Be careful with redundancies

The Japanese economy has suffered severely from the financial crisis. Many companies were forced to dismiss employees through corporate reorganisation or carry out redundancies (Seiri-Kaiko). However, under Japanese law, it is generally difficult to terminate employees and the courts have found many of the redundancies to be invalid, due to employers' failure to satisfy the conditions laid down by judicial precedent, even in this difficult economic climate.

The state of the law As Japan does not have any specific statutory regulations concerning redundancies, the rules that regulate the dismissal of employees also apply to redundancies. Until 2003, Japan did not have any general statutory regulations concerning the dismissal of employees, and whether or not a dismissal was lawful had to be determined by examining the conditions established by court precedent. In 2003, the general rule on the dismissal of employees as established by court precedent was codified into Article 18-2 of...