Why Companies Can’t Fire their Employees in Japan

Why Companies Can't Fire their Employees in Japan Japan

Japan has some of the strictest restrictions on dismissal in the world. It is impossible to fire a full-time employee unless there is a severe case of misconduct. In Japan, the “four requirements for dismissal for liquidation” have been established based on past precedents, and a regular employee cannot be dismissed unless all of the following conditions are met:

  1. There is a business necessity:
  2. Efforts were made to avoid dismissal:
  3. The selection of the employee is reasonable:
  4. The employee has been fully informed:

If any one of the four conditions mentioned above is not met, the dismissal will not be recognized as a reasonable cause and will be considered invalid. 

Let’s take a look at each of them in detail.

4 Conditions for Dismissal

There is a business necessity

It is a requirement that the company is objectively experiencing ” severe business crisis” and that downsizing through dismissal is necessary and unavoidable. This is already a huge hurdle. “You can’t fire a diligent employee for reasons such as “we’ve fallen into the red” or “we want to cut costs”. If you are a full-time employee of a large blue-chip company, you will find that you will not be laid-off unless there is a Lehman shock-level disaster.

Efforts were made to avoid dismissal:

Companies are expected to make as much effort as possible to avoid layoffs. To protect the employment of regular employees, they are actively encouraged to stop hiring new graduates and to lay off non-regular employees. The question is whether they have taken other possible measures other than firing employees, such as reassignment, secondment, and soliciting voluntary retirement. If you are to choose between hiring three new graduates over firing one highly-paid tenured employee, you have to keep the tenured employee.

The selection of the employee is reasonable:

Employers shouldn’t fire someone just because they don’t like them for some reason. Employers must be able to explain the reason/s for dismissal using an objective and reasonable set of criteria. The person must meet the following criteria:

  • A person whose dismissal will have little impact on his or her life;
  • Those with little to contribute to the reconstruction and maintenance of the company; and
  • Those who have little faith in the company in their employment contract

Employees who say, “I’ll go home early and do my side job!” also mean that, “I’m going to go home early and get a second job”. This can be a ground for will be dismissal.

The employee has been fully informed

It is not possible to dismiss an employee all of a sudden, but it is required to give the a full, detailed explanation to the labor union and employees. “In the Asahi Nursery School case, the court ruled that a sudden dismissal six days before the dismissal date was invalid and considered an abuse to the right to reasonable dismissal.

Inability to do the job is not a reason for dismissal

In order to dismiss an employee, there must be “an objective reason”, and the dismissal must be deemed reasonable under socially accepted standards.

Merely being incompetent is not enough for a dismissal to be considered valid. This is because the employee’s lack of ability may be due to a hiring error by the company or a failure in the company’s education and training. It is not enough to say that the employee’s work performance or attitude is poor; the dismissal will be effective only if the degree of poor performance is significant and there is no prospect of improvement.

In other words, a full-time employee who is working hard cannot be fired unless there is a serious problem. In the Sega Enterprises case, the company transferred an employee with low ability to a department like an “outcast room” before giving notice of dismissal, but the company lost in court and the dismissal was declared invalid.

Also, in the Kochi Broadcasting System case, the company tried to fire a radio announcer who overslept twice during the radio news and caused the news to be canceled, but the company lost that case as well. Even if the broadcaster could not broadcast the radio twice because of the announcer’s oversleeping, he could not be fired.

As you can see from these precedents, firing an employee is a very hard thing for a company to do. For this reason, companies try to avoid firing employees as much as possible and ask them to resign with their consent. Incidentally, even in foreign companies, Japanese laws are applied in Japan, so formally almost no one is “normally dismissed”. Dismissal is a huge hurdle for Employers, so they would rather ask you to voluntarily quit or resign from the company. By taking the form of saying that they will pay a premium severance payment on top of the regular severance payment if you quit, they encourage you to leave amicably in a sense.

However, the examples so far are for “liquidation dismissal,” and in the case of “disciplinary dismissal,” the employee can be dismissed immediately without a notice period. A disciplinary dismissal is a dismissal imposed as a sanction against a worker who has disturbed the corporate order, such as by violating service discipline.

The impact of not being able to fire someone easily

It can be said that strong employment regulations allow diligent company employees to concentrate on their work, but the restriction that once a person is hired, it is practically impossible to fire him or her forces companies to limit the number of full-time employees they hire, creating a structure that makes young people vulnerable to being caught in the middle. In addition, the privilege of not being able to fire full-time employees of large companies easily becomes a vested right, and while full-time employees who don’t work at all are sitting on their privileges, temporary workers and new graduates are getting the short end of the stick.

Even if they get a position and come into the company, they do not do any particular work. All they do is point out the flaws in the work done by younger workers, and then they go home on time. In some of the worst cases, they just read magazines or surf the Internet during their working hours. They all have one thing in common: they don’t do any real work. There are many critical comments from young people, such as “I don’t understand why they are paid three times as much as I am,” and ” I wish at least they would do duties in a proper way and diligently for their salary.