Issues Related to Creating a System of Laws for Fixed-Term Employment Contracts

Author Name SHIMADA Yoichi  (Waseda University)
Creation Date/NO. April 2011 11-J-060
Research Project Reform of Labor Market Institutions
Download / Links


With reform of the legal framework related to fixed-term employment contracts fast approaching, I examine in concrete terms problems of creating such laws from the perspective of avoiding excessive regulation of fixed-term employment contracts. My analysis is based on a report created by the Fixed-term Employment Contract Study Group organized by the Ministry of Health, Labour and Welfare, and I consider the fact that demand for workers with a fixed-term employment contract is mainly medium- and long-term, not temporary and special.

The general principle of permanent employment contracts is asserted when strictly regulating the use of fixed-term employment contracts. However this is not a general principle embodied in the actual employment contract but is a policy preference from the perspective of stable employment. The general principle of permanent employment contracts would dramatically restrict the use of employees with a fixed-term employment contract in current employment practices in Japan and force these changes. However, legal restrictions on fixed-term employment contracts cannot be considered an appropriate legal policy since they do not take into consideration how companies will meet their medium- and long-term demand for labor. Assuming that employees with fixed-term employment contracts—for which there is a medium- and long-term demand—continue to be permitted, the current legal issue becomes providing an appropriate scope of protection. In particular, the law should clearly state the possibility of renewing fixed-term employment contracts when concluding or renewing the contract and demand that the reason for terminating employment in the case the contract is not renewed be objectively justifiable and socially appropriate.