In November 2024, Japan will implement its New Freelance Act, designed to provide essential labor protections to workers in freelance and gig economy roles. This significant legislation reflects Japan’s unique approach to freelance work, contrasting sharply with the models used in other developed countries. A closer examination of these distinctions, along with the evolving landscape for Japanese freelancers, reveals important implications for the future of work.
The Emergence of Freelance Work in Japan
In recent years, the Japanese government has taken steps to formally categorize “freelancers” amidst a growing number of individuals leaving traditional employer-employee relationships. In 2021, the Japan Fair Trade Commission (JFTC) was the first entity to articulate a definition for freelancers. According to its guidelines, freelancers are self-employed individuals or sole traders who lack a fixed place of business and employees, and who earn income based on their knowledge and skills.
Statistics on Freelancers in Japan
This definition was subsequently adopted by the Ministry of Internal Affairs and Communications for the 2022 Employment Status Survey, which found that 2.09 million people in Japan identified as freelancers, representing 3.1% of the total workforce. Additionally, around 480,000 individuals reported freelance work as a supplementary activity. The legal entrenchment of this definition comes with the New Freelance Act, set to take effect on November 1, 2024.
Protections Under the New Freelance Act
The New Freelance Act aims to improve working conditions for freelancers by applying standards similar to those in the Subcontract Act. This legislation offers freelancers a status akin to “self-employed subcontractors,” thereby extending essential labor protections. The act mandates that clients provide clear, written contracts outlining terms and conditions, and prohibits detrimental practices like unreasonable payment delays and kaitataki, the act of offering payment significantly below market rates for comparable work.
Significant Changes and Provisions
One of the act’s key changes is the establishment of a harassment consultation system, along with provisions for clients to support freelancers in managing childcare and caregiving responsibilities. Clients must also provide at least 30 days’ notice for contract termination and cannot avoid accountabilities simply based on the size of their capital. Notably, around 40% of clients freelancers work with have a capital of ¥10 million or less, making these protections crucial.
Defining Employee Status: Freelancers vs. Employees
While the New Freelance Act enhances protections for freelancers, it draws attention to the ongoing debate about whether freelancers truly operate as self-employed individuals or should be classified as employees. The criteria for “employee status” often hinge on the degree of control exerted by clients over work processes, indicating the potential need for a re-evaluation of how freelance roles are perceived in terms of labor regulations.
The Global Context: Gig Economy Workers
The status of gig workers, particularly in the West, has become a heated topic, with many jurisdictions increasingly recognizing gig workers as employees entitled to labor protections. As the European Union’s Platform Work Directive establishes explicit legislative measures for gig workers, Japan seems to be charting a different path by acknowledging freelancers under the existing Subcontract Act framework.
Looking Ahead
As gig work becomes more prevalent in Japan, the implications of the New Freelance Act could lead to a significant shift in labor dynamics, though challenges remain unresolved. The legislation does not fully address the contentious debate surrounding the “employee status” of freelancers, which could affect their access to benefits like insurance coverage. Ultimately, a broader discussion on the classification of labor in Japan may be necessary to adapt to rapid changes in the workplace.
(Originally published in Japanese. Photo: An Uber Eats delivery worker navigates through heavy rain in Tokyo. © Jiji.)
The New Freelance Landscape in Japan: Understanding the Impacts of the Freelance Act
Introduction to Japan’s Freelance Act
Starting November 1, 2024, Japan will implement its New Freelance Act, designed to extend much-needed labor protections to freelancers. This new legislation marks a significant shift in how freelance and gig economy workers are recognized and protected, addressing the unique nature of work relationships in Japan.
The Evolution of Freelancing in Japan
In recent years, the Japanese government has taken steps to formally define the term “freelancer.” With a notable increase in individuals operating outside traditional employment frameworks, the Japan Fair Trade Commission (JFTC) laid the groundwork for this recognition in 2021. Freelancers are now defined as self-employed individuals who do not have a fixed business location and rely on their expertise to generate income.
Understanding the Scope of the Freelance Industry
The 2022 Employment Status Survey revealed that nearly 2.09 million individuals in Japan identify as freelancers, constituting approximately 3.1% of the nation’s workforce. This growing community is not just limited to full-time freelancers; an additional 480,000 engage in freelance work as a secondary source of income.
Core Provisions of the New Freelance Act
The New Freelance Act introduces essential provisions designed to safeguard the working conditions of freelancers. Clients are mandated to present formal contracts outlining clear terms, including prohibitions against delayed payments and ensuring fair remuneration for services rendered. Furthermore, the law emphasizes the establishment of harassment prevention systems and extends considerations for parents or caregivers balancing work responsibilities.
Freelancer Protections and Employer Responsibilities
One of the major shifts with the New Freelance Act is its alignment with existing labor regulations, offering freelancers protection akin to that of subcontractors. This means clients must adhere to fair arrangements, ensuring timely payments and a transparent contractual relationship. The Act also imposes restrictions on unfair practices, safeguarding freelancers from exploitative behaviors.
Challenges and Legal Interpretations
While the New Freelance Act presents significant advancements in worker protections, it also raises questions about the classification of freelancers versus traditional employees. The criteria for determining employee status incorporate elements such as a worker’s autonomy in accepting jobs and the nature of their contractual obligations. The Act’s broad definition could potentially encompass individuals who should be classified as employees under labor laws.
The Future of Freelancing in Japan
As Japan navigates this transformative period, the implications of the New Freelance Act will likely shape the future of work in the country. With increasing numbers of individuals engaging in gig economy roles, there is immense potential for policy evolution that could further redefine employment standards. The conversation surrounding the legal status of freelancers will continue, necessitating ongoing evaluations of labor protections to keep pace with changing work dynamics.
Conclusion
The enactment of the New Freelance Act marks a critical moment for the protection of freelance workers in Japan. By ensuring clearer terms of employment and limiting exploitative practices, the Act aims to foster a more equitable working environment for freelancers. As the vernacular of work evolves, Japan stands at the forefront of redefining employment relationships in a rapidly changing economy.
