What is Unfair Dismissal and Encouraged Resignation?

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Contesting unfair dismissals and encouraged resignations

Have you been having troubles at work recently? Does it seem like your employer wants you to resign?

In recent years, many foreign companies have expanded operations into Japan, and the concept of lifelong employment in Japanese business culture is at risk of collapse.

More than ever, companies are trying to more easily lay off or dissmiss their workers in the way it is done in other countries.

When trying to remove an employee, companies in Japan will often act in the following manner:

First, the company will point out all of your shortcomings and failures at work, and imply that your dismissal is unavoidable.

The company will then ask you to sign a "resignation agreement" (退職合意書 or "taishoku goisho").

The company may tell you that if you sign this agreement, you will be able to avoid all of the problems associated with being dismissed or fired (rather than voluntarily resigning), and that they will assist you in finding another job.

If you find yourself in this situation, you should first seek advice from an experienced labor law attorney BEFORE signing the resignation agreement.

Before signing the agreement, you need to first understand "why" the company wants you to sign this agreement.

In Japan, companies want to avoid formally terminating or firing someone, and will try to convince you to "voluntarily" resign.

In Japan, this is often referred to as a encouraged resignations, voluntary resignation, encouraged retirement, and other similar terms (退職勧奨 or "taishoku kansho").

For further details please refer to our Encouraged Resignations page.

Why don’t employers want to "dismiss" their employees?

First of all, please do not sign any resignation agreement without first consulting with an experienced labor law attorney.

So why do businesses in Japan try to have employees volunteer to resign?

This is because under the labor laws of Japan, it is extremely difficult for an employer to dismiss or fire an employee.

The labor law specifically says when an employer can dismiss an employee, and anything outside of a permitted dismissal is called an "unfair dismissal" (不当解雇 or "futo kaiko").

If an employee is unfairly dismissed, and that employee contests the legal validity of the dismissal in court, there is a high likliehood that the company will lose the case.

For this reason, companies try to minimise this risk by having the employee sign a resignation agreement, which amounts to voluntary resignation, rather than a dismissal, which will make it more difficult for you to claim that the dismissal was an unfair dismissal.

If you are already in an difficult position at work, you may think that it is preferrable to resign now, rather than waiting till you are presented with a resignation agreement and then refusing to sign it.

If you are determined to resign, the resignation agreement may be a good opportunity to do so.

However, if you are going to resign anyway, it might be worth considering doing so in a way that would be more financially beneficial to you, rather than just going along with what the company proposes (which is likely heavily in favor of the company).

For example, have you first considered how you are going to cover your financial obligations in the period between resigning from your current employer and finding another job?

Is the severance payment amount (退職金 or "taishoku kin") you are being offered as an incentive to voluntary resign actually fair?

In many cases, the company will not be able to dismiss you if you do not agree to voluntarily resign, and will need to keep paying your salary for the forseeable future.

Under stressful circumstances, you might be tempted to just say "I quit". However, we strongly recommened that you first calm down, and carefully consider the best way to go about leaving your job.

If you find yourself in a similar situation, please contact us to consult with our experienced labor law attorneys.

At Verybest, our attorneys will advise you as to how to obtain more favourable terms when resigning from your job.

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