When navigating a global restructure that involves Japan-based employees, employers must consider factors such as redundancy, changes to job description or work location, consultation with unions and corporate reorganisation to avoid legal or reputational risks.
Redundancy termination is often a key component of global restructures, however, unilaterally terminating employees in Japan is subject to extremely stringent requirements.
Employers must satisfy four conditions, known as the ‘four requirements for redundancy termination’ before the termination can take place: A high degree of necessity for workforce reductions, reasonable and fair selection of employees to be terminated, sincere efforts by the employer to avoid termination such as reassignment or offering voluntary resignation programs, and adequate consultation and procedure, including proper communication with employees.
Proving the necessity for redundancies, however, is normally only recognised when a company is suffering a financial crisis.
Unlike other countries, Japan does not have a system where redundancy payments can justify termination. If an employer proceeds with unilateral termination, employees may file wrongful termination lawsuits. Courts often rule in favor of employees and order reinstatement and backpay.
As a result, most companies in Japan opt for voluntary retirement programs or negotiate individual severance packages to achieve workforce reductions.
Global restructurings often require...
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