What Is the Freelance Protection Act?
The Act on Ensuring Proper Transactions Involving Specified Consigned Business Operators (Act No. 25 of 2023, commonly known as the "Freelance Protection Act") came into force on November 1, 2024. Its formal name covers the "proper treatment of transactions involving specified consigned business operators" and aims to ensure fair transactions between freelancers (specified consigned business operators) and their commissioning businesses, while improving freelancers' working conditions.
Previously, the Subcontract Act required capital thresholds, which meant many transactions between small businesses and freelancers fell outside regulation. The Freelance Protection Act eliminates capital requirements, covering all transactions where a business with employees commissions work from a freelancer.
JFTC Enforcement Since Enactment
As of March 2026, approximately 17 months after enforcement, the Japan Fair Trade Commission (JFTC) has published 10 corrective orders under the Freelance Protection Act. The main violation categories are:
| Violation Type | Cases | Typical Example |
|---|---|---|
| Failure to deliver written terms (Art. 3) | 4 | Only verbal communication of scope and fees; no written document provided |
| Late payment of fees (Art. 4) | 3 | Payment made more than 60 days after receipt of deliverables |
| Unjust fee reduction (Art. 5(1)(ii)) | 2 | Unilateral reduction of agreed fees after delivery |
| Unilateral change of contract terms | 1 | Expanding scope without the freelancer's consent |
These orders demonstrate the Act's real enforcement teeth while exposing compliance gaps among commissioning businesses.
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Try for free →Key Obligations
1. Written Disclosure Duty (Article 3)
Commissioning businesses must disclose the following items to freelancers in writing or by electromagnetic means at the time of ordering:
- Scope of work
- Fee amount and payment date
- Duration of the engagement
- Other items specified by Cabinet Order (delivery location, acceptance inspection methods, etc.)
This obligation requires prompt disclosure at the time of commissioning, separate from formal contract execution. Disclosure via email or chat is permitted, but paper documents must be provided if the freelancer so requests.
2. Payment Within 60 Days (Article 4)
Commissioning businesses must pay freelancers within 60 days from the date of receiving deliverables, and as early as possible within that period. This mirrors the Subcontract Act rule but applies to a significantly broader range of transactions.
3. Prohibited Practices (Article 5)
When a business with employees commissions work for a period exceeding that specified by Cabinet Order, the following practices are prohibited:
- Refusal to accept deliverables
- Unjust fee reduction
- Returns
- Undercutting (paying below market)
- Forced purchases or use
- Demanding unjust economic benefits
- Unilateral modification of terms or demanding rework
4. Harassment Prevention Obligations (Article 14)
Commissioning businesses must establish systems to prevent sexual harassment, maternity harassment, and power harassment against freelancers. Specifically, this includes setting up consultation desks, conducting training, and establishing post-incident response policies.
This is a groundbreaking provision extending harassment prevention duties to non-employment relationships, effectively extending the rules of the Act on Comprehensive Promotion of Labor Policies (Power Harassment Prevention Act) to commission-based relationships.
Practical Challenges
Unclear Private-Law Consequences
The Freelance Protection Act is primarily administrative in nature, with enforcement through JFTC and Ministry of Health, Labour and Welfare recommendations, orders, and public announcements (Articles 8–12). However, the Act does not clearly specify the private-law effect of violating contract terms — for example, whether such terms are void or voidable under the Civil Code.
For instance, whether a payment term exceeding 60 days would be deemed void under Civil Code Article 90 (violation of public order) or automatically shortened to 60 days under Article 4 of the Act remains an open question that awaits judicial development.
Overlap with the Subcontract Act
Where both the Subcontract Act and this Act apply, both laws operate concurrently. Since the Subcontract Act is stricter in certain areas (such as fee reduction prohibitions), determining Subcontract Act applicability remains important in practice.
Interpretation of "Business with Employees"
The prohibited practices under Article 5 apply only to businesses "with employees." While "employees" includes part-time and casual workers, sole proprietors who only commission other freelancers fall outside the prohibited practices provisions (though the written disclosure and payment obligations still apply).
Outlook
With over a year of enforcement behind us, the accumulation of JFTC orders is expected to clarify the Act's interpretation and application. Key developments to watch include:
- Court decisions addressing private-law consequences of violations
- Possible revised JFTC guidelines
- Industry-specific voluntary fair-dealing initiatives (e.g., development of standard contracts)
- The statutory review of enforcement status scheduled for 2027 (per supplementary provisions)
Both freelancers and businesses commissioning freelance work should review the latest JFTC orders and take steps to update their contracts and internal compliance frameworks.
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*Houritsu no Mikata Editorial Team | Published April 26, 2026*
