Japan: New rules for dispatch workers

In Japan, arrangements whereby workers are sent by one company to work under the supervision and direction of another company are generally prohibited unless it is a “labour dispatch” pursuant to the Worker Dispatch Law.

Under this law, dispatched workers are employed by dispatching agencies and supplied to client companies under a worker dispatch contract. There is no employment relationship between the dispatched worker and the client.

The maximum period for which a client may engage dispatched workers on a specific assignment is 3 years. Once the assignment has continued for 3 years, the client must offer direct employment to the dispatched workers working on the assignment in order to retain them. The client cannot avoid this restriction by engaging new dispatched workers in the same role after 3 years.

The maximum period does not apply to 26 prescribed types of professional assignments that require expert knowledge, technical skills or experience (e.g. newscasting and translating). On these professional assignments, dispatched workers may be retained indefinitely.

Amendments to this law have been proposed and a draft bill has recently been approved by the Cabinet. The following changes are expected to come into force in April 2015:

• there will no longer be a 3-year limit categorised by the type of work assignment. For all types of assignment, clients may retain dispatched workers indefinitely; however
• a 3-year limit per dispatched worker will be introduced. To retain dispatched workers indefinitely, client companies will need to replace the dispatched workers at least once every 3 years; and
• all dispatching agencies will require a licence.

Actions for employers

These amendments are expected to be welcomed by client companies, who will have more flexibility in the use of dispatched workers. However, dispatching agencies are likely to face more obligations under the new law. Dispatched workers in the current 26 prescribed types of professional assignments are concerned that the amendments would lead to fewer long-term opportunities.

Article written by Florence Cheung.