Asia-Pacific employment law bulletin 2025

Japan

The freelance workforce in Japan is growing. Aiming at improving the freelancers’ working environment, on 1 November 2024 a landmark law took effect known as the ‘Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators’ (Freelance Law).

Freelance Law

Under the Freelance Law, freelancers are defined as:

 i. Contractors, not a corporation, who do not employ any employees, and

ii. Contractors and corporations, who do not have directors other than a representative director, that also do not employ any employees.

Any business operator who entrusts business to a freelancer is considered a contracting party. Freelance Law applies to all transactions in which work is outsourced to freelancers, irrespective of sector or industry.

Key provisions

The Freelance Law provides for a number of key aspects that businesses that outsource work to freelancers should keep in mind:

• Terms required to be provided in writing: A business operator is required to indicate certain terms electronically or in writing immediately after engaging a freelancer to provide deliverables. At least, scope of the deliverables, payment amounts, and due date of any payments, must clearly be indicated when engaging a freelancer
• Timely payments: Payments for deliverables must be made within 60 days of the contracting party’s receipt of the deliverable, unless the contract involves work that has been subcontracted to the freelancer. In the event that the agreement involves subcontracted work, the contracting party must pay the freelancer within 30 days after the contracting party has received payment from the principal client.
  • Where the payment due date has not been set, the payment must be made no later than the date the freelancer’s service has been received.
  • If the contract terms reflect a due date later than 60 days after the business operator has received the deliverables, this provision will be deemed invalid, and the payment will be due after 60 days elapse.
• Prohibition of unfair practices: In order to prevent power imbalances that may arise in freelance transactions, contracting parties are prohibited from engaging in unfair practices, including the following:
  • Refusing to accept completed work without there being any reason attributable to the freelancer.
  • Arbitrarily reducing the agreed payment without there being any reason attributable to the freelancer.
  • Forcing a freelancer to take back deliverables without there being any reason attributable to the freelancer.
  • Setting an unreasonably low payment amount for the deliverables as compared with fair market value of deliverables of the same or a similar nature.
  • Forcing freelancers to purchase goods or services designated by the contracting party, unless doing so is necessary to standardise or improve the content of the deliverables or other reasonable grounds exist.

Improvements to working environment conditions of freelancers

The Freelance Law also introduced several measures aimed at improving the overall work environment for freelancers:

• 30-day termination notice requirement: For ongoing or continuous contracts, contracting parties must now provide 30 days’ notice before terminating an agreement (including when the notice is for non-renewal), unless there are reasonable grounds for immediate termination, such as when there are reasons attributable to the freelancer.
• Harassment prevention measures: Contracting parties must take proactive steps to prevent harassment against freelancers such as consulting with a freelancer who issues a complaint about sexual harassment, power harassment or any other inappropriate behaviour. 
• Flexibility for caregivers and parents: Contracting parties must consider requests to accommodate their caregiving or parental responsibilities from freelancers who are engaged in continuous contracts, so that freelancers can balance their work with their caregiving or parental responsibilities.

Penalties for breaching Freelance Law

Breaches of the Freelance Law can lead relevant authorities including the Fair Trade Commission, the Director General of the Small and Medium Enterprise Agency, or the Ministry of Health, Labour, and Welfare to issue recommendations, make public the contracting party’s breach, and/or issue orders for on-site inspections. Violations may also be subject to a fine of up to JPY 500,000 (approximately USD 3,200), depending on the violation.

Looking ahead

Changes to the childcare leave and caregiver leave

On 1 April 2025 a number of changes will take effect related to these types of leaves, as listed belo

• Scope of short-term lew:ave for sick/injured childcare expanded: Under the current law, employees are allowed to take short-term leave to take care of a sick or injured child that has not yet started elementary school. The law allows for an employee to take up to 5 days off per fiscal year for this kind of leave or up to 10 days if they have 2 or more eligible children.

As of 1 April 2025, the scope of applicability will be extended in the following ways:

• Eligible children: Children who have not finished the 3rd year of elementary school.
• Eligible Usage: Short-term leave can be used for certain events that are not related to the eligible child’s sickness / injury. These events are attending a child’s entrance ceremony, graduation ceremony or if the child’s class / school is closed due to an epidemic.

Furthermore, the cases in which a collective agreement can be concluded to exclude certain employees from being eligible for this leave have been reduced, and only the employees whose prescribed number of working days per week is two days or less will be able to be excluded by labour-management agreement.

• Limitations on unscheduled work (e.g. overtime) expanded: In certain situations where a worker cares for a child, the worker can request that the employer does not engage him or her in unscheduled work, such as overtime. The scope of eligible workers has been expanded, including now workers that care for children that have not started elementary school yet. Whereas previously, only workers caring for a child under 3 years old fell under the scope of this provision.
• Work from home: An employer will need to make efforts to allow an employee who takes care of a child under three years old or an employee who looks after an applicable family member requiring caregiving to work from home upon request.

In this case, the employers are only required to ‘make efforts’ in order to give the employee an option to work from home.

• Companies required to publicly announce statistics on employees utilizing childcare leave: Some companies are required by law to publicly announce statistics on employees within the company utilizing childcare leave. As of 1 April 2025, the threshold for being required to make this announcement has been lowered to 300 continuously employed employees, as opposed to the existing threshold of over 1,000 continuously employed employees.
• Eligibility for short-term leave for caregivers expanded: Currently, an employee who cares for an applicable family member may request to take up to 5 working days of short-term leave to care for the applicable family member. However, certain employees can be excluded from being eligible for this kind of leave through a labour-management agreement. Under the recent amendment, the scope of employees who can be excluded has been narrowed and only the employees whose prescribed number of working days per week is two days or less can be excluded.
• Obligation to create a working environment that minimises resignations from employees caring for applicable family members: An employer will be newly obligated to take measures to create a working environment which minimises employees caring for applicable family members from resigning. Examples of measures that can be taken are:
  • Providing an explanatory session to employees, explaining the rules on leave for caregivers.
  • Implementing a consultation window to enable employees to discuss rules on leave for caregivers.
  • Providing information on employees who take leave for caregivers, or
  • Announcing the company’s policy on how it plans to enhance the usage of the leave for caregivers.

Employers will be obligated to take at least one of the measures above.

• Employer obligations upon worker’s notification of need to provide caregiving: If an employee notifies their employer that the employee needs to look after an applicable family member requiring caregiving, the employer will be obligated to notify the employee of the details of the rules on leave for caregivers and consult with the employee to confirm whether the employee would like to take the leave.

On 1 October 2025 several other changes will take effect, as listed below:

• Measures to achieve a flexible working environment for an employee caring for a child under 3 years old: For an employee who takes care of a child under three years old, the employer will be obligated to offer at least two of the following measures:
  • Change the start working time/end working time;
  • Allow the employee to work from home at least 10 days per month;
  • Establish a childcare facility or provide similar services;
  • Allow an employee to take at least 10 days of ‘childcare balance support leave’ per year, or
  • Allow an employee to work less than the prescribed working hours.

An employee has the right to choose one of the offered measures. In addition, the employer will also be obligated to notify an employee caring for a child from 1 year and 11 months old to 2 years and 11 months old of the details of the available measures and must confirm whether the employee would like to utilise one of the measures made available to the employee.

• Employers’ obligation to consult with worker to balance work and childcare: An employer has an obligation to consult with a worker and listen to his or her opinion about issues concerning work and childcare balance in the following cases:
  • When the worker notifies the employer that the employee or the employee’s spouse is pregnant.
  • When the worker’s child is between the ages of 1 year and 11 months old and 2 years and 11 months old.

The issues for balancing work and childcare on which the employer needs to hear the worker’s opinion are the following:

(a) Starting and ending working time.

(b) Workplace.

(c) How long the employee would like to use a measure for balancing work and childcare, and

(d) Other conditions in relation to balancing work and childcare.

After the employer has obtained the employee’s opinion through the process above, the employer will be obligated to make reasonable accommodations based on the employer’s situation.

Contributors: Akiko Yamakawa, Tomohiro Yokota, and Abe Maria - Vanguard Lawyers Tokyo