An employer is only allowed to dismiss an employee if there are objectively reasonable grounds for dismissal, and dismissal is deemed to be appropriate in light of socially accepted ideas. Furthermore, all possible grounds for dismissal must be clearly stated in the work rules if the dismissal of an employee is to be valid. In Japan, moreover, termination of an employment contract by the payment of a certain amount of money is not recognized as a matter of course by law (except where an amicable settlement is reached between the parties concerned). As it is exceedingly difficult to judge the validity of dismissal in concrete cases, it is recommended that employers first obtain the advice of a specialist in labor law (such as an attorney or labor and social security attorney). There is considerable precedent in case law to the effect that it is necessary to meet the following four criteria when making employees redundant as part of company restructuring (i.e., dismissal of employees in order to reduce staff numbers as a result of deteriorating business performance) in order for the redundancies to be deemed reasonable:
1 Necessity — the company must prove that its business circumstances are such that redundancies are unavoidable and necessary.
2 Effort to avoid redundancy — the company must prove that it has made serious managerial efforts to avoid redundancies such as by re-assigning staff and advertising for voluntary redundancies.
3 Reasonable selection — the company must prove that the standards by which it selected those to be made redundant are reasonable, and that redundancies were carried out fairly.
4 Reasonable process — the company must prove that it conducted sufficient consultations with workers and labor unions.
Employers cannot dismiss employees in the following situations, and are subject to penalties for infringement:
1 While an employee is on leave from work as a result of illness or injury incurred in the course of work, or for 30 days following the completion of such leave.
2 While an employee is on maternity leave of six weeks prior to (14 weeks in the case of multiple pregnancy) and eight weeks after the childbirth, or for 30 days following the completion of such leave.
The following cases of dismissal do not have legal effect:
1 Dismissal of a female worker during pregnancy or within one year of giving birth.
2 Dismissal due to a worker’s having reported an illegal act committed by his/her employer to the relevant authorities.
If an employer wishes to dismiss an employee, the employer must give the employee at least 30 days’ notice. If the employer wishes to dismiss the employee summarily and without notice, the employer must pay the employee 30 days’ wages at the time of dismissal (notice allowance).