In the wave of globalized economy, more and more Chinese companies are choosing to enter the Japanese market. However, transnational operations not only face business challenges, but also need to deal with a complex legal environment. Among them, Japan’s labor law system is particularly unique and poses a considerable challenge to foreign-funded enterprises. This article aims to explain in detail the core content of Japanese labor law for Chinese companies and help them operate in compliance with regulations in the Japanese market.

Japan’s labor law is centered on protecting the rights and interests of workers and has built a complete and rigorous legal system. This system mainly includes the Labor Standards Law, the Labor Contract Law, the Minimum Wage Law and many other laws. These laws not only stipulate the basic framework of the employment relationship, but also cover working hours, remuneration, dismissal, social insurance and other aspects. A notable feature of Japan’s labor law is its strong protection of workers’ rights and interests, which is particularly evident in terms of dismissal restrictions and overtime management.

Compared with China’s labor law, Japan’s labor law system presents several significant differences. First, Japan’s employment system is more flexible, including regular employees, contract workers, dispatched workers and other forms, while China mainly employs full-time workers. Secondly, Japan’s dismissal restrictions are more stringent, and companies must have “objective and reasonable reasons” to dismiss employees, which is different from China’s regulations. Furthermore, Japan’s overtime management is more stringent, not only requiring strict recording of overtime hours, but also setting an upper limit on overtime hours. In addition, Japan’s annual leave system and childcare leave system are also more complete and humane than China’s.

For Chinese companies entering the Japanese market, adapting to the local labor law environment is a major challenge. First, language and cultural differences may lead to deviations in the understanding of the law. Second, Japan’s unique concept of lifetime employment and seniority system conflict with the management philosophy of many Chinese companies. Furthermore, Japan’s strict overtime management and dismissal restrictions may affect the company’s human resource strategy. In addition, Japan’s complex social insurance system and high social insurance costs have also brought considerable operating pressure to foreign-funded enterprises. Finally, Japan’s unique trade union culture and labor-management consultation system also require companies to respond with caution.

In the face of these challenges, Chinese companies need to have a deep understanding of Japanese labor laws, establish a human resources management system that complies with local laws, attach importance to employee training and communication, and seek assistance from professional legal advisors when necessary. Only in this way can they achieve compliant operations in the Japanese market, avoid unnecessary legal risks, and lay a solid foundation for the long-term development of the company.

The core legal system of Japanese labor law

The core legal system of Japan’s labor law is composed of multiple laws, which together provide comprehensive legal protection for employers and employees. The core of this system includes the Labor Standards Act, the Labor Contract Act, the Minimum Wage Act, the Labor Safety and Health Act, and the Trade Union Act. These laws complement each other and together build Japan’s unique and complete labor law framework.

The Labor Standards Law is the cornerstone of Japan’s labor law system and was enacted in 1947. It stipulates the minimum standards for working conditions, covering core contents such as working hours, rest days, paid vacations, salary payment, and restrictions on dismissal. The law aims to protect the basic rights and interests of workers and prevent employers from abusing their power. It is worth noting that most of the provisions of the Labor Standards Law are mandatory, and employers are not allowed to lower these standards through labor contracts or employment rules.

The Labor Contract Law came into effect in 2008 and is an important supplement to the Labor Standards Law. This law mainly regulates the conclusion, modification and termination of labor contracts, and emphasizes the rights and obligations of both labor and capital in the contractual relationship. It particularly emphasizes employment security and stipulates a system for converting open-ended contracts, that is, when a fixed-term contract is repeatedly renewed for more than 5 years, employees have the right to request a conversion to an open-ended contract.

The minimum wage law ensures a basic standard of living for workers. Japan’s minimum wage system is relatively complex, divided into two types: regional minimum wages and specific minimum wages. Regional minimum wages are set by each prefecture, while specific minimum wages are targeted at specific industries. Employers must strictly abide by these regulations, and violating the minimum wage law may face serious legal consequences.

The Labor Safety and Health Law focuses on protecting the health and safety of workers. It requires employers to take necessary measures to prevent accidents and occupational diseases in the workplace, including regular health checks and safety training. In recent years, the law has also added relevant provisions for preventing death from overwork and mental health management, reflecting the growing concern of Japanese society about workplace health issues.

The Trade Union Law guarantees the workers’ right to unity, collective bargaining and collective action. It stipulates the establishment, operation and rights of trade unions, as well as the relationship between employers and trade unions. Japan’s trade union system is mainly based on enterprise unions, which is different from China’s model of mainly industry unions. The Trade Union Law provides a legal framework for labor and capital to conduct collective bargaining, and plays an important role in safeguarding the rights and interests of workers and promoting harmony between labor and capital.

These five laws constitute the core of Japan’s labor law. They are interrelated and together provide comprehensive legal protection for Japan’s labor relations. For Chinese companies operating in Japan, it is crucial to deeply understand the content and spirit of these laws, which will not only help avoid potential legal risks, but also help companies better integrate into Japan’s business environment and establish harmonious labor-capital relations.

Employment Relationship

The employment relationship system in Japan is significantly different from that in China, and understanding these differences is crucial for Chinese companies to successfully operate in the Japanese market. Japan’s employment system is based on long-term employment, but in recent years more flexible employment forms have emerged. This section will detail the types of employment contracts, working hours system, and characteristics of the compensation system in Japan.

1. Employment Contract

In Japan, the type of employment contract directly affects the rights and interests of employees and the obligations of the company. It can be mainly divided into regular employees and non-regular employees, and open-ended contracts and fixed-term contracts.

Regular employees usually enjoy the most comprehensive labor protection and welfare benefits, including lifetime employment, regular salary increases and promotion opportunities. In contrast, informal employees (such as dispatched employees, contract employees, part-time employees, etc.) have relatively flexible employment conditions, but fewer welfare benefits. Chinese companies need to carefully consider the proportion of different types of employees to balance operating costs and employee stability.

Open-ended contracts are considered a standard form of employment in Japan, providing employees with a high level of job security. Fixed-term contracts are mostly used for specific projects or temporary work, with a maximum term of 5 years. It is worth noting that employees who have signed fixed-term contracts for more than 5 consecutive years have the right to apply for a change to an open-ended contract. This provision is intended to protect the rights and interests of long-term contract workers.

Regarding the probation period, Japanese law does not clearly stipulate the maximum period, but it usually does not exceed 3-6 months. The threshold for dismissing employees during the probation period is relatively low, but the principle of rationality must still be followed. Chinese companies should clearly stipulate the probation period clause in the employment contract to avoid disputes in the future.

2. Working hours and vacation system

Japan’s working hours system is known for its strict control, which aims to protect the rights and health of employees. The legal working hours are 8 hours a day and 40 hours a week. However, the actual working hours often exceed this standard, which is also a long-standing problem in Japanese society.

Overtime is common in the Japanese workplace, but in recent years the government has actively promoted “work style reform” and strictly limited overtime hours. In principle, overtime hours should not exceed 45 hours per month and 360 hours per year. Overtime pay of at least 25% must be paid for work hours exceeding the statutory working hours, and an additional 25% must be paid for late night work (22:00-5:00). Chinese companies must establish a strict overtime management system to avoid the risk of breaking the law.

Japan’s annual leave system is also relatively generous. After working for 6 months, employees can get 10 days of paid annual leave, and then increase with the length of service, up to 20 days. It is worth noting that Japanese law requires employers to ensure that employees use at least 5 days of annual leave each year, and violating this provision may face penalties.

In addition, Japan also has childcare leave and nursing leave systems. During childcare leave, employees can enjoy up to one year of paid leave (part of the salary is obtained through social insurance). Nursing leave allows employees to take leave to care for family members who need long-term care. These systems reflect the importance that Japanese society attaches to work-life balance.

3. Compensation system

Japan’s salary system is unique and Chinese companies need to fully understand and adapt to it. Minimum wage standards vary by region, with higher minimum wages in large cities such as Tokyo. It should be noted that the minimum wage is adjusted every year based on economic conditions and companies must keep up with these changes in a timely manner.

Bonus system is common in Japanese companies and is usually paid twice a year (summer and winter). The amount of bonus is often linked to company performance and individual performance, and may be equivalent to 2-6 months of employee salary. Although bonus is not required by law, it has become an important part of Japanese corporate culture and has a significant impact on employee loyalty.

The retirement pay system is a unique long-term incentive mechanism in Japan. Employees can receive a substantial retirement pay when they retire or leave their jobs, and the amount is usually calculated based on their years of service and final salary. Although the retirement pay system is not mandatory by law, it is seen as an important tool to attract and retain talent. Chinese companies should consider whether to adopt this system when designing their compensation plans to improve their competitiveness in the Japanese labor market.

Understanding and correctly implementing these employment relationship systems is crucial for Chinese companies to operate in compliance and manage talent in the Japanese market. It is recommended that companies take full account of Japan’s legal requirements and cultural characteristics when formulating human resource policies to minimize legal risks and improve employee satisfaction.

Dismissal Provisions

Japan’s dismissal system is known for its strictness and provides strong employment protection for employees. It is crucial for Chinese companies to understand and comply with these regulations, as wrongful dismissal may lead to serious legal consequences and reputational damage. This section will introduce the core principles and practices of Japan’s dismissal system in detail.

The principle of just cause is the cornerstone of Japan’s dismissal system. According to Japan’s Labor Contract Law, employers can only dismiss employees if they have “objectively reasonable reasons” and “are considered to be reasonable in social terms.” This principle greatly raises the threshold for dismissal. Common just causes include serious violations of discipline by employees, serious lack of ability, and deterioration of the company’s operating conditions. However, even if these reasons exist, the court will still consider the specific circumstances in a comprehensive manner when determining whether the dismissal is valid. Chinese companies need to note that in Japan, dismissal without reason is not allowed even during the probation period.

The dismissal notice system is another important mechanism for Japan to protect the rights of workers. The employer must notify the employee of the dismissal decision at least 30 days in advance, or pay a dismissal notice equivalent to 30 days’ salary. If the advance notice is less than 30 days, the corresponding difference compensation must be paid. For example, if the notice is 15 days in advance, 15 days’ salary must be paid as compensation. It is particularly important to note that even if the contract expires and is not renewed, it is considered a dismissal and the notice system must be followed.

Economic layoffs face even stricter restrictions in Japan. Courts usually judge the legality of economic layoffs based on the following four criteria: (1) the necessity of layoffs; (2) efforts to avoid layoffs have been made; (3) the criteria for selecting laid-off employees are reasonable and fair; and (4) sufficient consultation has been conducted with employees or unions. Companies must prove that these four conditions are met in order for economic layoffs to be legally justifiable. In practice, Japanese companies often avoid forced layoffs by offering voluntary resignation programs, job transfer training, etc.

In terms of the dispute resolution mechanism for dismissal, Japan provides a variety of channels. First, the parties can seek mediation from the local labor bureau. If the mediation is unsuccessful, they can apply for a fast-track trial to the labor tribunals. The labor tribunals are composed of a judge and two experts from both labor and management, and aim to reach a settlement or make a ruling within three hearings. If the parties are not satisfied with the results of the labor trial, they can also file a lawsuit in the local court. It is worth noting that during the litigation process, the employer bears the burden of proof for the validity of the dismissal.

For Chinese companies, when operating in the Japanese market, they must pay great attention to the legal risks associated with dismissal. It is recommended that when considering dismissal, first seek professional legal advice and comprehensively evaluate the legality and potential risks of dismissal. At the same time, establish a sound personnel management system and keep complete records of employee performance, which will help to safeguard the company’s rights and interests in possible labor disputes. In addition, cultivating good communication relationships with employees and trade unions is also an effective way to prevent dismissal disputes.

In general, Japan’s dismissal system provides strong protection for employees, which requires companies to be highly cautious in personnel decisions. By deeply understanding these regulations, Chinese companies can better manage human resources in the Japanese market, reduce legal risks, and build harmonious labor-management relations.

Social Insurance System

Japan’s social insurance system is an important pillar for protecting the rights and interests of workers, and is also a legal requirement that foreign-invested enterprises must strictly abide by. The system mainly includes four parts: health insurance, social insurance, employment insurance and work-related injury insurance, each of which has its own specific coverage and payment rules.

Health insurance is the core of Japan’s medical security system. All employees working in Japan, including foreigners, must participate in health insurance as long as they work more than 20 hours a week. This insurance covers not only the employee himself, but also his family members. The insurance premium is borne by the employer and the employee, usually 50% each. Health insurance provides participants with a wide range of medical protection, including 70% subsidies for medical expenses such as outpatient, hospitalization, and childbirth, which greatly reduces the medical burden of employees.

The Employees’ Pension Insurance is Japan’s public pension system. Similar to health insurance, all employees who work more than 20 hours a week must participate. The insurance premium is also shared equally by employers and employees. This insurance not only provides basic living security after retirement, but also includes benefits such as disability and survivors’ pensions. It is worth noting that Japan has signed social security agreements with many countries to avoid double payment of social insurance. Chinese companies should pay attention to this and make reasonable plans for their employees.

Employment insurance is Japan’s unemployment insurance system, which aims to provide temporary economic support and re-employment assistance to the unemployed. All employees, including foreigners, must participate in insurance as long as the expected employment period exceeds 31 days and the working hours per week exceed 20 hours. The insurance premium is mainly borne by the employer, and the employee only needs to bear a small part. In addition to unemployment benefits, employment insurance also provides a number of benefits such as childcare leave allowances and vocational training subsidies, which help protect the rights and interests of employees and promote the stability of the labor market.

Work-related injury insurance is an insurance system specifically for work-related injuries and diseases. The premium for this insurance is borne entirely by the employer and does not need to be deducted from the employee’s salary. Work-related injury insurance covers injuries, diseases, disabilities and even death caused by work, and provides comprehensive protection such as medical expenses, leave compensation, and disability pensions. For foreign-funded enterprises, it is crucial to properly handle work-related injury issues, which not only affects the company’s reputation, but may also involve significant compensation, so relevant regulations must be strictly observed.

For Chinese companies operating in Japan, it is crucial to fully understand and strictly implement these four major social insurance systems. This is not only a legal compliance requirement, but also the key to attracting and retaining outstanding talents. Companies should establish a sound social insurance management system to ensure accurate calculation and timely payment of various insurance premiums. At the same time, they should also pay attention to fully explaining the characteristics and benefits of Japan’s social insurance system to employees to help them make better use of these guarantees.

In actual operation, companies should also pay attention to some special provisions of the Japanese social insurance system. For example, Chinese employees who are assigned to work in Japan may be exempted from insurance for a short period of time; while for employees who work in Japan for a long time, they need to consider how to deal with their social insurance relationship in China. These details require special attention from the company’s HR department, and if necessary, professional social insurance consultants can be consulted to ensure compliance operations and maximize the protection of employee rights.

Regulations on the employment of foreigners

As a country that strictly controls the employment of foreigners, Japan has formulated a series of complex and strict regulations for foreigners working in Japan. The core of these is the residence status system. This system stipulates that foreigners working in Japan must obtain residence status that matches the content of their work. Common types of work visas include “Technology, Humanities, International Business”, “Highly Specialized Occupations”, etc. It is worth noting that residence status not only limits the type of work that foreigners can do, but also stipulates the place of work and employer. Therefore, if foreigners need to change jobs or employers, they often need to reapply for a change of residence status.

Closely linked to the status of residence system is the obligation to report employment of foreigners. According to Japanese law, when an employer hires a foreigner, he or she must submit an employment status report to the Public Employment Security Office (i.e. “Hello Work”). This report includes not only the situation at the beginning of the employment, but also the situation at the end of the employment relationship. The employer needs to submit the report within 10 days from the day after the employment begins or ends. This system aims to grasp the employment status of foreign workers and prevent illegal employment, and also provide a basis for the formulation of relevant policies.

The Technical Internship System is one of Japan’s unique foreign employment systems. The system was originally intended to transfer skills, technology and knowledge to developing countries and promote international cooperation. However, in recent years, this system has been controversial due to many problems. Technical interns can study and work in Japan for up to 5 years, but the protection of their rights and interests has always been a sensitive topic. In 2017, the Japanese government promulgated the Technical Internship Law, which aims to strengthen the protection of technical interns, including prohibiting improper behavior and improving treatment. However, there are still many challenges in actual implementation, such as long working hours and wages below the minimum wage standard.

For Chinese companies that intend to hire foreign employees in Japan, it is crucial to have a deep understanding of these regulations. Companies need to ensure that the foreign employees they hire hold appropriate residency status, fulfill employment reporting obligations in a timely manner, and strictly abide by relevant laws and regulations. In particular, companies that are considering using technical interns need to fully understand the complexity and potential risks of the relevant system. It is recommended that companies consult professional labor law advisors before hiring foreign employees to ensure compliance with regulations and avoid legal risks and reputation damage due to violations of relevant regulations.

Trade Unions and Labor-Capital Relations

Japan’s trade union system and labor-capital relations are significantly different from those in China, and it is crucial for Chinese companies entering the Japanese market to understand these differences. Japan’s trade union system emphasizes internal consultation and harmonious labor-capital relations, which is closely related to Japan’s corporate culture and social structure.

In terms of union organization and operation, Japan adopts a company-specific union system, that is, a union is established in a single company. This is different from China’s union system based on industry or region. In Japan, as long as there are more than two employees, a union can be established without the approval of the company or the government. It is worth noting that Japan’s union organization rate is relatively low, about 17%, but in large companies, the influence of unions is still relatively large.

The Japanese Constitution grants unions the right to collective bargaining. This means that unions have the right to negotiate with employers on issues such as working conditions and wages on behalf of employees. Employers are obliged to participate in these negotiations honestly and may not refuse without reason. Collective bargaining is usually conducted in a peaceful manner, and although the right to strike is also protected, in practice strikes are not common in Japan. Chinese companies should realize that even if only a few employees in Japanese branches are members of the union, they need to take the union’s negotiation requests seriously.

The labor-management consultation system is a unique mechanism in Japan, known as the “labor-management agreement”. This system encourages employers and employee representatives to meet regularly to discuss matters such as the company’s operating conditions and the improvement of the working environment. Although this consultation is not legally binding, it plays an important role in maintaining the stability of labor-management relations and preventing disputes. Many Japanese companies will set up labor-management consultation meetings and hold regular meetings. This practice is worth learning from for Chinese companies.

In practice, labor-capital relations in Japan are usually harmonious. This is partly due to Japan’s corporate culture, which emphasizes collectivism and long-term employment. However, with the increase in informal employment and changes in the economic environment in recent years, labor-capital relations have also faced new challenges. When Chinese companies operate in Japan, they need to fully understand these backgrounds and respect the local labor-capital interaction model.

For Chinese companies, adapting to Japan’s labor union culture may take time. It is recommended that companies take the initiative to communicate with employees to understand their needs and concerns. Even if there is no formal labor union within the company, it can consider establishing a communication mechanism similar to the labor-management agreement and meeting with employee representatives regularly. This will not only help prevent labor disputes, but also enhance the company’s public image in Japan.

In general, Japan’s labor union and labor-capital relations system emphasizes dialogue, consultation and mutual understanding. When Chinese companies operate in the Japanese market, they should fully realize this and actively adapt to the local labor-capital interaction model, which will help the long-term stable development of companies in Japan.

Common legal risks and countermeasures for foreign-invested enterprises

Foreign companies operating in Japan often face unique legal challenges that often stem from cultural differences, different legal systems, and unfamiliarity with local business practices. Here are some of the most common legal risks and strategies to address them:

1. Communication problems caused by cultural differences

Japanese business culture emphasizes implicitness, harmony, and collective decision-making. Many foreign companies, especially those from countries with a direct communication culture, often misunderstand the true intentions of Japanese employees. For example, “I’ll think about it” in Japan may imply a rejection rather than a positive response. This misunderstanding can lead to serious labor disputes.

Response strategies: Invest in cross-cultural training, encourage management to learn Japanese, hire human resources experts familiar with both cultures, establish clear communication channels and feedback mechanisms, and hold cultural exchange activities regularly to enhance mutual understanding.

2. Risk of wrongful dismissal

Japan’s dismissal laws are very strict, and even with a fixed-term contract, dismissal without just cause may be considered an abuse of rights and invalidated. Many foreign companies underestimate this, resulting in expensive legal proceedings and reputational damage.

Response strategy: Establish a clear performance evaluation system and keep detailed records of employee performance. Before considering dismissal, try other measures such as demotion, transfer or salary reduction. If necessary, consider terminating the contract through consensus and provide reasonable compensation.

3. Improper overtime management

Japan’s overtime culture is world-famous, but in recent years the government has been working hard to limit excessive overtime. Many foreign companies have failed to correctly understand and implement overtime regulations, facing the risk of breaking the law and the problem of “death from overwork”.

Response strategies: Implement a strict working time management system, including overtime application and approval process. Educate management and employees about legal working time limits. Consider introducing flexible working hours or remote working options to improve work efficiency and employee satisfaction.

4. Violation of the principle of equal pay for equal work

The revised Labor Policy Comprehensive Promotion Law in Japan in 2020 strengthens the principle of equal pay for equal work, requiring companies to provide the same treatment for the same work, regardless of the form of employment. Many foreign companies may inadvertently violate this principle when treating regular and irregular employees.

Response strategy: Comprehensively review the company’s compensation system and benefits policy to ensure that compensation is determined based on job content rather than employment form. Establish a transparent compensation structure and conduct regular internal fairness assessments.

5. Workplace harassment

Japanese law strictly prohibits workplace harassment, including power harassment (パワハラ), sexual harassment (セクハラ) and harassment of pregnant women (マタハラ). If foreign-invested enterprises fail to establish effective anti-harassment mechanisms, they may face legal action and reputational damage.

Response strategies: Develop a clear anti-harassment policy and establish an anonymous reporting system. Conduct regular anti-harassment training, especially for management. Investigate and handle all harassment complaints promptly and impartially.

6. Non-compliance with social insurance payment regulations

Japan’s social insurance system is complex, including health insurance, employee pension, employment insurance, etc. Some foreign-funded enterprises may violate relevant regulations because they do not understand the regulations or try to reduce costs.

Response strategies: Hire professional social insurance consultants to ensure that all relevant regulations are correctly understood and followed. Regularly audit the company’s social insurance contributions. Consider providing additional insurance options for foreign employees to meet their special needs.

By carefully identifying these risks and taking appropriate preventive measures, foreign companies can greatly reduce the legal challenges they face in operating in the Japanese market. Establishing a sound compliance culture can not only avoid legal disputes, but also enhance the company’s reputation and attract and retain outstanding talent.

Case Analysis

In recent years, as more and more foreign-funded enterprises have entered the Japanese market, labor dispute cases have also shown new characteristics and trends. This section will help Chinese companies better understand the practical application of Japanese labor law through the analysis of several typical cases and analyze the latest trends in court decisions.

1. Unfair dismissal case: Toshiba Information Systems (Shanghai) Co., Ltd. Tokyo Branch v. former employee

In 2015, a Chinese employee was fired by Toshiba Information Systems (Shanghai) Co., Ltd. Tokyo Branch for poor work performance. The employee immediately filed a lawsuit with the Tokyo District Court, claiming that the company’s dismissal was improper. After trial, the court determined that the company failed to provide sufficient evidence to prove that the employee’s work performance continued to be poor, and did not give sufficient opportunities for correction and reasonable warnings before dismissal. In the end, the court ruled that the dismissal was invalid and required the company to reinstate the employee and pay back wages.

This case highlights the strict scrutiny of dismissal cases by Japanese courts. For foreign companies, this ruling emphasizes that when considering dismissal, there must be sufficient reasons and a complete process, including giving employees the opportunity to correct their mistakes and clear warnings.

2. Overtime pay dispute case: Overtime work dispute case of a US-funded IT company

In 2018, an American IT company in Tokyo faced a class action lawsuit from several Japanese employees because the company had long required employees to work overtime without pay. The employees claimed that the company adopted a so-called “fixed overtime pay” system, but did not actually pay overtime pay according to the actual overtime hours. After hearing the case, the Tokyo District Court determined that the company’s practice violated the provisions of the Japanese Labor Standards Act on the calculation of overtime pay. The court required the company to pay overtime pay and rectify future overtime management.

This case highlights Japan’s strict requirements for labor time management. Foreign-invested enterprises must fully understand and comply with Japan’s overtime regulations, establish an accurate working time recording system, and pay overtime wages based on actual working hours.

3. Equal pay for equal work case: wage discrimination case of a German auto parts company

In 2020, a German auto parts company in Japan was sued by several informal employees on the grounds that the company treated informal employees significantly lower than formal employees when providing labor of equal value. After trial, the Yokohama District Court determined that the company’s practice violated the principle of equal pay for equal work in Japan’s Labor Contract Law, which was revised in 2018. The court ruled that the company must adjust the treatment of informal employees and pay the difference in wages.

This ruling reflects the Japanese court’s zero-tolerance attitude towards discrimination in employment forms. Foreign companies operating in Japan need to review their salary systems to ensure that employees in different employment forms receive fair treatment when providing labor of equal value.

4. Workplace harassment case: Sexual harassment case of a senior executive of a British financial company

In 2021, a senior executive of a British financial company in Japan was accused of sexually harassing a subordinate. The victim filed a lawsuit with the Tokyo District Court, demanding that the company bear compensation liability. After investigation, the court determined that the company failed to take timely and effective measures to stop and deal with the harassment after learning of it, which constituted management negligence. In the end, the court ruled that the company not only needed to compensate the victimized employees, but also needed to conduct special training for the entire company to prevent harassment.

This ruling reflects the Japanese court’s emphasis on workplace harassment and its strict requirements on companies’ responsibility to prevent and handle harassment incidents. Foreign-invested enterprises should establish sound anti-harassment policies and ensure their effective implementation.

Analysis of court ruling trends:

Through the above cases, we can observe several obvious trends in the way Japanese courts handle labor disputes:

• Strong protection of employee rights: Japanese courts tend to protect employee rights on issues such as dismissal and overtime pay, and have high requirements for companies to provide evidence.
• Strict implementation of the principle of equal pay for equal work: With the revision of relevant laws, the courts have paid more attention to the protection of the rights and interests of informal employees and required companies to eliminate unreasonable gaps in remuneration and benefits.
• Pay attention to the workplace environment: The courts adopt a zero-tolerance attitude towards issues such as workplace harassment, requiring companies to assume more responsibility for prevention and handling.
• Trend of punitive damages: In some serious illegal cases, in addition to requiring the company to correct the illegal behavior, the court may also impose high compensation to serve as a warning.
• Increase in class action lawsuits: In recent years, there has been an increase in cases of employees suing companies collectively, which has placed higher demands on corporate compliance management.

In general, Japanese courts have shown great concern for workers’ rights in labor dispute cases, and have also put forward higher requirements for corporate compliance. For Chinese companies operating in Japan, a deep understanding of these cases and trends, and adjusting the company’s human resources policies and management practices accordingly, will help reduce legal risks and build harmonious labor-capital relations.

Compliance Recommendations

When operating a business in Japan, especially for Chinese companies, it is crucial to comply with local labor laws. The following are some key compliance recommendations that can help companies effectively avoid legal risks and establish harmonious labor-management relations.

Establishing a sound personnel management system is the foundation for corporate compliance operations. This includes formulating clear employment policies, compensation systems, attendance systems, and performance evaluation standards. It is particularly important to note that Japan’s employment system is significantly different from that of China, such as the tradition of lifetime employment and the seniority system. Companies need to design a management system that meets legal requirements and can attract and retain talent based on Japan’s actual conditions. For example, establish a fair promotion mechanism, formulate a reasonable overtime management policy, and a complete welfare system.

Formulating company rules and regulations that comply with Japanese law is the key to avoiding labor disputes. These rules and regulations should include employment rules, disciplinary regulations, overtime management methods, etc. It is worth noting that according to Japan’s Labor Standards Law, companies that employ more than 10 people must formulate employment rules and submit them to the Labor Standards Supervision Office. When formulating these rules, not only legal compliance should be considered, but also Japanese corporate culture and employee expectations should be fully considered to ensure the enforceability and acceptability of the rules.

Emphasis on employee training and communication is particularly important in Japanese corporate culture. Regular training on labor laws and company rules and regulations can improve employees’ legal awareness and reduce disputes caused by misunderstandings. At the same time, establishing effective communication channels, such as regular employee interviews, suggestion boxes or internal complaint mechanisms, can timely discover and resolve potential problems. Especially for Chinese companies, overcoming language and cultural barriers and establishing an open and transparent communication atmosphere are crucial to preventing and resolving labor-capital conflicts.

Hiring a professional team is a wise move to deal with a complex legal environment. Japan’s labor law system is complex and is frequently updated and revised. Professional legal advisors can not only help companies understand and comply with existing laws, but also provide timely advice on legal changes. When dealing with specific labor issues, such as employee dismissal and labor contract amendments, the professional opinions of legal advisors can help companies make legal and wise decisions and greatly reduce legal risks. In addition, when labor disputes occur, professional teams can also provide valuable mediation and litigation support.

By implementing these compliance recommendations, Chinese companies can establish a solid human resources management foundation in the Japanese market, which can not only effectively avoid legal risks, but also enhance the corporate image, attract outstanding talents, and lay the foundation for the long-term development of the company.

Conclusion

Japanese labor laws are undergoing significant changes to adapt to the changing socioeconomic environment. In recent years, the Japanese government has been committed to promoting “work style reforms” aimed at increasing labor productivity, improving work-life balance, and addressing the long-standing problem of excessive overtime. This trend is reflected in stricter management of working hours, promoting diversified working methods (such as remote work), and strengthening the prevention and control of workplace harassment. At the same time, Japan is gradually relaxing restrictions on foreign labor to cope with the labor shortage caused by the aging population. These changes have brought new opportunities to Chinese companies, but also posed new challenges.

For Chinese companies, the Japanese market remains attractive. Japan’s technological innovation, high quality standards and mature consumer market provide Chinese companies with huge room for development. Especially in the fields of IT, new energy, medical health, etc., there is great potential for Sino-Japanese cooperation. However, Chinese companies entering the Japanese market also face many challenges. First, Japan’s strict labor laws and unique corporate culture require companies to have deep localized management capabilities. Secondly, language barriers and cultural differences may lead to poor communication and increase the risk of labor disputes. Furthermore, the high requirements of Japanese society for corporate compliance mean that companies need to invest a lot of resources to ensure that all operations comply with legal regulations.

To succeed in the Japanese market, Chinese companies need to adopt a long-term strategy. This includes a deep understanding of and strict compliance with Japanese labor laws, the establishment of a sound human resources management system, emphasis on employee training and cultural integration, and close cooperation with local legal and human resources experts. At the same time, companies should actively participate in Japan’s business network and deepen exchanges with local companies and government departments to better grasp policy trends and market opportunities.

Finally, it is worth noting that with the deepening of globalization and the widespread application of digital technology, cross-border labor relations will become more complex. Chinese companies in Japan need to not only comply with local laws, but also pay attention to the development trend of international labor standards. On the basis of compliant operations, they should innovate management models to achieve the common growth of enterprises and employees. Through prudent strategies and continuous efforts, Chinese companies will surely write a new chapter of success in Japan, a land full of opportunities and challenges.