What makes a retirement talk illegal in Japan?

A retirement talk becomes illegal coercion or "forced resignation" if it removes the employee's free choice. This includes applying excessive pressure, using insulting language, holding excessively long or repeated meetings, or demanding an immediate on-the-spot decision. The key is whether the employee can genuinely say "no."

Can we fire an employee if they refuse a retirement proposal?

No. An employee's refusal of a retirement proposal is not, by itself, valid legal grounds for dismissal. Firing an employee in Japan requires objective, rational, and socially acceptable reasons. Retaliating against an employee for refusing to resign is illegal and can lead to significant legal disputes.

Does an employee have the right to consult a lawyer before agreeing?

Yes. Employees must be given adequate time to consider the proposal, which includes the right to consult with family, a union representative, or a lawyer. Pressuring an employee to sign an agreement immediately without allowing them time for consultation is a key indicator of illegal coercion.

What is a “Company-Initiated” exit status for unemployment benefits?

A "Company-Initiated" (会社都合 - kaisha tsugō) resignation status confirms the separation was at the company's request. This status typically allows the employee to receive unemployment benefits faster and for a longer duration compared to a "Personal-Reason" resignation, making it an important negotiation term.

Home > Blog > Voluntary Retirement in Japan: Legal Rules & Steps

Voluntary Retirement in Japan: Legal Rules & Steps

Oct 03, 2025

Blog

Lawful Retirement Talks vs Forced Resignation

POINT: The key is pressure.
If talks remove free choice, it is unlawful.
Employees must always be able to say “NO.”

Case Law

The IBM Japan case set the rule.
Excessive pressure is illegal.
Insults or dignity loss are also banned.

Talks must support free decision-making.
If not, it may count as forced resignation.

Essential Rule

Ask one thing: Can the worker refuse?
If yes, it is safe.
If not, it risks being coercion.

[Note by Attorney Shinji Kakuta]
Do not run hours of meetings.
Do not repeat them many times.
Never push for a signature.
Meetings must stay calm and short.

Safe Process in Three Steps

POINT: Stay structured.
Steps: ① Prepare, ② Meet, ③ Record.
This keeps risk low and trust high.

① Prepare

Consensus: Show it is a company choice.
Reasons: Use facts, not vague claims.
Budget: Offer fair terms, often 3–6 months’ pay.

② Meet

Hold it in private.
Two company reps are enough.
Keep it 30–60 minutes.
Do not say “fired.”
Frame it as a proposal, not an order.

③ Record

Take notes.
Write a summary.
Avoid “he said, she said.”

Key Clauses in Agreement

POINT: The contract prevents disputes.
Must include Settlement and Non-Disparagement.
Non-compete needs extra pay.

Must-Have

Settlement: No further claims.
Non-Disparagement: No attacks, even online.
Confidentiality: No leaks of terms.
Amicable Exit: Confirms it is mutual, not firing.

Optional

Non-Compete: Only valid with payment.

FAQ

Q1: Can workers refuse?

Yes. Refusal is allowed.
Pushing after refusal is illegal.

Q2: Does refusal mean firing?

No. Refusal alone is not valid grounds.

Q3: Can they consult others?

Yes. Time for family or lawyer is required.

Q4: What exit status applies?

Usually “Company-Initiated.”
This gives faster, longer benefits.

Documents to Prepare

POINT: Bring evidence.
Clear records give clear advice.

Performance & Attendance
Warnings & Responses
Contracts & Rules
Incident Records

Conclusion

Retirement talks are useful but risky.
Respect the law at every step.
Consult a lawyer early.

Author

Akasaka International Law & Accounting Office
Attorney Shinji Kakuta

We support HR issues from prep to talks.
Contact us for safe advice.

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