Labor & Employment Law

Japan’s New Labor Mobility Rules: From Lifetime Jobs to Flexible Careers

Japanese Attorney at Law - Bengoshi L.L.

• 11 min read
One-slide overview of Japan’s labor mobility reforms—side jobs, reskilling, job-based contracts, and life-event leave

TL;DR

  • Japan is moving from lifetime employment to flexible, mobile careers, backed by new laws and policy.
  • Key reforms: promotion of job changes, guidelines for side jobs, mandatory disclosure of job-scope changes, and heavy investment in reskilling.
  • Employers must aggregate working hours across multiple jobs, manage health risks, and clarify transfer scope in contracts.
  • Robust leave frameworks support workers through illness, childbirth, childcare, and family care, but cultural uptake remains uneven.

Table of Contents

  1. The Legal Framework Promoting Labor Mobility
  2. Side Jobs and Diverse Careers (Fukugyō / Kengyō)
  3. Career Development, Training, and Reskilling
  4. “Job-Based” vs. “Membership-Based” Employment
  5. Supporting Career Continuity Through Life Events
  6. Conclusion

Japan's labor market, long characterized by the pillars of lifetime employment and seniority-based wages within a single company, is undergoing a significant transformation. Factors such as demographic shifts, technological advancements, evolving worker attitudes, and global pressures are pushing the nation towards a more fluid and flexible employment environment. This shift is not merely organic; it is actively encouraged by government policy aiming to facilitate labor mobility, reskilling, and diverse career paths. Understanding the legal landscape navigating this transition is crucial for businesses operating in Japan. This article delves into the key legal regulations and trends shaping Japan's evolving world of work, focusing on labor mobility, diverse work styles, career development, employment models, and support for life events.

The traditional Japanese employment model, often referred to as "membership-based," emphasized long-term commitment to a single employer, with the company holding broad discretion over job assignments and transfers. While this offered stability, it often limited individual career autonomy and inter-company mobility. Recognizing the need for adaptation, Japanese policy has increasingly focused on supporting smoother transitions between jobs and fostering individual career development.

A cornerstone of this policy direction is the Labor Measures Comprehensive Promotion Act (Act for Comprehensive Promotion of Labor Measures and Stabilization of Employment of Workers and Enrichment of Their Working Lives - 労働施策総合推進法, Rōdō Shisaku Sōgō Suishin Hō). This act mandates the government to formulate a "Basic Policy on Labor Measures" (労働施策基本方針, Rōdō Shisaku Kihon Hōshin), which outlines national strategies for employment and vocational stability. Recent iterations of this policy explicitly emphasize measures to enhance job change support (転職支援, tenshoku shien), improve vocational guidance and placement services, and promote lifelong learning and skill development to facilitate labor mobility.

The government's analysis, such as the Ministry of Health, Labour and Welfare's (MHLW) "Analysis of the Labour Economy," acknowledges that while overall labor mobility might not yet rival levels seen in some other developed nations, there are clear trends towards increased movement, particularly among certain demographics and those pursuing career changes across industries or occupations. Policy initiatives aim to further encourage "worker-driven career formation through support for labor mobility," signaling a departure from the company-led career paths of the past. This involves not just facilitating job changes but also creating an environment where individuals feel empowered to design and pursue their own career trajectories, whether within their current company, through転職 (tenshoku - changing jobs), or via entrepreneurship.

The Rise of Side Jobs and Diverse Careers (Fukugyō / Kengyō)

Concurrent with the push for greater mobility is the growing acceptance and promotion of side jobs (副業, fukugyō) and concurrent positions (兼業, kengyō). Traditionally, many Japanese companies prohibited or severely restricted employees from engaging in outside work, often citing concerns about conflicts of interest, disclosure of confidential information, or impact on primary job performance. However, the government's "Work Style Reform" initiative explicitly included the promotion of fukugyō/kengyō as a way to enable diverse work styles, supplement income, facilitate skill development, and support future career transitions or entrepreneurship.

In response, the MHLW issued "Guidelines on the Promotion of Side Jobs and Concurrent Positions" (副業・兼業の促進に関するガイドライン, Fukugyō/Kengyō no Sokushin ni kansuru Guideline), first introduced in 2018 and subsequently revised. These guidelines encourage companies to permit fukugyō/kengyō in principle, moving away from blanket prohibitions towards a system where employees notify their employer, and restrictions are imposed only under specific, justifiable circumstances. These circumstances typically involve:

  1. Interference with duties in the primary job (e.g., due to excessive working hours affecting performance or attendance).
  2. Risk of leakage of the primary employer's trade secrets or confidential information.
  3. Actions that could damage the primary employer's reputation or credibility.
  4. Conflicts of interest (e.g., working for a direct competitor).

A significant legal challenge associated with multiple jobs under different employers is the management of working hours. Article 38, Paragraph 1 of the Labor Standards Act (労働基準法, Rōdō Kijun Hō) stipulates that working hours across different workplaces under different employers must be aggregated for the purpose of applying statutory working hour limits and overtime regulations. This presents practical difficulties for employers in accurately tracking hours worked elsewhere.

The revised guidelines attempt to address this by introducing a simplified management method based primarily on worker self-reporting. Employers are expected to manage hours based on the reported time worked elsewhere, and simplified procedures are suggested for calculating potential overtime, particularly focusing on ensuring the aggregated statutory limits are not breached. However, the effectiveness hinges on accurate self-reporting, and critics note potential limitations, especially if workers are hesitant to fully disclose their secondary employment hours.

Furthermore, ensuring worker health in the context of multiple jobs is paramount. While working hour aggregation aims to prevent excessive total work time, the guidelines also stress the importance of health management measures, suggesting employers should take steps even if the legal duty under the Industrial Safety and Health Act (労働安全衛生法, Rōdō Anzen Eisei Hō) (which is typically tied to hours worked for that specific employer) isn't triggered by the primary job alone. Open communication between employer and employee regarding overall workload and well-being is encouraged.

From a career perspective, fukugyō/kengyō offers workers opportunities to acquire new skills, explore different fields, build networks, prepare for future entrepreneurship, or establish a "second career" alongside their primary employment. This aligns with the concept of enhancing individual "employability" – the capacity to gain and maintain employment – in a more dynamic labor market.

Career Development, Training, and Reskilling

As lifetime employment becomes less certain, the onus of skill development shifts partially from the company to the individual, supported by public policy. The Vocational Ability Development Promotion Act (職業能力開発促進法, Shokugyō Nōryoku Kaihatsu Sokushin Hō, commonly abbreviated as 能開法, Nōkaihō) provides the legal framework for vocational training and ability development in Japan. Its stated philosophy emphasizes development aligned with workers' career plans (職業生活設計, shokugyō seikatsu sekkei), respecting individual initiative.

However, historical implementation has often centered on company-led training programs (particularly OJT) integrated within the long-term employment system. While the Act acknowledges individual-led development, critics argue that the legal framework lacks robust mechanisms to guarantee individual rights to access meaningful training, especially for non-regular workers or those seeking to transition between companies or sectors.

Recent years have seen a strong policy push towards reskilling, driven by digitalization (DX), green transformation (GX), and the concept of investing in "human capital." Government initiatives and guidelines, such as the MHLW's "Guideline for Promotion of Learning and Re-learning in the Workplace" (職場における学び・学び直し促進ガイドライン, Shokuba ni okeru Manabi / Manabinaoshi Sokushin Guideline), encourage companies to:

  1. Clearly define the skills required for various jobs.
  2. Support employees in identifying skill gaps and setting learning goals.
  3. Provide access to effective training programs (both OJT and Off-JT).
  4. Offer guidance and support throughout the learning process ("accompaniment support," 伴走的な支援, bansō-teki na shien).
  5. Recognize and potentially reward acquired skills.

This emphasis on reskilling is often linked to discussions about shifting towards "job-based" employment models (discussed below) and facilitating smoother labor mobility into growth sectors. Public support systems, often funded through employment insurance, provide subsidies for companies offering training or directly support individuals undertaking approved courses. However, challenges remain in ensuring these programs are accessible and effective for all workers, including non-regular employees and the self-employed, and that the acquired skills are transferable and valued across the labor market. The debate continues on how best to balance company-led initiatives with truly individual-driven career development supported by robust public infrastructure and potential individual entitlements to training.

"Job-Based" vs. "Membership-Based" Employment

A central theme in discussions about Japan's changing labor market is the contrast between traditional "membership-based" employment (メンバーシップ型雇用, membership-gata koyō) and the increasingly discussed "job-based" model (ジョブ型雇用, job-gata koyō).

Membership-based employment, the archetype of post-war Japanese regular employment, involves hiring individuals (typically new graduates) as potential long-term members of the corporate community, rather than for a specific job. Key characteristics include:

  • Unspecified job duties and location in the employment contract.
  • Broad employer discretion regarding transfers (配転, haiten) and job rotation.
  • Emphasis on internal training (OJT) and long-term skill development within the company.
  • High degree of employment security (strong protection against dismissal).
  • Seniority-based wage progression.

Job-based employment, more common in Western economies and now gaining traction in Japan, involves hiring individuals for clearly defined roles with specific duties, responsibilities, and required skills. Key characteristics include:

  • Job description defining the scope of work.
  • Limited employer discretion for transfers outside the defined job scope.
  • Emphasis on specialized skills relevant to the specific job.
  • Market-based compensation tied to the job role and performance.
  • Potentially lower employment security compared to the traditional membership model if the specific job is eliminated.

The Japanese government and business organizations like Keidanren have been promoting the adoption of job-based elements, often termed "Diverse Regular Employees" (多様な正社員, tayō na seishain), which includes regular employees with limitations on job duties, working hours, or location (勤務地限定・職務限定・時間限定正社員, kinmuchi gentei / shokumu gentei / jikan gentei seishain). This is seen as a way to attract diverse talent (e.g., those seeking work-life balance or preferring specialized roles), retain skilled workers who might otherwise leave due to transfers, and adapt to a more skills-focused economy.

Legally, the distinction has significant implications. Under the membership model, Japanese case law established strong protections against dismissal (doctrine of abusive dismissal, 解雇権濫用法理, kaikoken ran'yō hōri, now codified in Labor Contract Act Art. 16) but granted employers wide latitude in ordering transfers, including those involving changes in job type or location (e.g., Tōa Paint decision, Supreme Court, July 14, 1986). Job or location limitations were typically not implied and required explicit agreement.

Conversely, if an employment contract clearly specifies job duties or work location (as is characteristic of job-based employment), the employer's ability to unilaterally transfer the employee outside that scope is restricted. Dismissal might also be considered more justifiable if the specific job for which the employee was hired ceases to exist, although the abusive dismissal doctrine still requires careful consideration of alternatives like reassignment if other suitable positions exist.

Recognizing the need for clarity as employment contracts diversify, a significant 2023 revision to the Ordinance for Enforcement of the Labor Standards Act (effective April 1, 2024) strengthens the employer's duty of disclosure at the time of contracting. Previously, employers only needed to state the initial job duties and work location. Under the revised rules (specifically Article 5, Paragraph 1, Item 1-3 of the Ordinance), employers must now clearly state the potential "scope of changes" (変更の範囲, henkō no hani) for both job duties and work location that could occur during the employment relationship. This applies to all workers, not just those hired into explicitly "job-based" roles. The intention is to enhance predictability for workers regarding potential future transfers and reassignments, allowing them to make more informed decisions about accepting employment. This mandatory clarification aims to prevent disputes arising from unexpected or overly broad transfers under vaguely defined "membership-style" contracts and supports the trend towards more clearly defined work roles.

Supporting Career Continuity Through Life Events

Maintaining a career trajectory often involves navigating significant life events. Japanese law provides various frameworks to support workers, particularly women, during periods that might otherwise force them out of the workforce.

  • Illness and Disability: Employers have a general duty of care (安全配慮義務, anzen hairyo gimu, Labor Contract Act Art. 5) to prevent harm to employees' health, which can include adjusting workloads or duties for employees recovering from illness. For those with lasting disabilities, the Act on Promotion of Employment of Persons with Disabilities (障害者雇用促進法, Shōgaisha Koyō Sokushin Hō) mandates employers to provide "reasonable accommodation" (合理的配慮, gōriteki hairyo), such as modifying tasks or facilities, unless it imposes an excessive burden. Government guidelines also encourage systematic support for balancing medical treatment and work, promoting collaboration between workplaces and medical institutions.
  • Pregnancy and Childbirth: The Labor Standards Act provides extensive protections, including mandatory pre-natal and post-natal leave (産前産後休業, sanzen sango kyūgyō), restrictions on hazardous work and overtime, and the right to request lighter duties. The Equal Employment Opportunity Act (男女雇用機会均等法, Danjo Koyō Kikai Kintō Hō) requires employers to secure time off for health check-ups and implement measures (like modified work schedules) recommended by doctors based on the employee's health status ("Maternity Health Care measures," 母性健康管理措置, bosei kenkō kanri sochi).
  • Childcare: The Childcare and Family Care Leave Act (育児・介護休業法, Ikuji Kaigo Kyūgyō Hō) is the central piece of legislation. It grants parents the right to take childcare leave (育児休業, ikuji kyūgyō), typically until the child turns one (extendable up to two years in certain circumstances, like inability to secure nursery placement). Recent revisions aim to promote male participation, introducing a separate, flexible "paternity leave" shortly after childbirth (出生時育児休業, shusshōji ikuji kyūgyō, often called 産後パパ育休, sango papa ikukyū) and allowing regular childcare leave to be taken in two installments. The Act also mandates shorter working hours (所定労働時間の短縮措置, shotei rōdō jikan no tanshuku sochi) or other measures (like flex-time or provision of childcare facilities) for employees with children under three, and imposes restrictions on overtime for those with pre-school children. Employers are also obligated to inform employees about these entitlements.
  • Family Care: The same Act provides for family care leave (介護休業, kaigo kyūgyō) for employees needing to care for family members requiring constant care. Eligible employees can take a total of 93 days of leave per family member, dividable into three installments. Similar to childcare, provisions exist for limiting overtime and mandating shorter working hours or equivalent measures. Additionally, employees can take up to five days of short-term family care leave (子の看護休暇・介護休暇, ko no kango kyūka / kaigo kyūka) per year (ten days for two or more eligible family members) for short-term care needs.

While these legal frameworks provide crucial support, challenges remain. Access to and utilization of leave, particularly by men, can be affected by workplace culture. Support measures often diminish as children age, potentially creating difficulties for parents of school-aged children. Furthermore, the effectiveness of family care support depends heavily on the availability and quality of external care services and workplace flexibility. Balancing work and life events continues to be a key area for legal and social development as Japan's workforce diversifies.

Conclusion

Japan's labor law is actively adapting to facilitate a more mobile, diverse, and individualized working landscape. The traditional model of lifetime employment is yielding to pressures for greater flexibility, driven by both economic necessity and evolving worker preferences. Key developments include the promotion of fukugyō/kengyō, an emphasis on reskilling and individual career design, the tentative exploration of job-based employment elements, and strengthened legal requirements for clarifying employment terms, particularly regarding the scope of potential job and location changes. Legal frameworks supporting workers through significant life events are also being refined, albeit with ongoing challenges in implementation and cultural acceptance.

For businesses, navigating this transition requires a keen understanding of the shifting legal requirements, from managing working hours across multiple jobs to providing reasonable accommodations and clearly defining the scope of employment contracts. Embracing flexibility, fostering open communication, and investing in employee development and well-being will be crucial for attracting and retaining talent in this dynamic environment. While the journey towards a truly fluid and individualized labor market is ongoing, the direction of legal and policy change in Japan is clearly set towards supporting greater worker autonomy and diverse career paths.