Japan: Termination of employment

Original and updating authors: Koki Yanagisawa and Erino Yoneda, Nagashima Ohno & Tsunematsu

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Summary

• Employment contracts may terminate in various ways, but employers may dismiss employees on open-ended contracts only on "objectively reasonable" grounds. (See General)
• An employer must generally give an employee at least 30 days' advance notice of dismissal, or pay the employee in lieu of all or part of this notice period, while an employee may generally resign with two weeks' notice. (See Notice periods)
• An employer may generally dismiss an employee without notice only with the prior approval of the Labour Standards Inspection Office, and only if the dismissal is for a serious reason attributable to the employee, or where the continuation of the employer's business has been made impossible. (See Summary dismissal)
• An employee's lack or loss of the skills, capacity and/or qualifications necessary to carry out his or duties is a permissible "objectively reasonable" ground for dismissal, under certain conditions. (See Dismissal on grounds of performance or capacity)
• An employee's serious misconduct is a permissible "objectively reasonable" ground for dismissal, under certain conditions. (See Disciplinary dismissal)
• An employer's need to reduce the number of employees because of business necessity (that is, redundancy) is a permissible "objectively reasonable" ground for dismissal, under certain conditions. (See Redundancy)
• Employers may set a mandatory retirement age of at least 60 years for employees. However, where the retirement age is less than 65 years, if an employee wishes to continue to be employed after the mandatory retirement age, the employer must offer the employee employment until the age of 65. (See Retirement)
• An employer must not dismiss an employee on unlawful discriminatory grounds or because the employee has exercised certain legal entitlements (such as requesting or taking maternity or childcare leave), or during certain periods (such as during maternity leave). (See Prohibition of dismissal on certain grounds and at certain times)
• There is no statutory requirement for employers to offer any form of severance payment on termination of employment, but in practice it is common for employers to pay "retirement allowances" on termination. (See Severance payments)
• When employment terminates, the employee is entitled, on request, to receive a certificate from the employer, stating the employee's period of employment, occupation, position in the enterprise and wages, along with the cause of the termination. (See Certificate of employment)
• An employee who believes that their dismissal is "abusive" because it lacks "objectively reasonable" grounds, or is unlawful for other reasons, has several potential channels for seeking redress, both judicial and administrative. (See Contesting dismissals)