As April 1, 2018, will mark the fifth year since the "Rule on conversion of fixed-term employment to permanent employment" ("Conversion Rule") was enacted to stabilize the employment of fixed-term employees, an increasing number of eligible employees ("Eligible Employees") will soon begin applying for permanent employment contracts. Given the impending situation, the Ministry of Health, Labour and Welfare is advising employer associations such as the Keidanren (Japan Business Federation) to be well prepared for the incoming impact of the Conversion Rule. The following is a brief overview of the Conversion Rule:

Requirements

  • The combined contract term of two or more fixed-term employment contracts with the same employer exceeds five years.
  • An Eligible Employee applies for a permanent employment agreement before the expiration of his or her fixed-term employment contract ("Last Contract") with which the combined contract term exceeds five years.

Effect

If an Eligible Employee makes a timely application, a permanent employment contract between the Eligible Employee and the employer will become effective the day following the expiration date of the Last Contract. The employment conditions of the permanent contract will be identical to those in the Last Contract, unless otherwise provided for in a collective agreement, work rules, or employment contract.

Since it will take some time to prepare for the Conversion Rule, we recommend that all employers promptly begin their preparations, including revising any applicable rules. In addition, employers should take into account that an employer may not legally refuse the renewal of an employment contract with an employee before he or she becomes an Eligible Employee.