Employment Contracts in Japan: A Quick Guide

Japanese law does not require a written employment contract, but employers must specify certain key employment terms to all employees (known as ‘KETs’). The following must be set out in writing:

• The term of the employment contract.

• In the case of a fixed-term employment contract, the standards for the renewal of the contract (including the limit of total contract periods as a result of renewals, if applicable).

• Workplace, work duties and responsibilities (including the scope of possible changes thereto as a result of future personnel changes).

• Working hours, the possibility of overtime work, rest periods, days off, and leave. In cases where employees work two or more shifts, the shift changes must also be specified.

• Methods to determine, calculate and pay wages, the cut-off dates for the calculation of a monthly salary and dates for payment of wages.

• Retirement and dismissal matters (including grounds for dismissal).

Many employers choose to include these terms in a written contract for ease and clarity.

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There is no legal requirement for contracts to be in a specific language, but they must be understandable to the employee. Courts may invalidate provisions if the employee cannot comprehend them. Offer letters are not legally required or widely adopted as a standard practice in Japan.

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Certain employee rights are automatically implied into contracts, even if not written. These include statutory benefits like annual leave, maternity leave, and mandatory overtime pay. Any contract terms less favourable than those mandated by law or prescribed by the internal company rules and/or a collective agreement are considered void.

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Employment contracts can reference other documents, such as internal rules of employment. Workplace policies setting out codes of conduct, confidentiality rules, and other matters that employees must comply with at work are also normally made available to new hires.

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Under Japanese labour law, as a general rule, employers cannot validly make unilateral changes to the contractual terms and conditions of employment where these are unfavourable to the employee. Any such changes require the employee’s consent. However, unilateral changes to internal rules may be valid if they are deemed reasonable, considering factors like the impact on employees and the necessity of the change.

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While Japan offers some flexibility in how employment contracts are structured, employers must ensure compliance with mandatory terms, prioritise clarity and fairness, and approach any contractual changes with caution and employee consent.

*Anderson Mori & Tomotsune