1. Resignation
2. Dismissal
3. Terminating of Consecutive Employment (Rejection of Contract Renewal)

1. Resignation

     The Labor Standards Act stipulates that an employer shall not force workers to work against their will (Article 5). Therefore an employee may give up his/her job whenever he/she wants to, but it should be done under the social rules. Rules (and steps) in resigning differ according to whether or not the employment contract states a specified/fixed period of time.

(1) Contracts for a specified period;
     In cases where the employee is contracted to work for a specified period of time, he/she should resign when the period of contract expires and the contract of employment will be terminated.

[Worker Point]

     Resignation during the specified contract period is not allowed in principle without any proper, unavoidable reason (Article 628, Civil Act). In cases where the contract prescribes regulations concerning resignation, the employee should follow these. It is possible that compensation for damages due to non-performance of obligation may be claimed by the company. An example would be in a case where an employee suddenly quits, regardless of regulations concerning advance notice in the contract, and the company is damaged by his/her early resignation.
     Some companies or employers include in their labor contracts an obligation for the employee to pay penalty fees if a contract is broken, such as a resignation in the middle of a labor contract. Such a rule is invalid, however, because the rule is against Article 16 of the Labor Standards Act which stipulates a “Predetermined Indemnity”.

(2) Contracts without a fixed period of employment.
     When an employee submits his/her resignation to the company at least 2 weeks before his/her resignation, the contract shall be terminated, if his/her contract is without a fixed period of employment, and if no special matters about resignation are stated in the rules of employment. However, according to the Act, monthly salaried workers are required to give notice of resignation in the first half of the current salary period, if he/she wishes to resign at the beginning of the next salary period. (Article 627, Civil Act)
     It is advisable to speak with the company in advance in order to effect a smooth handing over of duties on resignation.

2. Dismissal

     Dismissal is when an employer unilaterally terminates a labor contract with an employee before its pre-determined expiration date. The Labor Standards Act stipulates that“ dismissal without objective, rational reason(s) and unacceptable by current social standards, will be considered as an abuse of power and is therefore invalid.” Labor Contract Act(16)
     Employees have the right to request a written certification of reasons for their dismissal. (Article 22)

(1) Dismissal in the case of workers employed for a fixed period
     Employers are not allowed to dismiss employees with a fixed period of contract before the contract expires, except for in cases with an unavoidable reason (Article 628 Civil Act), or when a company goes bankrupt (Article 631 Civil
Act).・・・・ Even though in such a case dismissal would be unavoidable; the employer is responsible for compensation payable to the employee if the unavoidable reason is due to any fault attributable to the employer.
Dismissal may be allowed if an employee breaks any of the regulations laid out in the labor contract.

(2) Dismissal in the case of employees not employed for a specified period
     A company may terminate contracts without a specified period of employment according to Article 627 of the Civil Act, but according to the Labor Standards Act, minimum standards should apply as follows:

[Employer Point]

a.　An employer shall provide at least 30 days advance notice if the     employer wishes to dismiss an employee. If an employer fails to do so, he/she must pay the average wages for a period of not less than 30 days in lieu of advance notice of dismissal. The number of days of advance notice may be reduced by the number of days for which the employer pays average wages. (Article 20)
b.　Even an employee in a probationary period shall be given advance notice as above, when the person has been employed consecutively for more than 14 days. (Article 21)
c.　The exceptions are;
　 (1) if continuance of the enterprise has been made impossible by a natural disaster or other unavoidable cause (excluding failure to pay tax or financial difficulties), (2) when the reason is attributable to an employee, and an employer previously applies and obtains the approval of the Labor Inspection Office for an exception of dismissal notice. In this case, the employer is able to dismiss the employee without notice or compensatory payment. (Article 20)
d.　An employer shall not dismiss an employee during a period of recuperation from injuries suffered in the course of duty nor within 30 days thereafter. However, after 3 years in recuperation the employer is able to dismiss an employee if the employer pays compensation for termination, or when the continuance of the enterprise has been made impossible by a natural disaster or other unavoidable cause (the employer should obtain the approval of the Labor Standards Inspection Office) (Article 19).
e.　The employer cannot discharge a woman during her maternity leave nor within 30 days thereafter (Article 19).

   Furthermore, as dismissal is very serious for employees, the court ruled that a valid reason must be given for dismissal when the company wishes to discharge employees against their will, and dismissals which lead to an abuse of authority are not allowed.
     Even when a dismissal is due to a reduction in personnel because of a business decline, it needs to satisfy the following requirements.
a. the reduction in personnel is necessary for the company's existence and maintenance,
b. the company has made efforts to avoid dismissals by not hiring new employees or by encouraging early retirement,
c. the basis of the reduction in personnel is rational and also equitable, and persons must be selected logically.
d. the company has also made efforts to explain to the employees' satisfaction the rationale of staff reductions and the necessity of dismissal.

3. Terminating of Consecutive Employment (Rejection of Contract Renewal)

[Employer Point]

     In cases of labor contracts with a specified period, termination comes with their expiry. However, the so-called“ termination of consecutive employment” has become a serious problem. This is where a contract with a specified period has been renewed several times and a company has continued to employ an employee for a certain period, only to suddenly terminate the contract (upon its expiration) and displace him/her.
Several measures are stipulated as follows, to avoid such trouble upon contract expiration.
1. Employers are to clearly state the renewal or cancellation of contracts, and the criterion for contract renewal.
2. Employers are to give at least 30 days prior notice when terminating contracts for employees who have been employed for over one year on a contract for a specified period.
3. When employees request a clear statement on the reason(s) for the termination of their employment, employers must comply promptly in writing.
4. When a fixed-term contract employee, who has already been employed for over one year through contract renewal, arrives at a new contract term, the employer must make an effort to extend the contract period as much as possible, according to the substantiality of the contract and employee's wishes.

     Past judicial precedents [concerning legal conflict involving contract termination ] show that some contract terminations were recognized depending on certain surrounding elements (e.g., objective overview of business, procedures and realities of contract renewal, etc.) as seen as a whole by the court.