Most Japanese companies have a teinen, a mandatory retirement age at which employment ends automatically. Under the Act on Stabilisation of Employment of Elderly Persons it cannot be set below 60.
The same law requires employers to secure employment up to 65 by one of three routes: raise the retirement age to 65, abolish it, or offer continued employment after retirement. Most choose the third and re-employ people at 60 on new terms. A transitional rule that let employers limit re-employment to people meeting set criteria ended in March 2025, so it must now be open to everyone who wants it.
Since April 2021 employers must also make efforts to offer work up to 70. This is an obligation to try, not a requirement, and the options include contract and outsourced work as well as employment.
What it means for a foreign employer
- Check your entity has one, and what it is. Many foreign subsidiaries copied a retirement age of 60 from Japanese practice without thinking about it, and then must re-employ people to 65.
- Senior candidates are thinking about it. A 56-year-old at a Japanese company may face a pay cut at 60 and a fixed-term contract after that. A role that runs past 60 on full terms can be very attractive.
- Retirement is not a dismissal, and it is not age discrimination in Japanese law. Ending employment at a properly set retirement age is lawful. Ending it before that, on age grounds, is not.
Sources
- Act on Stabilisation of Employment of Elderly Persons, Articles 8, 9 and 10-2 (as amended, in force April 2021); end of transitional measures, 31 March 2025.