On April 1, 2015, the Act on Special Measures concerning Fixed-Term Employees with Expert Knowledge, etc. (the "Act") came into force. The Act provides for certain exceptions to the "rule of conversion into indefinite-term contracts." This rule, contained in the Labor Contract Act, provides that an employee may convert a fixed-term contract into an indefinite-term contract if the fixed-term contract has been renewed for five years or more in the aggregate. Specifically, the Act exempts from this rule (i) certain employees with a high level of expert knowledge, skill, or experience ("High-Level Experts"), and (ii) employees who are continuously employed after they have reached retirement age ("Continuously Employed Elderly Employees"). Those exemptions apply only if the employer obtains approval of the employer's plan concerning employment management measures that enable employees to fulfill their potential effectively from the Minister of Health, Welfare and Labor.

To be considered as a High-Level Expert, an employee must engage in projects with a fixed term of more than five years and have both an annual income of at least 10.75 million yen and a high level of expert knowledge, skill, or experience. Employees with a "high level of expert knowledge, skill, or experience" include (i) employees with a Ph.D., (ii) certified public accountants, (iii) medical practitioners, (iv) attorneys, (v) qualified IT strategists, actuaries, or systems analysts, and (vi) employees who are experienced systems engineers, etc.

Under the Act, the right to convert a fixed-term contract into an indefinite-term contract is not available to employees except during the following time periods: in the case of High-Level Experts, a period of up to 10 years during which the employee engages in the project, and, in the case of Continuously Employed Elderly Employees, the period during which an employee is continuously employed after he or she has reached retirement age.

Employers that employ any employees to which this exemption applies are advised to consider utilizing the system under the Act.