Companies and employees are free to set the governing law for employment contracts however they wish. This is particularly helpful for a foreign company that wishes to draft employment contracts that will be enforced according to the laws of its home country. However, in general, employees in Japan may still take advantage of Japan’s protective employment laws, such as the Labor Standards Law, even if their employment contract is governed by a foreign country’s laws.
In general, where Japan’s laws are more employee friendly than the foreign laws governing the contract, the Japanese laws will take precedence no matter what governing law is specified in the contract. This prevents employers from abusing employees through unfair employment agreements.
If you have any questions about hiring or firing employees for your business in Japan, please contact our office for a legal consultation.