The single most consequential fact about Japanese employment is that a dismissal without good reason is void — not compensable, void. The employee remains employed. Lifetime employment, seniority pay and restructuring by voluntary retirement all follow from that one rule.
This page explains the rules. For the numbers — companies that flagged doubt about continuing — see the benchmark page.
A dismissal that lacks objectively reasonable grounds and is not socially acceptable is an abuse of right and is void. The test was developed by the courts over decades and written into statute in 2007.
The employer bears the burden in practice, and the bar is high: poor performance alone rarely clears it without evidence of training, warnings and attempted reassignment first. At-will employment does not exist in Japan, and a contract clause purporting to create it is unenforceable.
An employer must give 30 days' notice or pay 30 days' average wages in lieu. This is procedural. Paying it does not make an otherwise unjustified dismissal valid — a common and expensive misunderstanding for foreign-owned employers in Japan.
Where the reason is economic rather than personal, courts weigh: whether there was a genuine business necessity; whether the employer made real efforts to avoid dismissals (cutting overtime, halting hiring, redeploying, seeking volunteers); whether the selection of individuals was reasonable and objective; and whether the procedure included proper explanation and consultation.
This is why Japanese restructuring is announced as a voluntary early retirement scheme with an enhanced payout rather than as layoffs — see how retirement lump sums work. The enhancement buys agreement, and agreement removes the legal problem.
An employee on repeated fixed-term contracts totalling more than five years may require conversion to an indefinite contract. The rule runs from April 2013, so the first conversions arose in April 2018. Separately, non-renewal of a contract that has been repeatedly renewed, or where continuation was reasonably expected, is judged by broadly the same standard as a dismissal.
Resigning is easy. For an indefinite contract the Civil Code default is two weeks' notice, though work rules commonly ask for a month or more. The asymmetry is deliberate.
Employment insurance's basic allowance. The reason for leaving changes the number of days paid — and agreeing to an employer's request to resign is normally treated as employer-initiated.
Resigning carries a waiting restriction. After the seven-day waiting period, payment is further suspended for a set period. Employer-initiated departures have no such restriction and payment starts straight after the waiting period. Check the reason recorded on your separation notice — it changes both the total and when payment starts.
How this is calculated: daily wage = pay over the six months before leaving ÷ 180 (approximated here as annual pay ÷ 365), capped and floored by age, then converted to a daily allowance at a rate that is higher for lower wages (80% down to 50%). The number of days depends on years insured, and on age as well where the departure was employer-initiated. Caps and floors are revised every 1 August. Extensions and the special categories are not modelled. Confirm with Hello Work.
Total figures are in units of 10,000 yen. See also the take-home calculator.
Take-home pay ・ Childcare leave benefit ・ What the 2026 changes did ・ all calculators. The salary you enter is carried across.
Bonuses ・ Retirement lump sums ・ Graduate hiring ・ Paid leave ・ Overtime ・ Parental leave ・ Women in management ・ Reading salary figures ・ Contracts and dismissal ・ Annual securities reports ・ all guides.
Sources: Labour Contract Act (Act No. 128 of 2007), Articles 16, 18 and 19 / Labour Standards Act, Article 20 (Act No. 49 of 1947) / Civil Code, Article 627. Summarised by Corpus; not provided or endorsed by any government agency. The figures behind the linked benchmark pages come from Japanese government statistics and company disclosure — see all benchmarks.