Japanese Employment Law Update (By Tomoko Narita and Ryoko Kondo)

In this issue, we discuss the report released by the Ministry of Health, Labour and Welfare this April on a possible monetary relief system for when a dismissal is invalid, which system is currently not available in Japan. In Japan, an employer may only terminate an employee when strict standards are met, and when a dismissal is found to be invalid, the employer must in general reinstate the employee. This increasingly is being seen as an unrealistic way of resolving termination disputes, as in many instances there is no longer a relationship of trust between the employee and employer after the dispute. Instead, the possibility of reaching a resolution on monetary compensation on an expedited basis is thought to be more beneficial for both employer and employee.

However, many issues still need to be considered in adopting this type of system, including, among other things, the mechanism for calculating the monetary relief amount. As such, it would likely take a considerable amount of more time before any new system will be introduced, but we will keep an eye on the matter and provide updates if any.

We also touch base in this issue on the law amendment with respect to the prevention of power harassment, which has now become applicable to small and medium-sized companies from this April.