Redundancy dismissal 整理解雇

Dismissal for business reasons, judged by courts on four factors. Also written seiri kaiko, economic dismissal, layoff, restructuring dismissal.

Redundancy is the case where Japan's general dismissal rule bites hardest, because the employee has done nothing wrong. The test grew from case law, starting with the Toyo Sanso case in 1979, in which the Tokyo High Court set out conditions for dismissals following the closure of a business division. Later courts organised them into four elements, now usually treated as factors weighed together.

The first is the need to reduce headcount. The business reason must be real, though courts accept more than imminent insolvency. The second is effort to avoid dismissal: cutting overtime and hiring, not renewing temporary staff, reducing executive pay, redeploying or seconding staff, and usually offering a voluntary early retirement programme first. The third is fair selection, on objective and reasonable criteria applied consistently. The fourth is procedure: explaining the situation and consulting in good faith with the union or the employees affected.

There are also administrative duties. Where 30 or more employees at a workplace will leave within a month for business reasons, the employer must notify Hello Work at least a month before the last departure, normally by preparing a re-employment assistance plan. Smaller numbers can still trigger a notice for older employees: where five or more employees aged 45 to 69 leave a workplace within a month through dismissal or other company reasons, the employer must file a mass separation notice with Hello Work in advance.

Closing a whole business is different. Where an entity genuinely shuts down, courts are more accepting, though procedure still matters. A sham closure followed by the same business in a new entity gets no such leeway.

What it means for a foreign employer

Sources

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General information for employers, not legal advice. Thresholds and dates are checked against the sources listed and dated above; confirm anything you act on with a Japanese employment lawyer or a licensed labour and social security attorney.