With Japan facing increasingly severe labor shortages, many companies are struggling to secure skilled workers, regardless of age. It is also becoming common to hire people who have retired from other companies as fixed-term employees. Some such workers join the workforce in April along with fresh graduates.
This article covers key points in changing fixed-term employees to permanent staff members and how to create the Notice of Employment Conditions appropriately.
[1] Rule on the conversion to permanent employment
If a fixed-term worker has been employed by a same company for a total of 5 years or more by multiple contract renewals, the worker may request a change in the status to a permanent employee at the time of next renewal.
For example, in the case of a one-year contract term, the worker will become entitled to a conversion request after a fifth renewal.
[2] Exception to the right to request conversion
Some companies continue to hire retired workers as fixed-term employees. Such employees also become entitled to contract conversion after working for 5 years.
There are cases where workers are rehired as fixed-term employees after reaching the retirement age of 60. They may request contract conversion if they continue working beyond the age of 65 and the total length of service exceeds 5 years.
However, companies may exclude workers rehired after mandatory retirement from this treatment. By drafting an “employment management plan” and obtain the labor bureau’s authorization, companies may use a special exception to exclude such employees from the rule of contract conversion. Please note that the special exception is applicable to workers rehired by same companies. Workers who have been employed after retiring from other companies are excluded from this rule.
[3] Matters to be included in the Notice of Employment Conditions
Companied must describe matters regarding the conversion to a permanent employment contract when signing or renewing a fixed-term employment contract.
If a conversion request is possible, that must be indicated clearly in the Notice of Employment Conditions, including the employment conditions after converting to a permanent contract, if they are different from those for fixed-term employment. If a company has received authorization from the labor bureau to exclude rehired workers from the rule, that also must be stated in the notice.
In summary, there may be three types of fixed-term employees rehired after reaching the retirement age; those who are yet to become entitled to request contract conversion (whose employment period is less than 5 years); those who are entitled to request contract conversion (who have been employed for more then 5 years); and those who will not become entitled to contract conversion (who are applicable to the special exclusion). Please be careful in managing their employment contracts.
[Reference]
The Ministry of Health, Labour and Welfare
Rules regarding the conversion of a fixed-term labor contract to a labor contract without a fixed term
https://www.mhlw.go.jp/stf/newpage_21917.html
