On February 27, 2026, Japan's Fair Trade Commission (JFTC) issued a recommendation against Chubu Electric Power Co. under the Freelance Protection Act (Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators). The case — involving 39 professionals including lawyers, doctors, and university professors — is a sharp warning to every business that engages professional service providers. This article covers the facts, violation categories, practical impact, and prevention.
Case Overview
| Item | Detail |
|---|---|
| Recommended party | Chubu Electric Power Co. |
| Recommendation date | Feb 27, 2026 |
| Statutory basis | Freelance Protection Act, Article 8(1)(2) |
| Violation period | Nov 1, 2024 – Sep 17, 2025 |
| Affected persons | 39 specified-recipient operators |
| Violation types | Failure to disclose terms in writing/electronic form (Article 3(1)); failure to pay within 60 days (Article 4(5)) — for 14 of the 39 |
What Went Wrong
1. Failure to disclose terms in writing/electronic form (Article 3(1))
When commissioning the 39 specified-recipient operators, Chubu Electric did not immediately provide written or electronic notice of: - The content of the deliverable - The remuneration amount - The payment due date - Other items prescribed by Cabinet Order
The engagements — covering legal advice, employee training, litigation representation, medical advice, and outside-director duties — were arranged orally, by phone, or in person, without writing or email confirmation.
2. Failure to pay within 60 days (Article 4(5))
For 14 of the 39 individuals, payment occurred after the 60-day window starting from the date the deliverable was received.
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Try for free →Common Violation Patterns in Professional Engagements
Pattern 1: "Favor"-based commissions
Verbal asks ("can you handle next month's training?"), legacy pricing assumptions, no purchase order.
Pattern 2: Cross-department commissioning gaps
Legal commissions a lawyer; HR commissions a professor; accounting payment processing not synchronized.
Pattern 3: Master contract present, individual commission documentation absent
A general retainer or framework exists, but individual project orders are not issued — failing the "immediate disclosure" requirement.
What Counts as "Writing or Electronic Form"
| Method | Compliant | Notes |
|---|---|---|
| Paper PO | Yes | No signature/seal required |
| Email body | Yes | Preserve sent records |
| PDF email attachment | Yes | Most recommended |
| Service agreement (with case-specific terms) | Yes | Per-case content required |
| Verbal / phone | No | Violation |
| Chat tools | Conditional | Tamper risk; preserve logs |
When Does the 60-Day Clock Start?
- Start date: When the freelancer's deliverable is received
- Deadline: As soon as possible within 60 days
- Inspection time is included — slow inspection cannot be used to delay payment
Example: Deliverable received May 1 → payment must occur by June 30.
Chubu Electric's Required Remediation
The recommendation requires Chubu Electric to: 1. Confirm the violations by board resolution 2. Train all employees with commissioning authority 3. Always provide written/electronic disclosure of required items immediately when commissioning going forward 4. Pay within the statutory deadline 5. Establish a compliance system
JFTC Enforcement Trend
In the ~11 months from Nov 2024 to Sep 2025, the JFTC issued ~445 guidance and recommendation actions, with 10+ public recommendations. The agency has signaled intent to focus on professional-services engagements (lawyers, educators, medical professionals).
Industry-Specific Risk Areas
- Legal: lawyer consultations by phone/in-person; out-of-retainer engagements without writing
- HR / training: external instructors commissioned verbally or by chat fragments; expert paper supervision without contracts
- Medical / occupational health: ad-hoc industrial physician engagements; nurse spot consultations
- PR / IR: contributing columnists, designers, videographers, translators on ad-hoc terms
- IT: freelance engineers and security consultants for spot work
Practical Compliance Checklist
At commissioning
- [ ] Provide work content, fee, and payment date in writing or electronic form
- [ ] Standardize a PO template across the company
- [ ] Email body acceptable; PDF attachment preferred
- [ ] Even with a master contract, issue per-case POs
After invoice receipt
- [ ] Pay within 60 days strictly
- [ ] Complete inspection within 60 days
- [ ] Track via payment cycle dashboard
Governance
- [ ] Train commissioning authorities on the law
- [ ] Strengthen legal-accounting coordination
- [ ] Quarterly review of commissioning records
- [ ] Internal hotline that captures freelance feedback
Private-Law Consequences (Open Issues)
Whether a Freelance Protection Act violation invalidates the underlying contract is unsettled. Some scholars argue invalidity under Article 90 of the Civil Code; others view it as a public-law regulatory matter that does not affect contract validity. In practice, remuneration claims are typically recognized, but Freelance Protection Act-based damages claims are theoretically possible — case law is developing.
International Context
| Jurisdiction | Framework |
|---|---|
| EU | Platform Workers Directive (2024) |
| US | California AB5 (2020) and other state laws |
| UK | Intermediate "worker" status |
| Japan | Freelance Protection Act (Nov 2024) |
Japan's law sits between labor law and pure independent-contractor freedom — its own scheme.
Three Take-Home Messages
- Don't skip writing for "Sensei" relationships. Lawyers, doctors, and professors deserve the same documentation discipline — it is legal compliance, not impolite formality.
- Centralize cross-department commissioning. Scattered engagements lead to compliance gaps; a unified PO system or checklist process is essential.
- Make 60-day payment a top KPI. Delays via slow inspection or internal approval are violations — accounting must treat the 60-day deadline as a service-level objective.
The Chubu Electric case shows that even very large enterprises struggle with Freelance Protection Act compliance. Every business that commissions professional services should review its end-to-end engagement workflow now.
For internal program design, audit, or response to suspected violations, consult an attorney experienced in corporate and labor law.
