Introduction

• Are food delivery couriers workers?
• Are freelancers working through platforms workers?
• Can the current criteria, which were formulated in 1985, adequately address new forms of work?

These issues are currently being discussed by the Study Group on “Workers” under the Labor Standards Act established by the Ministry of Health, Labour and Welfare (the “Study Group”).
In recent years, with the development of the platform economy, platform workers whose actual working arrangements closely resemble those of “workers,” despite having the freedom to choose whether to accept work, have increased worldwide. In addition, the digitalization of labor management through AI and algorithms has also advanced.

Against this backdrop, there is a growing need to enhance the predictability of employee-status determinations from the perspectives of responding to these new forms of work and ensuring that the Labor Standards Act is properly applied to those who are, in substance, “workers.” In addition, even in existing industries, a number of noteworthy cases have recently arisen in which employee status under the Labor Standards Act and the Labor Contract Act has been disputed.

Examples include:

• a case in which the employee status of a hotel manager and deputy manager was at issue (Super Hotel Case, Tokyo District Court Judgment, July 10, 2025, Rohan No. 1340, p. 35);
• a case in which the employee status of a counsel at a law firm was at issue (Nishimura & Asahi Case, Tokyo High Court Judgment, September 25, 2025);
• a case in which the employee status of a part-time university lecturer was at issue (National University Corporation Osaka University Case, Tokyo High Court Judgment, January 30, 2025, Rohanrei No. 1329, p. 5).

Accordingly, in this series, the author, who served as a member of the secretariat of the Study Group at the Ministry of Health, Labour and Welfare, will explain, over several installments, the status of discussions within the Study Group and related matters, taking into account trends in court precedents concerning employee status under the Labor Standards Act.

 

What Happens if Employee Status Is Recognized?

Whether a particular working arrangement is recognized as constituting employee status is of critical practical importance because it determines the scope of applicable laws and available protections. Where a person is recognized as a worker under the Labor Standards Act, that person is entitled to protections such as restrictions on dismissal, wage protection, working-hours regulations, and employment restrictions applicable to minors and pregnant or nursing women.

Moreover, not only the Labor Contract Act but also the Industrial Safety and Health Act, the Minimum Wage Act, and the Industrial Accident Compensation Insurance Act are generally understood to adopt the same personal scope of application as the concept of “worker” under the Labor Standards Act. Accordingly, where a person qualifies as a worker under the Labor Standards Act, that person will also be entitled to protection under these laws.

For this reason, developments within the Study Group, which is currently discussing the criteria for determining employee status, may have a significant impact on future labor and employment practice.

Background to the Establishment of the Study Group

The background to the establishment and operation of the Study Group is as follows:

On January 23, 2024, the Study Group on Labor Standards Legislation (Chair: Takashi Araki, then Professor, Graduate Schools for Law and Politics, The University of Tokyo) was established for the purpose of conducting comprehensive and medium- to long-term examinations of future labor standards legislation and undertaking specific consideration of revisions to the Labor Standards Act and related laws pursuant to Article 12 of the Supplementary Provisions of the Work Style Reform Legislation.

Following sixteen meetings, the Study Group compiled and published its report concerning the future direction of labor standards legislation on January 8, 2025. The report pointed out that approximately forty years had passed since the publication of the 1985 Labor Standards Act Study Group Report, “Criteria for Determining ‘Workers’ under the Labor Standards Act” (the “1985 Report”), and that the criteria contained therein had not necessarily kept pace with changes and diversification in working arrangements. The report further stated that it was necessary to analyze and study the cases and court precedents accumulated during that period, reconsider the criteria in light of academic theories, and conduct comprehensive research while taking international developments into account.

Accordingly, the report concluded that the Ministry of Health, Labour and Welfare should establish a specialized forum to undertake comprehensive consideration of these issues. In response, the Study Group was established in May 2025, bringing together experts with extensive knowledge regarding employee status under the Labor Standards Act for the purpose of deepening analysis and research concerning the criteria for determining employee status, and deliberations commenced thereafter.

Criteria for Determining “Worker” Status under the Labor Standards Act

Article 9 of the Labor Standards Act provides that: “A worker means a person who is employed at a business or office and is paid wages.” Whether a person constitutes a “worker” under the Labor Standards Act—that is, whether the person possesses “employee status”—is determined based on the following two criteria:

1. Whether the work is performed under the direction and supervision of another person, that is, whether the person provides labor in a relationship of subordination to another person (“work under direction and supervision”).
2. Whether the remuneration is paid as consideration for “work under direction and supervision” (“compensatory nature of remuneration for labor provided”).

These two criteria are collectively referred to as “subordination in employment” (shiyō jūzokusei).

However, in many individual cases where worker status becomes an issue, it is difficult to determine whether the person concerned qualifies as a worker under the Labor Standards Act solely on the basis of the above two criteria. Accordingly, the 1985 Report was formulated by organizing factors for determining worker status with then-existing workers in mind, based on court precedents and other accumulated materials concerning worker-status determinations at that time, so that such factors could be utilized as criteria for assessing individual cases.

The 1985 Report provides that, in determining worker status, the determination should be made comprehensively on a case-by-case basis based on the contents of the contract, the manner in which labor is provided, remuneration, and other relevant factors, regardless of the formal contractual arrangement, such as a contract for work (ukeoi) or a mandate agreement (inin).

The report sets forth the following specific criteria:

1. Criteria Relating to “Subordination in Employment” (1) Whether the work constitutes “work under direction and supervision” (a) Whether there is freedom to accept or refuse requests for work, instructions regarding engagement in work, and similar matters (b) Whether there is direction and supervision regarding the performance of work (c) Whether there is constraint or control over the manner of working (d) Whether there is substitutability (a factor reinforcing the existence of a direction-and-supervision relationship) (2) Whether there is “compensatory nature of remuneration for labor provided”   2. Factors Reinforcing the Determination of “Worker” Status (1) Whether the person possesses characteristics of an independent business operator (2) Degree of exclusivity (3) Other factors

The criteria set forth in the 1985 Report continue to be generally used today in both administrative interpretations and judicial determinations. 

Status of Discussions within the Study Group

Status of Meetings

To date, the Study Group has convened five meetings, primarily conducting analyses and research concerning court precedents and international developments. At the fifth meeting of the Study Group, held on January 28, 2026, a draft document organizing the discussions to date was considered (as of May 2026).
The status of the Study Group’s meetings is as follows.

• First Meeting: Analysis and research concerning court precedents, international developments, and academic theories
• Second Meeting: Hearings from legal practitioners (attorneys representing workers and employers)
• Third Meeting: Analysis and research concerning court precedents and international developments
• Fourth Meeting: Analysis and research concerning court precedents and international developments
• Fifth Meeting: Consideration of a draft summary of discussions to date

With respect to future meetings of the Study Group, the terms of reference do not specify a completion date. Because various issues remain to be examined, it is expected that deliberations will continue for a certain period going forward. 

Status of Discussions

Within the Study Group, the current state of employee-status determinations is being discussed based on analyses and research concerning court precedents and international developments, while also considering issues identified through hearings with legal practitioners. Because the matters under discussion are range widely, it is not possible to introduce all of them in this article. However, examples of themes that may have a significant impact on the practical determination of worker status include the following:

• The proper treatment of “instructions to the extent ordinarily given by a client” and situations “where the place and hours of work are inevitably designated due to the nature of the work, etc.”
• The positioning of circumstances such as “integration into the business organization” and “unilateral and standardized determination of contractual terms”
• The concept of presumptions of worker status and the shifting of the burden of proof

Although discussions on each of these themes are expected to continue, excerpts from the relevant portions of the Study Group’s Fifth Meeting materials, “Summary of Discussions to Date (Draft),” are introduced below to illustrate the status of discussions thus far.

● “Instructions to the Extent Ordinarily Given by a Client” and “Cases Where the Place and Hours of Work Are Inevitably Designated Due to the Nature of the Work, etc.”

Among the factors identified in the 1985 Report, regarding the factor of “whether there is direction and supervision concerning the content and manner of performance of work,” the report states:   The fact that a person receives specific directions and instructions from the “employer” regarding the content and manner of performance of work constitutes a fundamental and important element of a supervisory relationship. However, the degree of such direction and instruction is also relevant. Where the directions are limited to the extent ordinarily given by a client, it cannot be said that the person is subject to direction and supervision. (omitted)   With respect to the factor of “whether there is constraint,” the report states:   The designation and management of the place and hours of work generally constitute fundamental elements of a supervisory relationship. However, there are cases in which the place and hours of work are inevitably designated due to the nature of the work itself (for example, musical performances) or the need to ensure safety (for example, construction work). It is therefore necessary to determine whether such designation arises from the nature of the work itself or from the need to direct and supervise the performance of work.   In other words, as considerations relevant to determining “direction and supervision” and “constraint,” the report presents the following concepts: Where the degree of direction and instruction is limited to “instructions ordinarily given by a client,” the person should not be regarded as being subject to direction and supervision. There are situations in which the place and hours of work are inevitably designated due to “the nature of the work” or “the need to ensure safety,” and it is necessary to determine whether such designation derives from the nature of the work itself or from the need to direct and supervise the performance of work.   With respect to the use of these concepts in determining whether instructions constitute “instructions ordinarily given by a client” or whether the place and hours of work are “inevitably designated due to the nature of the work,” members of the Study Group expressed various views. These included opinions that: Facts that exist to the same extent regardless of whether a person is a worker should be treated as neutral factors and should neither support nor negate worker status; Directions and constraints that are necessary merely to specify the subject matter of contractual obligations, regardless of the type of contract involved, should be regarded as neutral considerations; Assuming that there are forms of direction unique to contracts for work (ukeoi), courts describe certain matters as arising naturally from “the nature of the work” to indicate that they do not support the existence of an employment contract; and Courts, based on the 1985 Report, objectively identify and evaluate facts through the filter of “the nature of the work” and similar considerations when applying the factors set forth therein.   The Study Group also confirmed that the approach of considering the nature of the work and similar considerations when determining worker status has in fact been adopted in numerous court decisions. On the other hand, many members expressed concerns regarding reduced predictability and the potential for abuse. Accordingly, it was considered necessary to continue examining this issue, including its theoretical foundation. Even if the concept of considering the nature of the work is retained, further examination is required regarding how to address concerns relating to reduced predictability and potential abuse.

(Study Group Fifth Meeting Materials, Material No. 1, Summary of Discussions to Date (Draft), pp. 38–40)

● Circumstances Relating to “Integration into the Business Organization” and “Unilateral and Standardized Determination of Contractual Terms”

Within the Study Group, members pointed out that it would be appropriate to examine the extent to which circumstances corresponding to the concepts of “integration into the business organization” and “unilateral and standardized determination of contractual terms,” which are recognized as factors in determining worker status under the Trade Union Act, are taken into account in judicial decisions concerning worker status under the Labor Standards Act. Accordingly, relevant portions of court decisions were extracted, organized, and analyzed.   Although there are not many court decisions concerning worker status under the Labor Standards Act that expressly utilize these factors, members expressed a variety of views. For example: Since labor legislation also contains regulations intended to protect persons with weak bargaining power (that is, persons who are economically dependent), it may be appropriate, when determining the scope of application of the Labor Standards Act, to treat “economic dependence” as a supplementary consideration. Such economic dependence would include factors such as “integration into the business organization,” “unilateral and standardized determination of contractual terms,” “economic dependence,” “business risk borne as an entrepreneur,” and “restrictions on acquiring independent customers.” Conversely, “economic dependence” may also be invoked as a factor supporting the denial of worker status, and unless its content is scrutinized, reliance upon it may ultimately lead to results inconsistent with the protection of workers.   Accordingly, it was concluded that discussions concerning these matters should continue.

(Study Group Fifth Meeting Materials, Material No. 1, Summary of Discussions to Date (Draft), p. 49)

● Presumptions of Worker Status and Shifting the Burden of Proof

In determining worker status, certain jurisdictions have adopted systems involving: a “presumption provision,” under which a person is presumed to be a worker if specified conditions are satisfied; and a “shift of the burden of proof,” under which the party commissioning the work (the employer) bears the burden of rebutting that presumption.   Examples include the ABC Test adopted in certain jurisdictions within the United States, including California, and related legislative measures, as well as the EU Directive on Improving Working Conditions in Platform Work. During hearings with legal practitioners, the following views were expressed: Employment-status litigation often requires at least two to three years to obtain a first-instance judgment, and in some cases three to four years or even more than ten years in total. In such circumstances, the burden on workers of proving the various factors relevant to worker-status determinations is extremely heavy. Moreover, the relevant factors are highly diverse and complex, and information concerning them is often almost entirely controlled by the business operator and frequently not disclosed at all. Consequently, workers are placed at an overwhelming disadvantage, making the establishment of a presumption of worker status highly desirable. A presumption provision differs from a conclusive deeming provision. Because worker status would not be definitively established, a presumption of worker status would not automatically constitute a presumption for purposes of applying criminal sanctions. Most cases that proceed to litigation involve situations where the business operator had not anticipated that the relationship would be characterized as employment, making ex post responses difficult. If presumptions and burden-shifting mechanisms were introduced, there is a risk that businesses might avoid providing work to independent contractors who could potentially be presumed to be workers.   Members of the Study Group also expressed various views, including: That introducing presumptions and shifting the burden of proof could contribute to greater predictability in worker-status determinations. That, in situations where violations of labor legislation may result in criminal penalties, a presumption mechanism could effectively amount to a presumption of guilt, and therefore careful consideration is required regarding whether, in what situations, and in what manner presumptions should be used within the framework of Japanese labor law.   In addition, opinions were expressed that: The ABC Test adopted in the United States and related legislative measures may provide useful reference points when considering more concretely how a worker-status presumption should operate; and The introduction of presumptions and burden-shifting mechanisms is an issue that should be examined while observing developments in other jurisdictions.

(Study Group Fifth Meeting Materials, Material No. 1, Summary of Discussions to Date (Draft), p. 59)

Conclusion

As discussed above, the Study Group is currently engaged in active discussions regarding the criteria for determining worker status under the Labor Standards Act.

The criteria for determining worker status under the Labor Standards Act are not merely theoretical issues. Rather, they directly affect whether various protections under labor legislation are available and therefore have an extremely significant impact on practice.

With the expansion of the platform economy and diversification of working arrangements, it has become increasingly important to establish criteria capable of appropriately responding to new forms of work. The Study Group has thus far primarily conducted analyses and research concerning court precedents and international developments. Going forward, attention will focus on whether discussions will proceed toward revising the criteria set forth in the 1985 Report and, if so, in what manner such revisions will be implemented.

In June 2025, the International Labour Organization (ILO) adopted a resolution concerning decent work in the platform economy at the 113th Session of the International Labour Conference and decided to commence discussions aimed at the adoption of international standards regarding platform work. International developments relating to worker status and labor protection are therefore expected to accelerate further. Accordingly, future developments in the deliberations of the Study Group should continue to be closely monitored.