investigation therefore matters in its own right. Who conducts it, how the parties and witnesses are heard, how the outcome is recorded, and how the complainant is protected from detriment, are all examined later. A separate question is the disciplinary measure, if any: the same proportionality analysis applies as elsewhere.

Resignation, leave and return to work

Disputes also arise around the end and the interruption of employment: whether a resignation was genuinely voluntary or effectively required, how sick leave under the work rules operates and what happens when it expires, and whether an employee is fit to return. Where the employer’s position depends on a medical assessment, the basis on which that assessment was obtained and what it actually says are usually more important than its conclusion.

Workplace accidents and the duty of care

Workers’ accident compensation insurance and a civil claim against the employer are separate things. A finding by the insurance system does not determine the civil claim, and the absence of one does not dispose of it. The civil claim is founded on the employer’s duty to take care for the safety of its employees — a duty that extends to health as well as to physical safety, and that in overwork and mental health cases is examined against what the employer knew or should have known about the employee’s hours and condition.

Negotiation, the labour tribunal and litigation

Negotiation and conciliation

Many matters are resolved without a formal procedure, through correspondence between lawyers or through administrative conciliation. What is said at this stage is not preliminary in any practical sense: an admission, or a figure mentioned to see how it lands, is difficult to withdraw. Where a settlement is reached, the scope of what is released, the treatment of confidentiality, the characterisation of the payment for tax and social insurance purposes, and the position on the employee’s record are all settled in the document rather than left to be worked out afterwards.

The labour tribunal

The labour tribunal is a procedure that may be unfamiliar to an overseas employer, and one that is easy to underestimate once the court has set the timetable. A panel of one professional judge and two tribunal members with specialised knowledge and experience of employment relations examines the case, ordinarily over a small number of hearings. Either party to an individual employment dispute may apply, although in practice most applications are made by employees. Much of the substantive work happens in the employer’s first written response and the evidence filed with it, on a timetable set by the court; there is little scope to develop the case as it goes along. The panel will usually explore a resolution, and where none is reached it issues a determination. Either party may file an objection within the statutory period; a timely objection causes the determination to lose effect, and the case is then treated as ordinary litigation deemed to have been commenced when the tribunal application was filed.

The practical implication is that the decision about how to approach the case has to be taken at the beginning, with the evidence that exists at that point. Where an overseas parent needs to be consulted before a position is taken, that consultation belongs in the first days.

Litigation and provisional dispositions

Ordinary litigation allows fuller pleadings and documentary evidence and, where it is necessary, the examination of witnesses; it takes correspondingly longer. A provisional disposition is a separate application, made before or during the principal proceedings, and it is not granted on the strength of need alone: the applicant must make a prima facie showing both of the right to be preserved and of the need for interim protection to avoid substantial harm or imminent danger. In each of these the contemporaneous records remain central, and inconsistencies between what was said early and the case advanced later are exposed.

Deciding what outcome to aim for

Whether to resolve a matter and on what terms is a commercial decision informed by a legal assessment, and the two are worth keeping distinct. The assessment covers the strength of the position on the documents, the exposure if the claim succeeds, the effect on other employees where the same arrangements apply to them, and what each route would require in time and attention. We set out that assessment rather than a prediction of the outcome, and the decision remains the company’s.

Collective bargaining and the labour commission

A single employee can bring a union

Employers new to Japan are often surprised that a company with no union can receive a demand to bargain. An employee may join a union outside the company — frequently a regional or general union — at any point, including after a dispute has begun, and that union may then seek to bargain about that employee’s case. The absence of a union inside the company, and the fact that only one employee is a member, are not answers.

Refusing to bargain without justifiable reason is an unfair labour practice, and it is assessed separately from the merits of the underlying dispute. So is conduct that amounts to bargaining in form but not in substance. The obligation is to bargain in good faith about the subjects concerning the represented employees that the employer is in a position to resolve; it is not an obligation to accept the union’s proposals, nor does it extend to everything a union may raise. What follows is that the response to the demand is itself a question requiring care.

How the bargaining is conducted

Practical matters — who attends for the company, the venue, the duration, whether the meeting is recorded — are settled in advance rather than at the door. What the company can say, and the basis for it, is prepared: an explanation supported by documents is more useful than a refusal to engage, and a figure produced without a basis is worse than either. Where a proposal is made, the person attending needs to know what they may agree to.

Records and any agreement

What was discussed and what was said are recorded after each session, and any point of agreement is identified precisely. An agreement reached with a union may have effects beyond the individual case, so the scope of what is agreed — whether it concerns one employee or a rule of general application — is made explicit in the document.

Applications to the labour commission

Where a union applies to a labour commission alleging an unfair labour practice, the commission adjudicates an application for administrative relief; it is not determining the underlying civil dispute. What it examines is the employer’s conduct: whether bargaining was refused or conducted without substance, and whether any detriment followed from union membership or activity. The response is built on the record of what was actually done at each stage, which is a further reason for keeping that record as the matter proceeds rather than reconstructing it afterwards.

Labour standards inspection offices

What an inspection is, and is not

A labour standards inspection office supervises compliance with the legislation within its jurisdiction, which includes the Labour Standards Act, the minimum wage legislation and the occupational safety and health requirements — not employment law at large. It may inspect on its own initiative or following a report, and it may require documents and explanations. It is not a forum for resolving the individual dispute, and it does not determine the civil claim; but what it finds, and what the employer does about it, affect the wider position.

Responding to enquiries and producing documents

The scope of what is requested is established before material is produced, and what is produced is consistent with the records themselves. Where the employer is aware that its practice diverges from the requirement, explaining that with the intended remedy is generally better than presenting a position the documents do not support. Where corrective guidance is given, the remedy, the treatment of past periods and the timetable are worked out together rather than separately.

Workers’ accident investigations

Where an accident or an illness is under investigation for insurance purposes, the employer will be asked for its account of hours worked and working conditions. That account should match the underlying records, and it should be prepared with an awareness that a civil claim founded on the duty of care may follow and will be assessed against the same material.

How we work with you

Experience of how these cases are decided

Our lawyers include a former judge with experience of hearing employment cases. That background informs how we assess a matter: which points the documents will actually carry, where the record is thin, and what the realistic range of outcomes is — set out as an assessment rather than as a prediction.

What we do

Assessment and strategy — establishing the facts from the documents, identifying the issues that will decide the matter, and setting out the options with what each involves.
Correspondence, negotiation and settlement — responding to demands, conducting negotiations, and drafting settlement documents that deal with scope, confidentiality and the treatment of the payment.
Tribunal, litigation and provisional dispositions — the written response and evidence, attendance at hearings, and the conduct of proceedings through to their conclusion.
Unions and the labour commission — the response to a demand to bargain, preparation for and attendance at bargaining sessions, and applications alleging unfair labour practices.
Inspections and investigations — responding to labour standards inspection offices and to investigations concerning workplace accidents.
What follows — implementing what has been agreed or decided, and revising the contracts, work rules and practices that produced the dispute.

Working with a group outside Japan

Where the Japanese company is part of an international group, part of the work is explaining the position in terms the group can use: why an outcome that would be straightforward elsewhere is not available here, what the exposure actually is, and what decision is needed by when. We work in English with the parent’s legal and human resources functions alongside the Japanese company. Where the matter forms part of a wider dispute, the general framework is set out in “Litigation and Dispute Resolution”.

Frequently Asked Questions

We have received a labour tribunal application. What do we do first?

Identify the date of the first hearing and the date by which the employer’s written response and evidence must be filed, because that period is short and the case moves quickly once it begins. Then gather the contract, the work rules in force at the relevant time, attendance and payroll data, and the notices and correspondence exchanged with the employee, and establish the chronology from those documents. The approach to the case has to be settled at this stage; there is limited scope to develop it later. Where an overseas parent must be consulted, that happens now rather than after the first hearing.

We want to dismiss an employee whose performance is poor. Can we?

It depends on considerably more than the performance itself. A dismissal lacking objectively reasonable grounds, and not regarded as appropriate in general social terms, is void — and a void dismissal does not convert into a payment; the employment is treated as having continued. What is examined is whether the problem was raised with the employee, what opportunity to improve was given, whether lesser measures were considered, and whether comparable cases were treated alike. Notice, or payment in lieu, satisfies a separate requirement and does not make a dismissal effective. It is worth taking advice before acting rather than afterwards.

A former employee is claiming unpaid overtime. Do we have to pay what is claimed?

Not necessarily, and the amount claimed is usually built on assumptions that can be examined. The questions are whether the time counted as working time because the employee was under the employer’s direction or control and whether the records capture it, whether any fixed allowance said to cover overtime is clearly identifiable and distinguishable from ordinary wages and whether any shortfall was actually paid, which allowances belong in the base for premium pay, and whether an employee treated as managerial genuinely qualifies — bearing in mind that late-night premium pay is due even where they do. The same arrangements may also apply to other employees, so a claim of this kind may raise a wider question about the workforce as well as an individual dispute.

An employee has complained of harassment. How should the investigation be run?

Two things are examined afterwards: whether the conduct occurred, and whether the employer’s response was adequate. The second is a separate source of liability, so the investigation is conducted on the footing that it will be reviewed. Who conducts it, how the parties and witnesses are heard, how the findings and their basis are recorded, and how the complainant is protected from detriment all matter. Any disciplinary measure is a further question, assessed against the grounds in the work rules and the proportionality of the measure.

A union we have never dealt with is demanding to bargain about one employee. Must we?

Generally yes. An employee may join a union outside the company at any time, including after a dispute has started, and that the union has only one member at your company is not an answer. Refusing without justifiable reason is an unfair labour practice, assessed separately from the merits of the dispute, as is bargaining in form without substance. Agreeing to bargain is not agreeing to the demands: what matters is that the response, the conduct of the sessions and the record of them are handled with care.

A labour standards inspection office has contacted us. How should we respond?

Establish the scope of what is being asked and produce material consistent with the underlying records. The office supervises compliance with the legislation within its jurisdiction — the Labour Standards Act, the minimum wage legislation and the occupational safety and health requirements among them; it is not resolving the individual dispute and does not determine a civil claim, but its findings and the employer’s response to them affect the wider position. Where practice has diverged from the requirement, explaining that together with the intended remedy is usually better than advancing a position the documents will not support. Where corrective guidance is given, the remedy, the treatment of past periods and the timetable are considered together.

This page sets out general legal issues arising in employment disputes in Japan, from the employer’s side, and is not legal advice on any particular matter. The applicable legislation, subordinate regulations, guidelines and case law are subject to change, and the outcome of any matter depends on its own facts. In any case, the law and the practice applying at the time must be confirmed for the employer and the circumstances concerned.

Contact

For Companies Facing an Employment Dispute

Please let us know the outline of the claim or demand, the type of document you have received, and any hearing dates or deadlines for response. After checking for conflicts of interest and reviewing the matter, we will advise whether and how we can assist.

Sending an enquiry does not by itself mean that we have agreed to represent you or to manage any deadline.

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.