Under the Labour Standards Act, any employer that regularly employs ten or more people at a workplace must write work rules, hear the opinion of a majority union or an employee representative, and file the rules with the local Labour Standards Inspection Office. They must cover working hours, breaks, days off and leave, how pay is calculated and paid, and the grounds for leaving employment, including dismissal.
Work rules matter more in Japan than an employee handbook does elsewhere. Where they are reasonable and have been made known to employees, they form part of each employee's contract. Grounds for discipline that are not in the work rules are very hard to enforce. And an employer that changes the rules to employees' disadvantage needs a reasonable justification, judged on the size of the disadvantage, the business need and how the change was negotiated.
What it means for a foreign employer
- A global handbook is not enough. A Japanese entity needs Japanese work rules that meet the statute, filed with the authorities. A translation of the group handbook usually does not.
- Write the grounds for dismissal and discipline carefully. If you may ever need to dismiss someone for misconduct or poor performance, the grounds need to be in the rules first.
- Getting them right at the start is cheaper than changing them later. Cutting a benefit or tightening a rule later needs a justification that can be challenged in court.
- Bonus and secondment terms belong here. Many disputes turn on whether the work rules allowed what the employer did.
Sources
- Labour Standards Act, Articles 89 to 92.
- Labour Contract Act, Articles 7, 9 and 10.