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Terminations in Japan: A Guide for Employers

A country’s policy toward employee termination will often depend on how the employer-employee relationship is viewed.  In Japan, many workers will remain with the same employer for many years, and expect the same loyalty in return.  Because of this business culture, employee terminations are not favored when initiated by the employer, and will require justification.

If you are considering hiring a Japanese employee, this guide will explain what to expect if you want to terminate them at some point.

On what grounds can you terminate an employee in Japan?

Japan has a very stringent termination policy which makes it difficult to dismiss employees except under extreme circumstances.  Failure to show some reasonable grounds for the dismissal will be deemed an ‘abuse of rights’ of the employee if they decide to make a claim.

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Dismissal for Cause

Justifiable cause for dismissal is a very narrow category and includes:

  • Incapacity due to health
  • Misconduct (theft, violence, insubordination)
  • Ongoing poor performance that could not be corrected

Negotiated Voluntary Resignation

Because termination cases are given close scrutiny by Japanese courts, many employers will negotiate a voluntary resignation with the employee to avoid confict.  This would include an agreed severance amount that will satisfy the employee and compensate for the termination.

Economic Circumstances

Dismissals are permitted due to the business and economic necessity of the employer, but those must be proven, as well as use of an appropriate dismissal procedure.

Can you terminate an employee in Japan without cause?

Generally, the termination will be declared invalid by a court if the dismissal lacks ‘reasonable’ grounds and is therefore not ‘socially acceptable’.  This is in sharp contrast to countries like the US with an ‘at will’ employment policy, where employees can be dismissed at any time and for almost any reason.

Client Case: What is the termination notice period in Japan?

Context: Our client with employees in Japan was wondering what the statutory termination notice period is in Japan for employers and for employees.

Solution: Shield GEO informed the client that 30 days is the standard statutory notice period in Japan for termination for employers. Payment in lieu of notice is permitted as well.  It is customary for employees to also give 30 days’ notice of resignation, but the statutory minimum is two weeks.

Do you need more information about Japan?

If you are new to hiring in Japan, you may have other questions such as:

If a termination is not for a justifiable cause, will a court force an employer to reinstate them?

What is a typical severance amount for a negotiated resignation?

Can employees who are ill or on maternity leave be terminated if there is a justifiable cause?

Issues like these face our clients frequently, and they rely on our guidance and in country experts to remain in compliance.  We make international employment simple.

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The information in this article is subject to changes in local legislation.

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