Japan's whistleblower laws set to change

Japan's Consumer Affairs Agency is currently considering amendments to expand the scope and increase the effectiveness of Japan's whistleblower protection laws. The proposal is earmarked for implementation later this year.

Current status of whistleblower protections in Japan

Whistleblowers are protected under the Whistleblower Protection Act (Act No. 122 of 2004), which prohibits discriminatory treatment of an employee whistleblower, including termination, demotion or reduction in salary, where such termination or discriminatory treatment is due to the whistleblowing, and the employee meets certain requirements, including that he or she must:

• not have a wrongful purpose (eg, obtaining a wrongful gain or causing damage to others by whistleblowing);
• be reporting about a ‘reportable fact’, which is a fact relevant to:
  • the commission of certain criminal acts, the protection of human life, consumers, the environment, competition and the life, property and interests of Japanese citizens; or
  • violations of administrative penalties, recommendations or orders;
• be reporting in regard to an act committed by their employer or officers, employees or agents of their employer;
• report to the designated person in their company or to a government agency with the power to impose penalties in regard to the reportable fact or to any person necessary to prevent the occurrence or spread of damage.

The existing law (in place since 2006) has been criticised as somewhat of a toothless tiger, due to the lack of sanctions available to be imposed on companies that treat whistleblowers unfairly in breach of the provisions.

Proposal to reform whistleblower protections

Aligning with recent international trends toward increased whistleblower protections an expert panel at the Consumer Affairs Agency (CAA) (a Japanese government body) was tasked in December 2018 with undertaking an analysis of the existing provisions, consulting with the business sector, and producing a report containing recommendations for the reform of Japan's whistleblower legislation.

Key findings from the report include:

1. recommendations to strengthen existing protections and extend the scope to cover former employees and board members (as existing provisions are limited to current employees);
2. requiring companies to implement mandatory internal channels for reporting of information by whistleblowers; and
3. considering the introduction of administrative penalties for breaches, including official warnings and requests to comply, as well as public naming and shaming for continual breaches.

Despite the move to increase protections, the CAA did not go so far as to recommend the introduction of strong sanctions against employers that punish their workers for whistleblowing. It also resisted calls for company officials who are in charge of in-house whistleblower alert procedures to be bound by legally punishable confidentiality requirements.

Watch this space

Following the CAA report, the Ministry of Internal Affairs and Communications has undertaken a public consultation period from January 23 to March 29 2019, seeking public input on whistleblower protections and proposed reforms.

While the result of the public consultation is yet to be published, we understand the CAA is aiming to finalise a proposal to amend whistleblower protection laws in time for debate at the Diet later this year.

If you have any questions about how whistleblower provisions apply to your company, or what the proposed changes may mean to you, please contact our HSF Tokyo Team.