New gig economy worker protections have been introduced

At a glance

• Act on Improvement of Transactions between Freelancers and Undertakings (Freelancers Act), effective 1 November 2024, establishes protections for gig economy workers in Japan.
• Businesses must provide written contracts, ensure payment within 60 days, and cannot unjustly alter contract terms for projects exceeding one month.
• Companies must assist freelancers with work-life balance after six months of service and face penalties, including fines up to JPY500,000 for non-compliance.

On 1 November 2024, the Freelancers Act passed into law. This creates new protections for gig economy workers. There has been an increase in the number of freelancers in Japan in recent years, however many have been left without bargaining power, resulting in them being exploited by businesses. 

The Freelancers Act states that:

• Businesses must provide written contracts, defining the terms of a freelancers contract.
• A freelancer must receive payment within 60 days of completing their work.
• Where a contract exceeds one month, businesses cannot return the final product, reduce the remuneration or require the freelancer to redo the work unless specific grounds justify this.
• Freelancers must be paid at the rate which is ordinarily paid for the same type of work, they cannot be paid less.
• If a freelancer works for a business for six months, the business is now under an obligation to help balance work with any child or nursing care and 30 days notice must be given before a contract can be terminated. 

Penalties for non-compliance have also been introduced including naming and shaming, a warning from the government for first time offenders, and fines of up to JPY500,000 for repeat offenders.