JAPAN Law and Practice Contributed by: Junichi Ueda, Etsuko Hara, Nobuto Shirane, Takahiro Hayase, Yutaka Shimoo and Miki Goto, Anderson Mori & Tomotsune
• the actual content and nature of the work per - formed by the employee; • the authority, responsibility and manner in which work is performed; and • the salary and other compensation. The scope of employees in managerial positions is generally quite narrowly interpreted based on judicial precedents. 4.4 Termination of Employment Contracts Unilateral Dismissal in General When an employer unilaterally dismisses an employ - ee, the employer must have an “objectively legitimate and socially justifiable cause” for the dismissal (Article 16 of the LCA). Otherwise, the dismissal is deemed to be an abuse of right and would therefore be null and void. There is no doctrine of employment at will in Japan. It is generally understood that the following five reasons constitute an “objectively legitimate and socially justifiable cause” for a unilateral dismissal: • inability of the employee to offer their labour to an employer, mainly because of physical or mental disability or extremely poor performance; • infringement of the disciplinary rules in the work - place by the employee’s serious misconduct; • redundancy; • termination due to an agreement with a trade union; or • termination due to an employer’s liquidation if an employer is a corporate entity. In addition, the employer must give the employee at least 30 days’ prior notice of the unilateral dismissal or make payment in lieu of the notice (LSA, Article 20). Except as agreed in an employment contract or the rules of employment, an employee is not entitled to any other monetary compensation upon a unilateral termination of employment. Redundancy A unilateral dismissal due to redundancy may occur where an employer wishes to continue business operations in Japan with a reduction in the number of employees. In this case, the employer must dem - onstrate an “objectively legitimate and socially justifi -
able cause” for the dismissal by satisfying all of the following factors. • The shedding of employees is justified by a strong financial or business necessity, such that it would be extremely difficult for the employer to continue its business without implementing a reduction in the number of employees (and not merely the fact that the employer would be more profitable if the employees were dismissed). • The employer has already endeavoured to take all reasonable means to avoid dismissal of employ - ees, such as facilitating intra-company transfers (or, in some cases, associated-company transfers), offering voluntary resignation with a certain amount of severance compensation, and reducing other operating costs. • The selection of employees for termination was conducted in a fair manner and in accordance with a reasonable and objective standard established by the employer. In other words, the selection criteria must be fair and rational, and must not be based on the employees’ gender, membership of a trade union, race, creed, or any other discrimina - tory reason. • Sincere attempts at discussion or negotiation were undertaken, either with employees or their repre - sentatives (including a trade union, if applicable), but were unsuccessful. The regulations regarding notice period and monetary compensation are the same as those applicable to unilateral dismissal due to redundancies. 4.5 Employee Representations Employee Representative As explained in 4.2 Characteristics of Employment Contracts , when an employer establishes the rules of employment, the employer must obtain a written opin - ion of the majority trade union (or, if such a union does not exist, of the employee representative). Similarly, if an employer intends to execute certain labour man - agement agreements (eg, an Article 36 agreement), these agreements must be executed with the majority trade union (or, if such a union does not exist, with the employee representative). An employee representa - tive must be elected by a majority vote or majority consent of the employees.
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