On 1 April 2013, an amendment to the Japanese Labour Code came into force and introduced new rules regarding fixed-term employment contracts in Japan. It will now be possible for a fixed-term worker in Japan to become a permanent employee provided that he or she has been in fixed-term employment for more than five years and has made a formal request to his or her employer to become a permanent employee.

One of the biggest risks for Japanese employers is that, once a fixed-term employee becomes a permanent employee, that employee will acquire certain rights on termination and as such an employer will need to comply with strict legal requirements (e.g., the test of reasonableness) when considering how and when to terminate an employee.