In Japan, labor laws do not specify particular notice periods for employment termination. Instead, these requirements are usually determined through individual employment contracts, collective bargaining agreements, or established company practices.

Employment Contracts and Notice Periods

Most Japanese employment contracts outline a notice period for both the employer and the employee in case of termination. The notice period can vary based on factors such as the employee's position, length of service, and industry standards. Notice periods are typically reciprocal, meaning the same amount of notice applies to both the employer and the employee. Common notice periods range from one month to three months.

Collective Bargaining Agreements and Notice Periods

In workplaces with unions, collective bargaining agreements may determine notice periods for termination. These agreements supersede any terms outlined in individual employment contracts.

Established Company Practices and Notice Periods

Unwritten company policies or practices may inform notice periods, especially if there is no specific clause in the employment contract. Even if not legally required, providing reasonable notice is considered good practice in Japan to ensure a smooth transition of responsibilities and minimize disruption.

Exceptions to Notice Periods

There are limited situations where immediate termination without notice may be permitted, but these are based on severe breaches of contract by either party. For employers, this might include serious employee misconduct or absenteeism without a justifiable reason. For employees, it could involve the employer's unilateral change of essential working conditions without agreement or the employer's failure to pay wages.

In Japan, there is no statutory severance pay mandated by law. However, it is a common practice for employers to offer severance pay during termination.

Factors Influencing Severance Pay

Several factors influence whether an employee receives severance pay and the amount offered:

• Reason for Termination: Severance pay is more likely in cases of company-initiated termination due to restructuring, redundancy, or downsizing. Employees who resign may not be entitled to severance pay.
• Employee's Length of Service: Generally, longer tenures lead to higher severance packages.
• Company Policy and Industry Standards: Many companies have established severance pay policies based on industry norms and company finances.
• Collective Bargaining Agreements: Unionized workplaces may have negotiated severance pay provisions within their collective bargaining agreements.

Calculation of Severance Pay

There's no fixed formula for calculating severance pay in Japan. Amounts are typically negotiated between the employer and employee during the termination process. Here's a general guideline:

• Severance pay often ranges from one month's salary to a maximum of around 36 months' salary for long-serving employees.
• The average severance pay in Japan is estimated to be around 2 to 6 months' salary.

Important Note: Acceptance of severance pay may signify agreement to the termination and waive the right to challenge the dismissal in court. It's crucial to consult with a lawyer if considering legal action.

Additional Considerations

Some companies may offer additional benefits as part of a severance package, such as health insurance continuation or outplacement services.

Employee termination in Japan follows a cooperative and relationship-oriented approach, focusing on reaching a mutual agreement between employer and employee.

Initiating Termination

The initiating party, employer or employee, provides written notice to the other party. This is according to the agreed notice period stipulated in the employment contract, collective bargaining agreement, or established company practice.

Negotiation and Settlement Agreement

During the notice period, discussions regarding the termination take place. This may involve handover of responsibilities, unused paid time off, and return of company property. A settlement agreement formalizing the terms of termination is often negotiated and signed by both parties.

Last Working Day

On the last working day, administrative tasks like returning company property and completing handover procedures are finalized.

Post-termination

After the termination date, health insurance continuation options offered by the employer may go into effect, and unemployment benefits may become available to the employee.

Important Notes:

While not required by law, providing written reasons for termination is considered good practice in Japan. Termination should align with the principle of good faith. Dismissal deemed unfair or discriminatory may be challenged in labor courts. Seeking advice from a labor attorney is recommended for navigating complex terminations or if there are concerns about the fairness of the process.