Author: Attorney Gosuke Kashiwada

With work style reforms and the diversification of employment arrangements, the number of employees hired under job-specific agreements is expected to increase. On April 26, 2024, the Supreme Court of Japan issued a landmark decision significantly affecting the practical scope of an employer’s right to reassign employees (hereinafter referred to as the “Decision”). This article explains the significance of the Decision and its practical implications for employers.

1. Conventional Practice

For many years, Japanese human resource systems have operated under the assumption of lifetime employment. Job rotation has been a common strategy to promote employee development by enabling workers to gain diverse experience and advance within the organization. Courts have traditionally granted employers broad discretion to reassign employees within this context.

In contrast, where employees were hired under a job-specific agreement, such as for managerial or technical roles, unrestricted reassignment has generally not been permitted under judicial precedent. However, this did not amount to an outright prohibition. Reassignment was allowed under “special exceptional circumstances” where there were justifiable reasons for assigning an employee to a different job category (e.g., Tokio Marine & Nichido Fire Insurance Case, Tokyo District Court, March 26, 2007).

2. Significance of the Supreme Court Decision

In a significant departure from past practice, the Supreme Court held that an employer does not have the authority to reassign an employee without their individual consent when a job-specific agreement is in place.

The case in question involved an employee hired as technical staff at a welfare equipment center. After the closure of that department, the employer reassigned the employee to a general affairs position involving facility management. The employee sued for damages, arguing that the reassignment order was unlawful. The Supreme Court ruled in favor of the employee, holding that when a job-specific agreement exists, the employer cannot issue a reassignment order without the employee’s consent.

While the employer argued that the reassignment was necessary to ensure continued employment after the department’s closure, the Court ultimately rejected the claim and invalidated the reassignment.

3. Practical Considerations for Employers

The Decision clarifies that employers lack the right to reassign employees when a job-specific agreement exists. This makes it essential for employers to determine whether such an agreement is in place. The key question becomes how to establish and verify the existence of a job-specific agreement.

To address this, it is particularly important to explicitly state in the employment contract that the employee is hired for a specific job type or scope of duties, and that such duties will not change in the future.

Judicial precedent also supports the need for clarity: in the Nissan Motor Case (Supreme Court, December 7, 1989), the Court ruled that merely engaging in the same job for many years does not by itself constitute a job-specific agreement.

Moreover, with the amendment to the Ordinance for Enforcement of the Labor Standards Act, effective April 2024, employers are now required to specify in employment contracts the scope of any possible future changes to job duties or job types. As a result, when entering into job-specific agreements, employers must clearly define the terms at the time of hiring.

For existing employees, if such terms have not already been specified, companies must now confirm the existence of a job-specific agreement through written documentation or other formal procedures.