Black Companies : Exploitative Workplaces in Japan (Part 2)

When evaluating a contract for potential "black company" practices, employees should be vigilant about the following unfair or unusual terms:

1. Excessive Non-Compete Clauses

• Clauses that prohibit working in the same industry or a related field for an unreasonably long time or across a wide geographic area.
• Excessive penalties for violating the non-compete clause, which can severely limit future employment opportunities.

2. Unpaid Overtime Requirements

• Clauses that imply or explicitly state that overtime work is expected but will not be compensated.
• Salaries that include a fixed amount of overtime regardless of actual hours worked, can lead to unpaid excess work.
  • Fixed overtime is a common part of Japanese labor contracts because the assumption is some overtime is necessary, but, the issue lies when there is an expectation to always work overtime.  If the company reprimands the employee for not working overtime or requires the employee to fudge their actual working hours, that's a red flag that should be taken seriously. 
• A requirement to be on-call or available for work at all times without additional compensation or consideration for personal time.
  

3. Salary Deductions

• Rules for salary deductions: Article 24 of the Labor Standards Law stipulates that wages “shall be paid directly to the worker in full." Therefore, it is against the law for a company to deduct wages from salaries as a one-time “fine" as a form of disciplinary action. Companies do have the discretion to take disciplinary action but only by following official company policy. Most often disciplinary action can only be taken after multiple offenses and after discussing the consequences with the employee. In short, if salary deductions are arbitrary, it's likely illegal. 
  

• Recovering training or relocation costs: If an employee leaves before the agreed time and the employer has incurred costs for training, relocation, or work permits, these costs cannot be recovered by deducting from the employee's salary. This would be considered a breach of contract under Article 16 of the Labor Standards Act. If the employer wants to recover these costs, they would need to file a separate legal action against the employee for breach of contract, based on the agreement made with the employee.

4. Unilateral Clauses

• Employer's Right to Change Terms: Clauses that allow the employer to unilaterally change important terms of the contract, such as salary, working hours, or job duties, without the employee’s consent.

• Overly Broad NDAs: NDAs that are excessively broad and restrict the employee from discussing any aspect of their work or the company’s practices, including illegal or unethical behavior.

• Mandatory Arbitration/Waiving Legal Rights: Clauses that require employees to settle disputes through arbitration rather than in court, often favoring the employer and limiting the employee's ability to pursue legal action.

•  Unfair Termination: Clauses that allow the employer to terminate the employee easily, often with little notice or severance pay.

• Strict Resignation Terms: Requirements for the employee to give excessive notice before resignation, often coupled with penalties for non-compliance.

5. Restrictive or Unrealistic Policies

• Unfair restrictions on taking annual leave, sick leave, or other statutory leave entitlements.
• Policies that force employees to take unpaid leave during slow business periods or for other arbitrary reasons.
• Performance goals or sales targets that are unrealistically high and used threat of termination or garnished wages.
• Long probationary periods during which the employee can be terminated easily and may receive lower pay or fewer benefits.

6. Overly High Salaries

Useful Contacts and Resources

• Labor Standards Inspection Office: Ministry of Health, Labour and Welfare’s website
• Foreign Workers Consultation Corner: Available through local Labor Bureaus
• Japan Legal Support Center (By Region)

If you are looking for a job in Japan, email us at info@izanau.com