Japan – Additional conditions to be specified in employment contracts

What’s new?

From 1 April 2024, employers will be required to specify further working conditions in employment contracts.

Currently, the Labor Standards Act stipulates that employers must make certain working conditions (such as wages, working hours etc.) explicit to a worker when entering into a contract of employment. Once the changes come into effect, employers will also need to specify the work location and duties for all employees and certain specific conditions for fixed-term employees around contract duration, renewals and the right to convert to an indefinite term contract.

What are the additional conditions?

  1. Changes to work location and duties – Employers must include in all employment contracts (whether for indefinite term or fixed-term employees) provisions which detail the place of work and duties and any future possible changes which may be made to them.
  2. Contract duration and number of renewals – Employers must specify in fixed-term contracts if there is a maximum duration to the contract and/or the number of times it may be renewed. If once a contract has been concluded the employer decides a change needs to be made to these terms, the reason for the change must be communicated to the employee before this can be implemented.
  3. Opportunity to apply for indefinite conversion – Employers must include a provision in fixed-term contracts that employees can apply for their definite-term contract to be converted to an indefinite employment contract once they have obtained the right to do so. This right arises for fixed-term employees with a contract with a defined period of at least 5 years.
  4. Working conditions after indefinite conversion – If a fixed-term contract is renewed when the employee was entitled to apply for a conversion to an indefinite term contract (see above) employers must expressly state that they have the right to apply for a conversion each time their contract is renewed and what the working conditions would be after the conversion.

So, what should employers do now?

Employers should review their template contracts and prepare to amend them in line with the additional conditions so that they are compliant once these changes come into effect. If you need any support with this, or would like any further information, please get in touch with a member of the MDR ONE team.

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