Japan's Freelance Act: What Companies Commissioning Freelancers Must Do (Written Terms, Payment Within 60 Days, Prohibited Conduct, 30 Days' Notice)

A company that commissions work from a freelancer in Japan must state the terms in writing or by email as soon as it places the order, and must pay within 60 days of receiving the work. These are rules of the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators (the "Freelance Act"), which came into force on 1 November 2024.

For commissions of one month or more, reducing fees and setting unreasonably low fees are prohibited, and ending a commission of six months or more generally requires at least 30 days' notice. A system for handling harassment consultations is required regardless of how long the commission lasts.

• You commission engineers or designers through Slack messages only, with no document setting out the terms.
• Your internal "close at month-end, pay at the end of the month after next" rule is applied to individual contractors too.
• You want to end, next month, a contract with a contractor you have used for a year.
• Your overseas head office's English-language Service Agreement is used for individual contractors in Japan.

The Act protects "specified entrusted business operators": counterparties to a commission that fall within either of the following (Article 2(1)).

A one-person company is outside the scope if it has a director or auditor besides the representative. "Commission" covers manufacturing or processing goods, creating information-based deliverables such as software and designs, and providing services (Article 2(3) and (4)).

There are two kinds of commissioning party. A business that commissions a specified entrusted business operator is a "commissioning business operator" (Article 2(5)). Among them, an individual who uses employees, or a corporation with two or more officers or with employees, is a "specified commissioning business operator" (Article 2(6)). An ordinary company falls into the second category.

Which commissioning parties are bound, and for which durations, depends on the obligation.

A commissioning business operator must, immediately on commissioning, state the work, the amount of remuneration, the payment date and other matters in writing or by electronic means (Article 3(1)). The matters are set out in the Japan Fair Trade Commission's rules (JFTC Rules, Article 1(1)).

• The names or other identifiers of both parties
• The date of the commission
• The work (or services) to be delivered
• The date and place of delivery
• Where the work is inspected, the date by which inspection will be completed
• The amount of remuneration and the payment date

Matters that cannot yet be fixed for a legitimate reason may be stated immediately once they are fixed (Article 3(1), proviso). If the terms were stated by email and the freelancer asks for a paper document, it must in principle be provided without delay (Article 3(2)).

A specified commissioning business operator must set a payment date within 60 days of receiving the work, and as short as possible (Article 4(1)). This applies whether or not the work is inspected. For services, the period runs from the date the services are provided.

Where work received from a principal is subcontracted to a freelancer, and the freelancer has been told that it is a subcontract and given the principal's payment date and other prescribed matters, the payment date may be set within 30 days of the principal's payment date (Article 4(3)).

Where a specified commissioning business operator commissions work for one month or more, including where renewals extend the commission to one month or more, the following are prohibited (Article 5(1); Cabinet Order, Article 1).

• Refusing to accept the work without fault on the freelancer's part
• Reducing the remuneration without fault on the freelancer's part
• Making the freelancer take back work after receipt without fault on their part (returns)
• Unjustly setting remuneration markedly lower than that ordinarily paid for similar work
• Forcing the freelancer to buy designated goods or use designated services without legitimate reason

It is also prohibited to unjustly harm the freelancer's interests by making them provide money, services or other economic benefits, or by making them change or redo the work without fault on their part (Article 5(2)). For service commissions, refusal of receipt and returns do not apply (Article 5(1)).

When recruiting freelancers through advertisements or similar means, a company must not give false or misleading information about the work, remuneration, termination and other prescribed matters, and must keep the information accurate and up to date (Article 12; Cabinet Order, Article 2).

For continuing commissions of six months or more, a company must, on request, give necessary consideration so that the freelancer can carry on the work alongside pregnancy, childbirth, childcare or family care (Article 13(1); Cabinet Order, Article 3). For other commissions, the company must endeavour to do so (Article 13(2)).

A specified commissioning business operator must take measures such as establishing a system to respond to consultations about sexual harassment, harassment relating to pregnancy or childbirth, and conduct exceeding what is necessary and appropriate that relies on a superior position in the transaction (Article 14(1)). It must not terminate the contract or otherwise treat the freelancer unfavourably because they sought advice (Article 14(2)).

To terminate a continuing commission of six months or more, or not renew it on expiry, the company must give at least 30 days' notice (Article 16(1)). Notice must be given in writing, by fax or by email or similar means (MHLW Rules, Article 3).

Exceptions include where notice is difficult because of a disaster, and where immediate termination is needed for reasons attributable to the freelancer (MHLW Rules, Article 4). If, after notice, the freelancer asks for the reason for termination, it must in principle be disclosed without delay (Article 16(2)).

1. 1

   Check whether the counterparty is covered

   Before ordering, confirm whether they are an individual or company with no employees and no other officers (Art. 2(1))

2. 2

   State the terms immediately

   Set out the work, remuneration, payment date and other terms in writing or by email (Art. 3(1))

3. 3

   Record the date of receipt

   The payment period runs from receipt, so keep a record of the delivery or service date (Art. 4(1))

4. 4

   Pay within 60 days

   Pay by the agreed date; for commissions of one month or more, do not reduce the fee without fault on the freelancer's part (Art. 4(5); Art. 5(1)(ii))

5. 5

   Give 30 days' notice before ending

   To terminate or not renew a commission of six months or more, give notice in writing or by email (Art. 16(1))

Breaches of the obligations on stating terms, payment dates and prohibited conduct are subject to recommendations by the JFTC (Article 8). Breaches concerning recruitment information, harassment measures and notice of termination are subject to recommendations by the Minister of Health, Labour and Welfare (Article 18).

A party that fails without legitimate reason to follow a recommendation may receive an order, which may be published (Articles 9 and 19(1)-(2)). For a recommendation on harassment measures (Article 14), non-compliance may be published but no order is issued (Article 19(3)). Breaching an order, or refusing reports or inspections, is punishable by a fine of up to JPY 500,000 (Article 24). Where an employee commits the breach, the company is also fined (Article 25).

Where a transaction also falls within the Act on Preventing Delay in Payment to Small and Medium-sized Entrusted Business Operators for Manufacturing Consignment, etc. (renamed from the Subcontract Act on 1 January 2026) because of the parties' capital and other criteria, the rules of both Acts need to be checked. Unlike that Act, the Freelance Act has no capital threshold and applies regardless of the commissioning party's size.

If a Japanese subsidiary uses its overseas head office's English Service Agreement for individual contractors in Japan, check that it includes the matters that must be stated (JFTC Rules, Article 1(1)). In particular, payment terms such as "60 days after receipt of invoice" may exceed 60 days when counted from receipt of the work.

Even if the termination clause allows termination "at any time on notice", a continuing commission of six months or more requires 30 days' notice. For operating in Japan more generally, see our column on entering Japan and governing law.

• List your contractors and identify those with no employees or other officers (specified entrusted business operators).
• Check that your purchase order and master agreement templates contain every matter the rules require.
• Review payment terms and confirm you can pay within 60 days of receipt.
• If bank transfer fees are borne by the contractor, check whether this was agreed and how deductions are handled.
• Identify commissions that have lasted six months or more and settle the notice procedure for ending them.
• Make your employee harassment helpline available to freelancers and tell them about it.

• The JFTC or the MHLW (Prefectural Labour Bureau) has requested a report or contacted you about an investigation.
• A freelancer has protested in writing about a fee reduction or the ending of a contract.
• You want to adapt your head office's contract templates for Japan but are unsure how far to change them.
• You plan to end a long-standing relationship with a contractor soon.

We help Japanese subsidiaries review contract templates and deal with disputes with contractors. See our corporate practice.

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