On June 6, the MHLW (Ministry of Health, Labor and Welfare) released an update on the new Japanese freelancers law and company requirements enforcement. Freelancers are a growing part of the “workplace” globally and in Japan.  As a result, regulations applying to the companies engaging freelancers are growing and increasingly strictly enforced with associated penalties and fines.

For details, and the numerous associated laws and directives, all in Japanese, please visit this link on the MHLW website

• Verse Corporation publishes articles on timely issues in Japanese Social Welfare and Labour Law. Japanese payroll, source deductions, and all labor law work & pay rules regarding compensation, social insurance, absenteeism & sick leave, etc. require strict adherence. Labor/employment law can be complex, even for Japanese companies, and must be handled mostly in Japanese. As with all social welfare and labor law matters in Japan, please seek out professional Sharoushi (Certified Labor and Social Security Attorney.)* 

• The bulk of the Japanese Ministry of Health, Labor and Welfare (MHLW) announcements are in Japanese.  There are some general materials on the English site, however it tends to 
• reflect only basic information.  Please always seek out a local Japanese Sharoushi for an accurate interpretation of these complex rules and laws.

SUMMARY

As stated by the MHLW…

“In view of the diversification of work styles in Japan, the purpose of this Act is to create an environment in which individuals can engage stably in work entrusted to them as business operators, to ensure proper transactions with specified contract providers and to improve the working environment for persons engaged in specified contract work, and thereby to contribute to the sound development of the national economy“

For companies that outsource business to freelancers working as individuals, it is mandatory to specify the terms and conditions of the transaction when outsourcing, within 60 days in principle from the date of receipt of benefits, and establish a system for harassment countermeasures. The Fair Trade Commission and the Small and Medium Enterprise Agency are mainly responsible for the provisions on the optimization of legal transactions, and the Ministry of Health, Labor and Welfare is mainly responsible for the implementation of the provisions on the maintenance of the working environment.”

Details Overview

Source document in Japanese is here.

Definition of parties/transactions covered

(1) “Specified entrusted service provider” means a business operator that is the counterparty to a business consignment and does not employ employees. [Article 2, Paragraph 1]

(2) “Specified entrusted service provider” means an individual who is a specified entrusted service provider and a representative of a juridical person who is a specified entrusted service provider. [Article 2, Paragraph 2]

(3) “Outsourcing” means the entrustment by a business operator to another business operator to manufacture goods, produce information deliverables, or provide services for the business. [Article 2, Paragraph 3]

(4) “Specified service provider” means a business entity that subcontracts work to a specified service provider and uses its employees. [Article 2, Paragraph 6]

Employees” do not include those who are temporarily employed for a short period of time or for a short period of time.

2. Appropriateness of Transactions with Specified Trust Business Operators

(1) When a business is entrusted to a specified trustee, the details of benefits and the amount of remuneration, etc. of the specified trustee must be clearly indicated in writing or by electromagnetic means. [Article 3] The same shall apply when a business operator that does not employ employees consigns business to a specified entrusted service provider.

(2) A due date for payment of remuneration shall be set within 60 days from the date of receipt of benefits from the specified entrusted service provider, and payment shall be made. (In the case of subcontracting, within 30 days from the date of receipt of payment from the originator of the order) [Article 4] 

(3) With respect to a business consignment (for a period longer than that specified by a Cabinet Order) with a specified commissioned business operator, the acts of 1~5 shall not be performed.

(4) With respect to the outsourcing (for a period longer than that specified by a Cabinet Order) of business with a Specified Trusted Business Operator, a person shall not commit acts 1~5 and shall not unreasonably harm the interests of the Specified Trusted Business Operator by committing acts 6 and 7. [Article 5]

1. Refusing to accept a request without a reason attributable to the Specific Entrusted Business Operator

2. Reducing the remuneration without reasons attributable to the specified entrusted services provider

3. to return goods without reasons attributable to the Specified Trusted Business Operator

4 Unjustifiably setting an amount of remuneration that is significantly lower than the normal market rate

5 Forcing a person to purchase goods or use services designated by the person without justifiable reason

6 Making a person provide money, services, or other economic benefits for his/her own benefit

7. To change or redo the contents without reasons attributable to the Specific Entrusted Business Operator

3. Improvement of Working Environment for Specified Consignment Business Operators

(1) When providing recruitment information by advertisement, etc., false representation, etc. shall not be made, and accurate and up-to-date information shall be maintained. [Article 12]

(2) When a Specified Trusted Business Operator engages in outsourcing (for a period longer than that specified by a Cabinet Order. (2) Necessary consideration shall be given upon request so that the specified entrusted service providers can perform the services pertaining to outsourcing (for a period longer than that specified by a Cabinet Order; hereinafter referred to as “continuous outsourcing”) while balancing childcare and nursing care, etc. [Article 13]

(3) The MFG shall take necessary measures, such as the establishment of a system for consultation and other necessary measures, to deal with harassment of workers engaged in specified entrusted services. [Article 14]

(4) In the case of mid-term termination of continuous outsourcing, etc., in principle, 30 days’ notice must be given to the specified entrusted service provider prior to the date of mid-term termination, etc. [Article 16]. [Article 16]

4. Actions to be taken in case of violation, etc.

The Fair Trade Commission, the Director-General of the Small and Medium Enterprise Agency, or the Minister of Health, Labor and Welfare may give advice, guidance, report collection/on-site inspection, recommendation, public announcement, or order to a specified outsourcing business operator, etc., with respect to any violation. [Article 8, Article 9, Article 11, Article 18~20, Article 22]

A fine of up to 500,000 yen shall be imposed for violation of the order and refusal of inspection. There are provisions for both corporate and individual penalties. [Article 24, Article 25].

5. Efforts by the government to provide consultation services, etc.

The national government shall take measures such as the development of necessary systems for consultation response, etc., in order to contribute to the properness of transactions pertaining to Specified Fiduciary Business Operators and the improvement of the working environment for persons engaged in Specified Fiduciary Business Operators. [Article 21]

This is an update on the new Japanese freelancers law and company requirements enforcement. Please be fully versed on the changing regulations applying to the companies engaging freelancers, which are growing and increasingly strictly enforced with associated penalties and fines.