SERIES 3-01: “Your Team in Japan Will Be Disbanded” ― If You Are Suddenly Called into a Meeting and Asked to Sign a Separation Agreement


【Case Study】 X, a foreign worker, has worked for eight years as a sales manager at Company Y, the Japanese subsidiary of a global company headquartered in Country B (status of residence: work visa). One morning, X was called into a meeting that would take “just 15 minutes,” where an HR representative and a supervisor from headquarters (joining online) said: “Due to an organizational restructuring, the team in Japan will be disbanded. Your position will be eliminated.” X was handed a separation agreement written in English and told: “If you sign by this Friday, we will pay you three months’ salary. If you do not sign, this offer will no longer be available.” That same day, X returned the computer and employee ID card, and X’s access to the company systems was also cut off.

This is a common scenario at foreign-affiliated companies, but Japanese labor law applies regardless of where the headquarters is located.

【Conclusion First: Four Key Points to Keep in Mind】

① This is not a dismissal but a request that you resign (Taishoku Kansho). Whether to sign is up to you.

② The mere fact that “the team will no longer exist” does not by itself justify a dismissal.

③ “Three months’ salary” is not necessarily the final offer, and it can be negotiated.

④ If you hold a work visa, check how your resignation date relates to your visa before signing.

Q1. Do I have to sign on the spot, or by the deadline?

A1. No. A separation agreement is an “agreement” between the company and the employee, so if you do not sign it, your employment simply continues. It is enough to say, “I will take it home and review it.” However, since the offer may be withdrawn once the deadline passes, consult an expert before the deadline. Persistently calling you into meetings or making threats can be unlawful, so keep a record of what is said in the meetings. Once signed, it is extremely difficult to rescind or set aside the agreement, so if you do not genuinely agree with the contents, do not sign.

Q2. If my position is eliminated, can’t the company just dismiss me?

A2. In Japan, that alone is not enough. For a dismissal for business reasons (Seiri Kaiko), the following are examined: ① the necessity of reducing personnel, ② efforts to avoid dismissal (such as considering transfers to other departments), ③ the reasonableness of how the employees subject to dismissal were selected, and ④ sufficient explanation and consultation. If the Japanese subsidiary has other departments, ② in particular becomes an issue. Even if the employment contract states that it is “governed by the laws of Country B,” employees working in Japan can assert that Japan’s dismissal rules apply. It is precisely because the bar for dismissal is high that companies seek a “separation agreement with a package.”

Q3. Is three months’ salary reasonable? What should I watch out for in the agreement?

A3. There are no legal rules on the amount, and it is very common for the amount to be increased (particularly where the employee is not at fault in any way, it is also common for the parties to agree on a severance payment equivalent to six months’ to one year’s salary). In addition to the amount, you can also negotiate the resignation date (“garden leave,” under which you remain on the payroll but are released from work), the use or buyout of paid leave, the treatment of bonuses, and having the reason for separation recorded as “for company reasons” (which may result in more favorable treatment when claiming unemployment benefits).

In the agreement, pay attention to the settlement clause stating that “neither party shall make any claim against the other other than as set out in this agreement.” It may prevent you from claiming items such as unpaid overtime pay. Also check the non-compete clause and how the reason for resignation is described.

Q4. What if I refuse to sign and am then dismissed?

A4. Even if you are told you are dismissed, do not sign a resignation letter or an agreement (doing so would be treated as if you “quit voluntarily”). Then, the following steps are recommended: ① request a certificate of reasons for dismissal (this makes it more difficult for the company to add or change its reasons later), ② check whether you were given 30 days’ advance notice or pay in lieu of notice of at least 30 days’ worth, ③ gather evidence, and ④ have a lawyer notify the company that “the dismissal is invalid and you intend to continue working.”

Ways to contest the dismissal include labor tribunal proceedings (Rodo Shinpan) (most conclude in about three months) and litigation (in which you can also directly seek reinstatement). If the dismissal is invalid, you can also claim wages for the intervening period (back pay), which becomes significant leverage in negotiating a settlement payment.

Q5. If I hold a work visa, what should I be careful about?

A5. This is the biggest difference from Japanese employees. Those with the status of “Permanent Resident” or “Spouse or Child of Japanese National” do not lose their status of residence even if they resign or are dismissed. On the other hand, with a work visa, you must file a notification with the Immigration Services Agency of Japan within 14 days of leaving the company, and if you do not engage in the activities corresponding to your work visa status for three months or more without a justifiable reason, your status of residence may be revoked. When you set your resignation date is just as important as the amount. Even if you contest the dismissal, do not forget to file the notification, and keep a record of your job-seeking activities.

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