Compliance & Labour in Japan
Subcontracting Act, Construction Industry Act, Freelance Act, Labour Law — turning compliance obligations into a competitive advantage in fair trading.
The Toshiba enforcement notice. Mandatory labour cost standards in construction. The first Freelance Act violation referral. Regulatory scrutiny over fair trading practices has tightened sharply in recent years. Many companies believe they understand the legal changes — but the gap between knowing the rules and actually embedding them in contracts, quotations, and internal procedures remains wide.
Use the checklist below to assess your current position. If any item applies, we recommend starting with the related articles to get an accurate picture of your exposure.
Corporate Compliance Readiness Checklist
COMPLIANCE SELF-CHECK
The number of items that apply will indicate which articles to prioritise.
Employee compensation & labour management
Labour costs, performance structures, overtime
- Your base salary, bonus, and allowance structures have not been reviewed in the past two to three years, despite rising inflation and labour shortages.
- Excessive overtime has become routine, and solutions beyond simply hiring more staff have not been explored.
Internal tools & technology adoption
Generative AI, information governance, operational rollout
- Generative AI and other new tools are being used, but rules on data handling, copyright, and personal information have not been established.
- New tools are introduced without adequately communicating to staff why they are being adopted.
Business model & subcontracting structure
Scope of Subcontract Act, SME Transaction Act, Construction Industry Act
- A significant portion of revenue depends on contracts from a small number of prime contractors or lead vendors.
- Management and sales teams do not share a common understanding of where the Subcontract Act and SME Transaction Optimisation Act begin to apply.
Trading partner relationships
Price reductions, unpaid work, whistleblower and enforcement risk
- Requests to trading partners for price reductions or unpaid services are made without cross-checking against applicable rules and guidelines.
- Contracts are not designed with awareness that communication patterns could create future enforcement referral risk.
Internal culture & attitudes
Legacy practices, operational rollout, ownership
- Contract terms and HR practices have not been reviewed because “this is how we have always done it.”
- Front-line managers do not genuinely own new rules, resulting in inconsistent communication to their teams.
Tracking legal reform & regulatory guidance
SME Transaction Act, Subcontract Act, Construction Industry Act, Freelance Act
- Recent amendments to the SME Transaction Optimisation Act, Subcontract Act, and Freelance Act have not been systematically reviewed.
- Government guidance on price pass-through and labour cost standards has not been translated into your own contracts and quotation templates.
If any checklist item applies, start with the articles below. We also advise on project-based engagements covering the SME Transaction Act, Subcontract Act, Construction Industry Act, labour law, and price pass-through as an integrated package.
Toshiba enforcement notice: mold storage risk and the 2026 SME Transaction Act
Uses a real enforcement case to show exactly where common trading practices can cross into violation. Essential reading for CHECK 03 or 04.
Construction industry labour cost standards (Japanese)
Explains the labour cost calculation formula mandated under the 2024 Construction Industry Act amendments. Essential reading for CHECK 01 or 06.
Japan’s new Subcontract Act: what changes in 2026
Sets out the scope, prohibited conduct, and penalties under the revised Subcontract Act. The essential starting point for confirming whether your business falls within scope.
We advise on the SME Transaction Act, Subcontract Act, Construction Industry Act, labour law, and price pass-through compliance — tailored to your specific situation.