Japan Business Law: Basic Information on Employment Regulations

In Japan, as working-style reforms are stipulated as governmental policy, it is said that companies without employment regulations are at increased risk with regard to labor issues.

According to Article 120 of the Labor Standards Act, companies that employ more than 10 regular employees are obliged to create employment regulations, and if neglected, a fine of no more than 300,000 yen will be imposed.


Therefore, it is urgent for all companies to formulate and review appropriate employment regulations.

On the other hand, it is hard to find an accurate explanation on “what employment regulation are”.

What are Employment Regulations?


First, let’s look at Article 6 of the Labor Contract Act.

“A labor contract shall be established by agreement between a Worker and an Employer on the basis that the Worker will shall work by being employed by the Employer and the Employer shall pay wages for such work.”

It is a basic principle that the content of a contract between a company and a worker is determined by agreement.

However, in the following Article 7 “, it is written as follows.

“In cases where a worker and an employer conclude a labor contract, if the employer had informed the worker of the rules of employment that provide for reasonable working conditions, the contents of the labor contract shall be based on the working conditions provided by such rules of employment; provided”

Therefore, (1) reasonable employment conditions, (2) if the workers are informed, the content of labor contract will be the content stipulated by the employment regulations.


There is an important rule in (1) the rationality and (2) notice.

If the employment regulations are disadvantageous for the employee compared to the laws such as the Labor Standards Act, the disadvantageous part becomes invalid (Article 13 of the Labor Contract Act).


For example, even if employers in their employment regulations, set a wage below the minimum wage, that part will be deemed invalid.

Therefore, in general, employment regulations are made with reference to the standards of each law, including the Labor Standards Act.

For that reason, at the time of work regulation formulation, (1) the rationality will not be a big problem.
Of course, if employment regulations specialized for risk management are required, careful consideration for wording, strict risk prediction, and planning are required.


On the other hand, (2) notice is often a problem.

For managers who say that their “employment regulation documents are in stored in the safe”, please ensure that it is possible for all employees to read the documents.
The “notice” need to be “practical” in that “employees can read the employment regulations anytime”. Many business owners are hesitant to show their employment regulations, but unless the provide notice, when employees commit a fraud, the owner may not be able to impose disciplinary action, or not be able to do anything even if employees refuse dispatch orders.


What if Labor Contract Differs from Employment Regulations?


If the content of a labor contract and work regulations are different, what should be done?

In Article 7 of the Employment Contract Act, the following statement is written.

“However, that this shall not apply to any portion of the labor contract in which the worker and the employer had agreed on working conditions that are different from the contents of the rules of employment, except in cases that fall under Article 12.”


In short, “Article 12” stipulates, “where the content of labor contracts is more disadvantageous than the employment regulations, then contract conditions shall be raised to match conditions defined in the employment regulations.”

In other words, when the content of labor contracts is more advantageous than employment regulations, labor contracts will take precedence.

On the contrary, if the content of the labor contract is more disadvantageous than the employment regulations, the conditions will be raised so that they are in line with content defined in the employment regulations.

If employment contracts are disadvantageous, there is a risk that if employee trouble arises, the conflict will be resolved based on the content of the employment regulations.

If employers “made employment regulations in the past but are unfamiliar with the content,” it is recommended to compare with the employment contract.

Furthermore, when creating employment regulations that are most advantageous to the company, it is recommended details are carefully verified through reviewing various past precedents and other documents.

Contact us

No matter the stage of your expansion into Japan – whether you just started to consider the expansion or you are already here – our team is ready and waiting to provide consultation. Please do not hesitate to contact us.