JAPAN Trends and Developments Contributed by: Norihiro Sekiguchi, Daisuke Mure, Yuki Kuroda and Ryosuke Sogo, Oh-Ebashi LPC & Partners
The main markets available to grid-scale battery stor - age businesses in Japan include: • the wholesale electricity market; • the supply-demand adjustment market; and • the capacity market. Although participation in these markets can generate revenue, income levels are subject to volatility, and cash flows are not necessarily stable. This variability has posed challenges in securing external financing, as financial institutions typically prefer predictable income streams. To address this issue, mechanisms aimed at stabi - lising cash flows have attracted attention, including participation in the Long-Term Decarbonized Power Source Auction operated by the Organization for Cross-regional Coordination of Transmission Opera - tors (OCCTO), as well as entering into contracts with third parties that provide for the receipt of fixed con - sideration. If such mechanisms succeed in stabilising cash flows, they are expected to facilitate financing through bank loans and other methods, including pro - ject finance. Labour and Employment Amendments to the Whistle-blower Protection Act and their impact In Japan, the Whistle-blower Protection Act was enacted in 2004, and it was subsequently amended in 2022. It has now been further revised, with the lat - est amendments scheduled to come into force on 1 December 2026. The main points of the amendment include the fol - lowing: 1. expansion of the scope of whistle - blowers to include freelancers (Article 2, paragraph 1, item 3 of the amended Act); 2. prohibition of acts that obstruct whistle - blowing (Article 11-2 of the amended Act); 3. prohibition of acts aimed at identifying the whistle - blower without justifiable grounds (Article 11-3 of the amended Act);
4. introduction of a presumption rule ( shift in the bur- den of proof ) concerning dismissals or disciplinary actions taken on the grounds of whistle-blowing (Arti - cle 3, paragraph 3 of the amended Act); and 5. introduction of criminal penalties for dismissals or disciplinary actions taken on the grounds of whistle- blowing (Articles 21 and 23 of the amended Act). Among these, items 4 and 5 are particularly attracting attention as having a significant practical impact. First, with regard to item 4, under the current law, disadvantageous treatment, including dismissal, on the grounds of whistle-blowing is already prohibited (Article 5 of the current Act). Such disadvantageous treatment is interpreted broadly to include, for exam - ple, demotion, salary reduction, disadvantageous reassignment, and disciplinary actions. The amended Act introduces a presumption that any dismissal or disciplinary action taken within one year from the date of whistle-blowing is deemed to have been made on the grounds of the whistle-blowing. In other words, the burden of proof is shifted to the employer to dem - onstrate that the action was not based on the whistle- blowing. Next, regarding item 5, such criminal penalties do not exist under the current law and will be newly intro - duced by the amendment. However, the above-men - tioned provision on the shift in the burden of proof does not apply to these criminal penalties. The persons subject to penalties are individuals who were involved in the decision-making process con - cerning a dismissal or disciplinary action in violation of this provision. Specifically, this may include not only company representatives but also heads of human resources departments and members of disciplinary committees, among others. As for the level of penal - ties, individuals may be subject to imprisonment for up to six months or a fine of up to JPY300,000 (Article 21, paragraph 1), while a business operator that is a legal entity may be subject to a fine of up to JPY30 million (Article 23, paragraph 1, item 1). With respect to these items 4 and 5, there was a debate as to whether personnel transfers or reassign -
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