Legal Regulation of Dismissal in Japan

In Japan dismissals are regulated by the Article 16 of the Labour Contracts Act (LCA) enacted in 2007 which stipulated the established case law rule. It provides that ‘if a dismissal lacks objectively reasonable grounds and is not considered to be appropriate in general societal terms, it is treated as an abuse of rights and is invalid’. Under this doctrine of abusive dismissal, the effect of abusive dismissal is to makes the abusive dismissal invalid and then the courts deliver a declaratory judgment confirming the status of the dismissed worker as the worker of the employer and order of backpay. This remedial rule has a deterrent effect on arbitrary dismissals, and is the most successful aspect of Japanese unfair dismissal law. There is, however, a fatal defect. The Japanese unfair dismissal law does not have effective procedures to resolve dismissal disputes that are prompt, low cost and easy to use. The most necessary thing is to build the effective procedure to resolve dismissal disputes for all the dismissed workers. If this reform is realised, it will provide much more dismissed workers than before with the effective remedies for abusive dismissals and further a deterrent effect of the Article 16 of the LCA on arbitrary dismissals.