Muki means without a fixed term. When fixed-term staff convert to an open-ended contract under Article 18 of the Labour Contract Act, the default is that only the end date disappears: pay, duties and benefits stay as they were. Many employers created a separate label for these people, muki koyo shain or muki tenkan shain, to distinguish them from seishain. Some companies also hire into the category directly.
The result is a third tier. Muki koyo staff have job security close to that of seishain, since a dismissal is judged under the same Article 16 test, but they may have contract-staff pay, no bonus, no retirement allowance and no promotion route. And they can fall into a gap. The Part-time and Fixed-term Employment Act, which carries the equal pay for equal work rules, covers workers who are part-time or fixed-term. A full-time employee on an open-ended contract is neither. Only the general principle in the Labour Contract Act, that terms should take balance into account, still applies, and the ministry encourages employers to review their treatment.
Since April 2024 employers must tell eligible fixed-term staff at each renewal that they can convert and what their terms would be, which has made the category more visible.
What it means for a foreign employer
- Find out whether you have one. Many foreign subsidiaries with long-serving contract staff have muki koyo employees without having designed the status.
- Write the category into the work rules. If converted staff are not seishain, say what they are: pay, evaluation, retirement age and any route to regular status. Silence leads to disputes.
- Security changes the exit. Ending employment for a converted employee is a dismissal, not a non-renewal.
- Use it as a pipeline. Converted staff who are performing well are prime candidates for seishain roles, and promoting them is good for retention.
Sources
- Labour Contract Act, Articles 3, 16 and 18.
- Part-time and Fixed-term Employment Act, Articles 2 and 8.
- Ordinance for Enforcement of the Labour Standards Act, Article 5, as amended in force April 2024.