From April 2024, rules regarding the explanation about working conditions will be changed, requiring employers to indicate “the scope of change in the place of work and duties” to all employees. There are other additional items that must be explained to workers under fixed-term contracts. This article focused on key points regarding the conversion to a permanent contract.
[1] Conversion to a permanent contract
After a fixed-term employment contract has been renewed several times, making the total length of continuous service exceed five years, the employee may request the company to change the fixed-term contract to a permanent contract.
An employee working under a one-year contract obtains the right to change the fixed-term contract to a permanent one after a fifth renewal, upon which the employee becomes able to request the company for a contract conversion.
[2] Clear explanation about the right to change to a permanent contract
From April 2024, companies will be required to explain fixed-term workers entitled to the conversion to permanent contract about the matter in the employment notice. If working conditions change after conversion, companies must also explain details about the change. Companies may attach a separate document that explains the details. Below is an example of the explanation in an employment notice.
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By making a request to the company for a contract without a fixed term (permanent labor contract) during the term of this contract, the contract may be converted to a permanent labor contract beginning on the day after the expiration day of this contract (yyyy/mm/dd). Changes in working condition after the conversion: no / yes (as described in the separate document) |
[3] Important points in converting a contract
Companies must be particularly aware of two points regarding these rules. One is that explanation about the right to change contract should be given only to eligible fixed-term workers. Since this does not necessarily apply to all fixed-term workers, companies must correctly understand the fixed-term workers who have worked for over five years.
The second point is about the treatment of workers reemployed after reaching the retirement age. Since the contract term of reemployed workers is normally one year, they are also considered as fixed-term workers. Companies may exclude such workers from the rule on the conversion to permanent employment by submitting application to the labor bureau and obtaining an approval. Once approved, workers reemployed after retirement will not be allowed to request for the conversion to a permanent contract. Meanwhile, companies that haven’t obtained the labor bureau’s approval have to accept a request from such employees. In this case, companies will also have to comply with the rule regarding explicit explanation about the matter in the employment notice after April 2024.
Companies should consider the treatment of reemployment workers and obtain the labor bureau’s approval if needed make necessary preparations.
[Reference]
Labor Ministry, “Revision in the rules about clear explanation of working condition from April 2024”
https://www.mhlw.go.jp/stf/newpage_32105.html
“Rule on the conversion to permanent labor contract”
https://www.mhlw.go.jp/stf/newpage_21917.html
*The information is based on laws and regulations as of the date of this article.
