“Poor Sales” Doesn’t Cut it When Your Job is On the Line!

“I was told by my company yesterday that they are firing me. When I asked my manager why, she said that it is because the company’s sales/profits have been bad for two years and they need to start terminating some employees, although I don’t know who else, if anyone, is being fired. What can I do?”


First of all, per Article 22 of the Labor Standards Act, employers must provide a document stating the reason for termination upon request.

According to Japanese labor law, employers can only terminate an employment contract based on “permitted termination.” Anything beside that is an “unfair termination,” and is invalid.

Permitted termination can happen, but the bar is high. The most common situations are:

1) You did something really bad! Maybe you punched someone or robbed a bank.

2) You have been found to be grossly incompetent at your job.

3) The company’s finances are so poor that they need to let you go.

Number 1 is kind of obvious, so we will not discuss it. We talked about number 2 in another article. Here, we will talk about number 3.

3) The company’s finances are so poor that they need to let you go.

First of all, your company needs to demonstrate in black and white (or red) that it has been performing so poorly that it cannot continue operating with its current workforce.

After the company has established financial hardship, there are still some steps that it should take before they can reasonably fire you:

i) The company should have undertaken efforts to avoid terminating workers, such as reassigning them between departments.

ii) The company should offer voluntary retirement packages to all workers.

iii) The company should develop a fair and reasonable process for terminating workers – in practice, this process cannot be arbitrary at all.

If the company really needs to fire people for its financial survival, odds are that you have been hearing about this for a while, and that you have witnessed these steps take place in real time. If you have not, your company may be fibbing.

Please keep in mind that just because laws exist to protect you, they are not magic bullets that will suddenly make your boss reverse course when you recite labor law to them. It is usually up to you to go to court to fight against unfair termination. It is a long and expensive process, and for limited term contract workers, our experience is that judges award damages, but do not order employers to renew contracts. Therefore, for many it is not worth it.

That is why we urge workers to join the General Union. A labor union can keep you informed of the law and offer advice, but they can also represent you and negotiate to keep your job or reach a better deal. Finally, a workplace with a strong union presence makes it easier to prevent unfair practices before they start in the first place.

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