Unfair Dismissal in Japan — Advice for Employees

1. Dismissal and Resignation under Japanese Law

Dismissal, requests to resign and contract expiry

Japanese law does not follow the "at-will" model. An employer's notice of dismissal, or a request that you resign, does not by itself settle the legal position. Three situations need to be kept apart: a dismissal, which is the employer's unilateral termination of the contract; a resignation, which may take effect through your own notice, or an agreed departure, which requires agreement between you and the employer; and the expiry of a fixed-term contract, which raises its own questions about renewal. On this page, "unfair dismissal" is used as a general description of disputes over whether a dismissal is valid under Japanese law, not as a reference to the statutory claims of that name in other countries.

When a dismissal may be invalid

Under the Labor Contracts Act, a dismissal that lacks objectively reasonable grounds and is not considered appropriate in general social terms is treated as an abuse of the right to dismiss and is invalid. The assessment is case-specific. Depending on the reason for dismissal, relevant factors may include the reasons the employer relies on, whether those reasons are supported by the record, the seriousness of any conduct or performance issue, whether the employer gave guidance and a realistic opportunity to improve, whether less drastic measures were considered, and whether the procedure followed was fair. A contractual termination clause, or the fact that a notice was given, does not decide these questions. Equally, it is not correct that employees in Japan cannot be dismissed; the question is whether the particular dismissal meets the legal standard.

Notice and payment in lieu of notice

As a rule, an employer must give at least 30 days' notice of dismissal or pay average wages for the shortfall. This is a separate requirement from the validity of the dismissal itself. Payment in lieu of notice does not, by itself, establish that a dismissal is valid under Japanese law. A payment in lieu of notice should also be distinguished from a settlement payment made as part of an agreed departure.

Probation, fixed-term contracts and managerial roles

Probation does not allow dismissal at will. The assessment takes account of the purpose of probation, but dismissal or refusal to confirm employment must still have objectively reasonable grounds and be appropriate in the circumstances. Dismissal before a fixed term expires requires unavoidable circumstances. Non-renewal may also be restricted where repeated renewals make it effectively equivalent to dismissal from indefinite-term employment, or where there are reasonable grounds to expect renewal. The reasons for non-renewal and whether you sought renewal before expiry or a further contract without delay afterwards must be considered. Managerial or senior titles do not remove these protections; what matters is your actual position under the employment contract and the nature of your duties. Where your employer is a foreign company, or your contract is in English or refers to foreign law, the applicable law and the mandatory rules of Japanese law that apply to work performed in Japan need to be checked rather than assumed.

2. Before You Sign or Respond

Performance improvement plans (PIPs)

A PIP is a process of evaluation and guidance, and what follows it must be assessed on its own merits. The existence of a PIP, or a finding that its targets were not met, does not in itself determine whether a later dismissal is valid. Relevant questions include whether the targets were clear and realistic for your role, how performance was measured, what support was offered, how you responded, and how the outcome was communicated. Keep the plan, the assessments and your own responses, and respond to the plan in writing where you disagree with its contents.

Resignation letters, separation agreements and releases

Documents presented at the end of employment serve different purposes, and it is important to read them for what they actually do. A document may merely acknowledge receipt of a notice; it may record your consent to resign; it may release the employer from all claims; and it may impose confidentiality, non-disparagement or non-competition obligations. A request to resign is not a dismissal, and a resignation or separation agreement that you sign will generally be treated as your agreement. Whether an agreement can later be challenged depends on its content and on how it was concluded. It is not the case that signing always makes a challenge impossible, nor that feeling pressured always makes an agreement invalid. If you are asked to sign, you may ask for time to consider and for clarification of the terms.

Deadlines, records and your response

Several different deadlines may be in play at the same time: a response date set by your employer, statutory limitation periods for legal claims, court deadlines once proceedings have started, and immigration deadlines that arise independently of the employment dispute. These should be listed separately, and there is no single rule such as "you must act within a fixed number of days after dismissal." For fixed-term contracts, the timing of any request for renewal may also matter. While you consider your position, continue to follow lawful instructions about attendance and duties, keep your own records in a lawful manner, and avoid statements or actions that could later be characterized as consent or misconduct.

3. Possible Outcomes of a Dismissal Dispute

Continued employment and claims for unpaid wages

An invalid dismissal does not, by itself, end the employment relationship. A court claim may seek a declaration that you remain employed and payment of wages owed after the dismissal. Whether wages are recoverable, and in what amount, depends on the circumstances, including your ability and willingness to work and any earnings from another job. A judgment in your favor does not, however, guarantee a smooth return to your previous role; the practical arrangements for returning to work are a separate matter, and in practice many disputes are resolved on agreed terms.

Agreed departures and financial settlements

Many dismissal disputes end in an agreement under which the employment ends on an agreed date and the employer makes a payment. A settlement of this kind can be reached in negotiation, in labor tribunal proceedings or during litigation. The amount and terms depend on the strength of each side's position, the length of the dispute, your remuneration and other circumstances; there is no fixed formula, and a high salary does not in itself guarantee a high settlement. Ordinary litigation does not provide an automatic, formula-based payment simply because you prefer not to return to work. A labor tribunal may also issue a decision ordering payment, which is different from an agreed settlement.

Salary, bonuses, equity awards and other separation terms

For professionals and managers, the terms of departure often involve more than the end date and a settlement sum: unpaid salary and allowances, bonus entitlements, stock options or restricted stock units, retirement allowances, unused leave, the return of company property, references, and confidentiality or non-competition provisions. Each of these should be identified and dealt with expressly in any agreement, together with the tax treatment where relevant.

4. Negotiation, Labor Tribunal Proceedings and Litigation

Negotiation and conciliation

In many cases the first step is a written response to the employer setting out your position and, where appropriate, the terms on which you would be prepared to resolve the matter. Conciliation through the Labor Bureau is also available. Negotiation is not a required stage before court proceedings, and the choice of procedure depends on the issues, the evidence and your objectives.

Labor tribunal proceedings

Labor tribunal proceedings (rodo shinpan) are a court procedure for individual employment disputes, conducted at the District Court by a panel of one judge and two tribunal members with expertise in employment relations. The hearings are not public. The panel considers the parties' rights and the evidence while seeking a mediated settlement. If no settlement is reached, it normally issues a decision. Hearings are generally limited to three, although exceptions apply. A party wishing to object must file with the court within two weeks of service of the decision or its oral announcement at a hearing. A valid objection makes the decision ineffective and the case proceeds to ordinary litigation. Without a valid objection, the decision has the same effect as a court settlement. This objection procedure does not apply to an agreed settlement. Labor tribunal proceedings are not a form of arbitration and are not a shortened version of an ordinary lawsuit.

Litigation and interim relief

Ordinary litigation allows a full examination of the evidence and results in a judgment that can be appealed. It generally takes longer, often a year or more at first instance, and settlements are frequently reached during the proceedings. In some cases, an interim order requiring wage payments may be sought while the dispute continues. The application must be supported by evidence of both the underlying wage entitlement and the need for temporary relief, for example to meet necessary living expenses. The court considers whether relief is justified and, if so, its amount and duration. Negotiation, labor tribunal proceedings and litigation are not steps that every case must pass through in order; the appropriate route is chosen for each case.

Timing, interpretation and document translation

Proceedings in Japanese courts are conducted in Japanese. Communication with us can take place in English, but court submissions are prepared in Japanese. Foreign-language documents submitted as evidence generally require Japanese translations of the relevant parts. Interpretation must be arranged where needed for a party or witness to participate in the proceedings. Translation and interpretation requirements should be considered when planning the case.

5. Work, Income and Residence Status during a Dispute

Work instructions, access and pay

While a dispute is pending, your employer may instruct you not to attend the office, restrict your access to systems, or stop paying salary from the dismissal date. How you respond to these steps can affect the dispute, so it is worth confirming the position in writing and taking advice before, for example, refusing an instruction or leaving a notice unanswered.

Job changes and unemployment benefits

Taking up new employment during a dispute is possible, but it can affect the remedies available and the terms of any settlement, and should be considered with that in mind. If you are covered by employment insurance, you may be able to receive unemployment benefits; the conditions depend on your insurance record, the recorded reason for leaving and your job-seeking status, and should be confirmed with the Public Employment Security Office (Hello Work). Challenging a dismissal does not automatically prevent you from receiving benefits. Tell Hello Work that the dismissal is disputed and ask whether conditional payments are available. Depending on the outcome, benefits may have to be repaid, including where employment is restored or wages are paid retrospectively.

Residence status and immigration notifications

Check your residence status, expiry date and any notification requirements separately from the employment dispute. Do not assume that challenging a dismissal extends your permission to stay or work in Japan. Holders of many work-related statuses of residence must notify the Immigration Services Agency within 14 days of leaving their employer, and a prolonged period without the activity permitted by the status can have consequences for the status itself, depending on the circumstances. Neither "you lose your status as soon as you leave your job" nor "nothing needs to be done for three months" is a safe assumption. This page addresses only general immigration considerations. Advice on your specific residence status and any application or notification should be obtained separately.

6. How Our Firm Can Assist

Reviewing the evidence and your objectives

We review the documents you have received and the record of events, identify the legal issues, and give you an assessment of the grounds for challenging the dismissal or for negotiating the terms of departure. We distinguish between what the documents show and what would need to be established, and we discuss with you what outcome you are seeking, whether that is continued employment or an agreed departure on acceptable terms.

Advising on agreements and representing you in disputes

We advise on the meaning and effect of resignation letters, separation agreements and releases before you sign them, and we prepare responses to your employer. Where the matter proceeds, we represent you in negotiations, in labor tribunal proceedings and in litigation, including the preparation of Japanese-language submissions and evidence, and we assist with the practical arrangements for translation and interpretation.

Initial enquiries and the scope of representation

Before deciding whether we can act, we carry out a firm-wide conflict-of-interest check based on the parties involved and our existing and previous client relationships and consultations. If we accept the matter, we confirm the scope of our work in writing. Immigration applications and other immigration procedures are not included unless expressly agreed.

Frequently Asked Questions

Contact

Enquiries

Please tell us, as far as you can, your position and employer, what has happened so far, any documents you have been asked to sign, and any deadlines you have been given.

Contact us about a dismissal

We assess whether we can act after checking for conflicts of interest and reviewing the circumstances of the matter. Sending an enquiry does not by itself mean that we have agreed to represent you or take responsibility for 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.