Japan: Non-renewal of fixed-term employment contract not justified by redundancy of role

Generally, when fixed-term employees have been continuously employed by the same employer for a number of years and the fixed-term contract has undergone many renewals, the fixed-term employees will essentially be treated like permanent employees under the eyes of the law, and if the employer decides on one occasion not to renew the contract, such a decision can be challenged. As a recent Court decision shows once again, even redundancy of the role is not a good enough reason to justify a non-renewal.

In October 2013, Aoba Post Office in Yokohama purported not to renew the fixed-term employment contract of an employee who had been continuously employed for almost 11 years and whose contract had been renewed roughly every six months. The employee lodged a claim in Court asking for a declaration that the refusal to renew was not valid. Aoba Post Office argued that due to recent restructuring of the delivery system, the role itself had become redundant.

On 19 January 2016, the Court handed down judgment with the finding that Aoba Post Office had not implemented sufficient measures to ensure that its fixed-term employees could continue their employment. The refusal to renew the employee's contract in this case was therefore found to be invalid.

In Japan, redundancy of a role does not necessarily justify managing out the person doing the role. Companies should discuss with the employee the alternative roles available within the company or at other branch offices, and try to avoid a termination as best as they can.