For employers in Japan, this has been a busy year to keep up with changes to the employment law landscape. This compliance check revisits recent changes.

Amendments to the Act on Stabilization of Employment of Elderly Persons (ASEEP)

The ASEEP guarantees employment until the age of 65. An employer that establishes a mandatory retirement age below 65 must amend the mandatory retirement age in compliance with the ASEEP or introduce a re-employment scheme whereby individuals reaching the mandatory retirement age are re-employed on different terms and conditions until they are 65.

In addition to the existing obligation to guarantee employment until the age of 65, amendments to the ASEEP that took effect on 1 April 2021 require employers to use 'best efforts' to secure employment opportunities for employees up to the age of 70.

Employers who:

  • set the mandatory retirement age at 65 or older but less than 70; or
  • have introduced a system of continuous employment until age 65 (excluding a system of continued employment until age 70 or older),

should take one of the following measures:

  • raising the retirement age to 70;
  • abolishing the mandatory retirement age;
  • continuing to employ employees who have reached the mandatory retirement age until they are 70;
  • engaging employees who have reached the mandatory retirement age on continuous service contracts (ie as independent contractors) until they are 70; or
  • supporting employees to work on social outreach projects implemented by the employer or by an organisation entrusted or funded by the employer until they are 70.

However, before implementing the last two measures, the employer must first obtain consent from a labour union whose members include more than half of the employees in the workplace (or if there is no such labour union, then from an employee representative who represents the majority of employees in the workplace).

The Act on Improvement of Employment Management for Part Time and Fixed Term Workers (AIEMPF)

The AIEMPF was amended last year to ensure fair treatment of part time and fixed term workers (including dispatch workers) and to improve their working conditions. These amendments took effect from 1 April 2020 for large enterprises and from 1 April 2021 for small and medium-sized enterprises.

In particular, the AIEMPF was amended to prohibit an employer from creating unreasonable differences in working conditions (including salary and bonuses) between regular employees and part time or fixed term workers in light of their duties, level of responsibility and the scope of changes in their job descriptions and assignment.

Act on Employment Promotion of Persons with Disabilities (AEPPD)

Under the AEPPD, an employer is required to hire individuals with physical or intellectual disabilities and mental disorders subject to a quota. From 1 March 2021, the mandatory employment quota in the private sector was increased from 2.2% to 2.3%.

If an employer does not comply with the quota, the employer will be required to make a payment to the Japan Organisation for Employment of the Elderly and Persons with Disabilities that equals the numerical shortage of disabled employees multiplied by 50,000 per month. However, the obligation to make payment does not apply to employers with 100 or fewer regular employees.

Key takeaways

Employers should:

  • conduct a self-assessment to consider whether their retirement policies comply with the recent changes in the law;
  • conduct a self-assessment of the entire employment life cycle and consider whether there are any unreasonable differences in working conditions applicable to a fixed term/part time worker vs a regular employee performing a similar role or duties, including in terms of salary, bonuses, allowances or benefits; and
  • implement relevant hiring processes in place to ensure that they comply with the mandatory employment quota for persons with disabilities.