When can an Employee be Dismissed?

Lack of ability is the most common reason given for dismissal of an employee.

Companies will often have internal employment rules stating that "lack of ability to carry out work duties" will be grounds for dismissal.

However, for permanent employees that are hired right after graduating college (without their job position or duties being specifically limited) in a regular, generalist position, they cannot be dismissed just because their work performance is below average.

For example, there are cases in which the dismissal of an employee was ruled invalid even when they received a "C" grade or substandard evaluation of their work performance for several years, because prior to that the employee received standard grades and there are work duties the employee can adequately perform.

On the other hand, an example of a case whereby dismissal of the employee was ruled valid when, after being hired, the employee was transferred between various departments and showed a poor understanding of their work duties in each.

The employee was overconfident in their knowledge and abilities, and entered into negotiations with business partners whilst ignoring the instructions of their boss.

In addition to these deficiencies, because the employee made incoherent comments, the employer was effectively forced to restrict the employee from carrying out any substantive work.

As a last resort the employee was exempted from their regular work duties for 3 months and given legal practice training, however their results were inadequate and the employee was finally dismissed.

As can be seen above, it is possible the dismissal of an employee will be found invalid unless the employee’s lack of ability is such that it seriously intereferes with the operation of the company, and matters cannot be resolved even after attempting job transfers, demotions, training, education and the like.

Generally speaking, an employee cannot be dismissed for having multiple debts (多重債務 or "taju saimu") or filing for personal bankruptcy (自己破産 or "jiko hasan").

For example, even if phone calls demanding for payment of a debt are made at the workplace of the employee, this is not valid grounds for dismissal, as the problem can be resolved by the employee by taking steps to working out their debt (such as by hiring a lawyer to consolidate their debt or to negotiate on their behalf to resolve their debt situation by seeking reduction in interest rates, suspension of payment, or reduction in principle).

However, for securities sales representatives, insurance sales representatives, travel agencies, investment advisers, security guards and the like, it is often the case that their registration or qualification necessary for employment will be lost upon bankruptcy.

Thus, it is possible that personal bankruptcy will be grounds for the legal dismissal of an employee.

For these types of professions, dismissal in this manner will only be valid if the employee has filed for personal bankruptcy.

The employee voluntarily working out their debts or filing for voluntary liquidation will not be grounds for a valid dismissal and is illegal.

In one case, an announcer for a local news broadcaster overslept twice in a two week period.

As a result of this, one time the announcer missed the news broadcast entirely, and the other time he missed five minutes of the broadcast.

The announcer was consequently dismissed.

Considering these were negligent acts and not malicious behaviour, and that the announcer apologized and made efforts to arrive at the studio as soon as possible, in addition to the fact that their usual work performance was sufficient, it was ruled that the dismissal was invalid.

On the other hand, in another case, an employee was absent 70 days within their first year of being hired without giving any specific reason beyond it being a personal matter.

The employer repeatedly cautioned the employee in writing and requested improvement.

The dismissal of the employee after failing to adhere to these cautions and requests for improvement was ruled to be valid.

Although it will depend on the facts of the case, as the above examples show, it would be unfair for a hard working employee to be dismissed after being late to work two or three times.

On the other hand, if that employee was late to work once or twice a week for an extended period of time and showed no interest in improvement despite being cautioned by their boss, dismissal would likely be valid.

Even in cases where an employee has suffered an injury or become ill outside of work and is now unable to perform their work duties, if the employee was hired in a regular generalist position and can perform other work after being transferred or deployed within the company, they cannot be dismissed.

If an employee suffers an injury in the course of performing their work duties and is receiving treatment for that injury, the employer is generally prohibited from dismissing the employee.

If an employee has enaged in behaviour that constitutes embezzlement, malpractice, violence, abusive language, or insubordination, in many cases, dismissal will be legal.

It should be noted that in most cases dismissals of this type will be a "disciplinary dismissal" (懲戒解雇 or "chokai kaiko").

Even for foreign foreign companies which are known for high salaries and frequent job changes, because employees are making a living dependent on wages, dismissal will still require objectively reasonable grounds like any other industry.

For further details please refer to our Foreign Companies and Unfair Dismissal Page.

The same processes and requirements to dismiss a regular employee will apply when attempting to dismiss a contract employee (契約社員 or "keiyaku shain") during the term of their employment.

However, rather than dismissal, the more common scenario is that the employer will decline to renew the employee’s contract when it expires.

As to whether non-renewal of a contract could actually be disputed as the dismissal of an employee, it will depend on whether there was a reasonable expectation that the contract would be renewed.

Factors such as what was explained to the employee at the time they entered into the contract (for example, whether they were told they would be able to work longer than the term offered), how many times the contract has been renewed thus far, and how contract renewals are usually handled by that employer, will be important in making this determination.

When an employee is initially hired, a trial or probationary period (試用期間 or "shiyo kikan") may be set in order to determine whether the employee will remain a permanent employee of the company.

If the employee is dismissed during that trial or probationary period, the reason for the dismissal will be interpreted fairly leniently.

However, if the trial or probationary period was unusually long, it may be possible to dispute whether it was in fact a trial or probationary period to begin with.