We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
27 May 2020
On 7 April 2020 the government declared a state of emergency due to the COVID-19 pandemic. In response, prefectural governors have requested certain industries to suspend their business operations. While the emergency status was lifted on 25 May 2020, the suspention is still requested for cetain industries. It has not been officially decided, but it has been announced that the suspension will be lifted on 25 May 2020.
This article provides information for employers on how to handle employment matters during the COVID-19 crisis.
The government implemented special measures relating to employment adjustment subsidies (paid from government-operated employment insurance) for the period from 1 April 2020 to 30 June 2020. During this period, eligibility has been expanded and subsidy amounts have been increased. The subsidies will cover up to 80% (for small and medium-sized entities) or 66% (for large entities) of paid salaries, but will be capped at Y8,330 per day (as of 18 May 2020).
The key points are as follows:
On 14 May 2020 the government announced that it is considering reforming the subsidy system, which would enable employees to directly apply for the subsidy and increase the upper limit of the subsidy (please note that this article was written based on the information as of 15 May 2020).
Some companies affected by COVID-19 put employees on temporary leave or reduced their working hours. Under Japanese labour law, employers can temporary suspend their business and put employees on temporary leave or reduced working hours; however, in principle, employers must still pay at least 60% of affected employees' average wages as a suspension allowance (unless the suspension is deemed to be because of a force majeure event). Affected companies may apply for subsides as explained above.
Before implementing temporary suspension, employers should consult with their employees. If a labour union exists, such prior consultation process is normally required under a collective agreement.
In addition, in principle, companies can ask employees to agree to temporary salary reduction or salary reduction (without paying the suspension allowance) corresponding to reduced working hours. However, such salary reduction cannot be made without employee consent (ie, individual consent or collective agreement with a union, if applicable).
Employees with indefinite-term employment
In general, under Japanese law, it is difficult for employers to dismiss employees with indefinite-term employment, because employers' right to dismiss employees is strictly restricted. Article 16 of the Labour Contract Act requires objectively reasonable grounds and appropriateness in light of socially accepted convention for a dismissal (unilateral termination of employment).
Under Japanese case law, the involuntary termination (ie, dismissal) of employees as a means of workforce reduction can be justified only when all of the following conditions are met:
In general, it is difficult to satisfy these conditions; thus, in practice, employers often solicit voluntary resignation by offering a severance package.
Employees with fixed-term employment
In principle, fixed-term employment is terminated on the expiration of the term; however, where a renewal is repeated many times or it is deemed that a fixed-term employee has reasonable expectation of renewal, the similar doctrine for dismissal (discussed above) will apply and non-renewal may be deemed to be invalid.
The Ministry of Health, Labour and Welfare requests that employers maintain employment by using the subsidies. Employers must have a discussion with employees before taking actions (eg, putting employees on temporary leave or implementing workforce or salary reductions).
For further information on this topic please contact Eriko Ogata at Nagashima Ohno & Tsunematsu by telephone (+81 3 6889 7000) or email (firstname.lastname@example.org). The Nagashima Ohno & Tsunematsu website can be accessed at www.noandt.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.