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Employment law in Japan – an overview

27 April 2017

Although its historically high economic growth has long since passed, Japan’s economy is still one of the largest in the world. This economic strength, combined with the fact that Japan is a relatively mature market in the Asia Pacific region with a rich and unique culture, means that Japan remains a popular place for Western companies to do business. This inbrief outlines some of the key areas of Japanese employment law relevant to businesses operating in Japan.

The employment law landscape

Japanese employment law is very employee friendly – some employment rights are even written into the national constitution!

The principal statutes regulating the employment relationship are the Labour Standards Act (“LSA”) (which sets out minimum conditions of employment) and the Labour Contracts Act (which codifies court decisions that are well accepted principles of Japanese law).

Arguably the most notable feature of Japan’s employment environment is its restrictive unfair dismissal laws. These laws afford a very high level of job security to permanent full time employees and have helped to contribute to the still prevalent (albeit weakening) concept of “lifetime employment” under which employees tend to stay in the one job. To circumvent the difficulties associated with dismissals, many Japanese employers are reluctant to take on permanent, full-time employees. Some estimates place up to two-fifths of Japan’s working population as non-permanent staff.

You can read the full in-brief by clicking 'download files' below.

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