When companies sign an employment contract, they need to explicitly state labor conditions prescribed by the Labor Standards Act to the employee. The rules regarding the explicit statement of these employment conditions will be revised in April 2024. This article explains will discuss details of the changes.
[1] Explicit statement of place of work and job duties
Labor conditions must be clarified whenever a company signs an employment contract or renews contract with fixed-term workers. Among the items to be clarified, it is currently sufficient to state “place of work” and “job duties” immediately after hiring. After April 2024, however, a company will be required to specify “the scope of changes in the place of work and job duties.” The “scope of changes” means places of work or job duties the employee may be assigned in the future. Companies have to consider possible changes in the conditions and include them in the contract.
[2] Explicit statement of renewal limits and the possibility of signing an unfixed-term contract
Employment contracts for fixed-term workers must also include the limit on the number of renewal and possibility of entering into an unfixed-term contract, as well as employment conditions after changing to unfixed-term contract, if applicable.
1. Limit to the number of renewals
Regarding fixed-term workers, companies must comply with the “Criteria for the Conclusion, Renewal and Termination of Fixed-term Employment Contracts.” With the recent amendment to the criteria, companies are now required to state whether they set an upper limit on the total contract period or the number of renewals (“renewal limit”), and if they do, the length and the number, whenever they conclude or renew a fixed-term contract.
When setting a renewal limit or reducing it, companies have to explain the reason to the employees in advance. This applies, for example, to a case where a company changes the maximum contract period to five years in a contract without an upper limit on the period, or when the limit of four renewals is changed to two renewals.
2. Statement of the possibility of signing an unfixed-term contract, conditions after the change
When a fixed-term contract is renewed multiple times and the total period exceeds five years, the worker my request a conversion to an indefinite-term employment contract. From April 2024, companies must state this option in a renewal contract when the request becomes possible (when the employee becomes entitled to the request.)
If labor conditions will change after entering into an unfixed-term employment contract, the conditions must be stated in the renewal contract when the employee becomes entitled to the request.
The Labor Ministry is planning to provide Q&A and further details in its website. Please check the information and make necessary changes.
Reference
Labour Ministry “Amendments to the rules on labor contracts (clarification about the change to indefinite-term contract or in employment contract relationships)
