1. Methods of Recruitment
When hiring personnel in Japan, foreign companies can utilize services broadly categorized into “public agency support” and “private services.”
1-1. Support from public agencies
The most representative example is the Public Employment Service (called “Hello Work”), administered by the Ministry of Health, Labour and Welfare. Hello Work offices are located nationwide and provide free job matching services for all occupations. By submitting job postings, companies can reach a wide range of job seekers, and Hello Work also serves as a window for procedures related to labor insurance.
At Hello Work, communication is generally conducted in Japanese. It is important to note that while some offices may offer foreign language support, this support is not available at every location.
1-2. Private recruitment services
In Japan, there are numerous private recruitment agencies (licensed employment agencies), offering services such as registration-based recruitment and executive search targeting management-level positions. Most operate on a success-based fee structure, where fees are paid upon successful placement.
Japan is enforcing a licensing system based on the Employment Security Act, which means that recruitment agencies are subject to certain legal regulations, enabling employers to access transparent services.
1-3. Other Job Recruitment Channels
In addition to traditional media such as newspapers, industry magazines, and job transition magazines, recruitment is widely conducted through online job sites and company websites. Recently, online recruitment is becoming the mainstream channel for job searches and matching. . However, in some rural areas, recruitment through public employment offices remains highly effective, therefore, leveraging both public support and private services is recommended.
2. Legal Framework for Recruitment in Japan
2-1. General Overview
While “freedom of contract” is a fundamental principle in Japan, there are many legal restrictions on recruitment, and employers are not entirely free in their hiring practices. Moreover, the Japanese employment system is fundamentally based on the philosophy of “long-term employment and worker protection.” It is difficult for employers to unilaterally terminate employment, and dismissals on grounds such as redundancy or lack of ability are strictly regulated. The following sections explain the regulatory framework under specific statutes and case law.
2-2. Restrictions at the Hiring Stage (Equal Employment Opportunity Act, Comprehensive Promotion of Labor Policies Act)
Although employers are, in principle, free to conduct recruitment activities, certain restrictions exist. For example, the Equal Employment Opportunity Act prohibits discriminatory restrictions on recruitment based on gender, while Article 9 of the Comprehensive Promotion of Labor Policies Act prohibits, imposing age restrictions at the time of hiring.
It should be noted that, although age restrictions at the time of hiring are prohibited, the introduction of a mandatory retirement age is not prohibited.
2-3. Restrictions on Dismissal (Labor Contract Act)
As mentioned earlier, the Japanese employment system is premised on “labor protection based on long-term employment.” Under Article 16 of the Labor Contract Act, dismissal requires objectively reasonable grounds and social appropriateness, and case precedent has strictly applied this standard. Employers should be mindful that once an employee is hired, dismissal cannot be done easily.
There are also unique features at the recruitment stage. In some countries, job offers or offer letters have only limited legal binding force. In contrast, under Japanese case law, a job offer (naitei) constitutes a “labor contract with a deferred commencement date and a right to rescind” In other words, once a job offer is extended, an employment contract is deemed concluded, and it may only be rescinded if an unavoidable reason arises before the commencement of work.
Therefore, an employer’s unilateral withdrawal of a job offer for managerial or economic reasons carries a high risk of being deemed unlawful.
In this way, employment in Japan is legally binding from the job offer stage, and dismissal is heavily regulated. For foreign companies engaging in recruitment activities in Japan, it is essential to understand this fundamental difference in the legal framework.
3. Job Postings and Job Offers, and the Obligation to Disclose Labor Conditions
3-1. Obligation to Disclose Information at the Time of Recruitment
In job advertisements and job postings, it is mandatory to clearly state the terms and conditions of employment (Article 5-3 of the Employment Security Act). Specifically, the following must be included:
- job description
- wages
- working hours
- the scope of changes to job duties or workplace, and
- the criteria for renewing fixed-term employment contracts.
Additionally, if the worker requests it, the information may be provided not only in writing but also via email or social media, provided that it can be printed and made available in written form.
If there is a discrepancy between the information provided in the job posting and the actual working conditions, this can lead to disputes. Furthermore, if the information is deemed to be false advertising, employers may be subjected to penalties including up to six months’ imprisonment or a fine of up to 300,000 yen (Article 65 of the Employment Security Act).
4. Notification of Employment Conditions and Employment Contract
4-1. Obligation to Provide a Notice of Employment Conditions
Upon the decision to hire, the employer must provide the worker with a notice of employment conditions (Labor Standards Act, Article 15). Mandatory items include matters related to the term of the employment contract, working hours, wages, leave, and grounds for dismissal. For part-time or fixed-term contracts, additional items such as whether there are wage increases or severance pay, and criteria for contract renewal must also be clearly stated.
4-2. Comparison with the foreign country
In some countries, a simple offer letter may suffice, but in Japan, a detailed written document is essential. Additionally, any changes to employment conditions require the agreement of both parties, and unilateral changes by the employer are not permitted. Foreign companies entering into employment contracts are required to document all details in advance.
5. Procedures for Employment Insurance and Workers’ Compensation Insurance
5-1. Eligibility Requirements for Employment Insurance
When hiring employees, employment insurance and workers’ compensation insurance generally apply. In particular, Workers’ compensation insurance is mandatory for all employers who hire workers and employment insurance is mandatory for employers who hire workers working 20 or more hours per week with an expected employment period of 31 days or more. Note that the applicability of employment insurance for executives and family employees is determined based on actual circumstances.
5-2. Procedures for Establishing Labor Insurance
When starting a business and hiring employees, you must submit a “Labor Insurance Establishment Report” to the relevant Labor Standards Inspection Office. Subsequently, you must submit an “Employment Insurance Application Form” and an “Insured Status Acquisition Report” to the Public Employment Security Office (Hello Work). Failing to complete these procedures may result in the collection of retroactive premiums or additional payments, so it is crucial for foreign companies to understand the system from the outset and consult with experts.
6. Establishment of Employment Rules
6-1. Obligation to Create Employment Rules
Workplaces that employ 10 or more workers on a regular basis are required by Article 89 of the Labor Standards Act to establish and submit Employment Rules to the Labour Standards Inspection Office. These rules must specify matters such as working hours, wages, resignation, and conduct regulations, and serve as the basic norms for business operations.
Even if there is no legal obligation to establish Employment Rules, it is important to create them at an early stage to prevent labor disputes between employers and employees.
6-2. Utilization of Model Employment Rules
The Ministry of Health, Labour and Welfare has published model Employment Rules in Japanese, English, Chinese, and other languages. While these can be used as a reference and customized to suit your company’s specific circumstances, it is advisable to have them drafted by a specialist familiar with Japanese law to avoid unintended mistakes.
Conclusion
In Japan, employment practices are characterized by strong labor protection, with detailed disclosure obligations and various reporting requirements imposed on companies. A notable feature of the Japanese system is that employment contracts carry strong binding force from the moment of contract conclusion, and dismissals are strictly regulated. Below is a summary of key points to keep in mind when conducting recruitment activities in Japan:
- Prohibition of discriminatory recruitment based on gender or age
- A job offer constitutes a “labor contract with a deferred commencement date and a right to rescind,” thereby creating a legally binding force
- Dismissal requires “objectively reasonable grounds and social appropriateness.”
- Working conditions must be clearly indicated in job postings
- Upon conclusion of an employment contract, employers must issue a written notice of working conditions specifying certain statutory items
- Employers are obligated to enroll employees in employment insurance and workers’ compensation insurance
- Employers may be required to prepare and implement Employment Rules
For startups to succeed in the Japanese market, it is essential to be mindful of these systems from the recruitment stage and establish a compliance framework. To achieve this, it is important to seek the assistance of experts well-versed in Japan’s legal system.
