The rule is simple to state. Once an employee's fixed-term contracts with the same employer add up to more than five years, with at least one renewal, the employee may ask for an open-ended contract. The employer is deemed to accept. The new contract starts when the current one ends, and unless the parties agree otherwise, every term except the end date stays the same. Conversion gives job security, not seishain status: pay, duties and benefits do not change automatically.
Breaks can reset the count. A gap of six months or more between contracts starts the clock again, and a shorter gap is enough where the earlier contracts totalled less than a year. There are two main exceptions. Researchers and teaching staff at universities and research institutions have a ten-year period instead of five. Under a separate special measures act, highly skilled professionals on fixed-duration projects can be exempt for up to ten years, and workers re-employed by the same employer after retirement are exempt, but only if the employer has had a plan approved by the prefectural labour bureau.
Since April 2024, employers must tell eligible employees at each renewal that they can apply, and what their terms would be after conversion.
What it means for a foreign employer
- Most entities are now affected. Contracts count from April 2013, so long-serving contract staff have had conversion rights for years. Check who has crossed five years.
- Refusing renewal just before five years is risky. A cap introduced late, purely to stop conversion, can be challenged under the renewal protection in Article 19.
- Re-employed retirees need the approved plan. Without it, a retiree on successive one-year contracts can also convert.
- Decide what converted staff become. If conversion leaves them on contract-staff pay with no end date, you have created a third category. Set its terms in the work rules.
Sources
- Labour Contract Act, Articles 18 and 19 (Article 18 in force 1 April 2013).
- Act on Special Measures for Fixed-Term Workers with Specialised Knowledge (in force April 2015).
- Act on the Vitalisation of Science, Technology and Innovation (ten-year period for researchers).
- Ordinance for Enforcement of the Labour Standards Act, Article 5, as amended in force April 2024.