"I was suddenly told that I would be laid off at the end of next month due to financial difficulties. However, I am the only one being dismissed for this reason, and I am not responsible for the company’s poor performance. I don’t think this is fair. Can I challenge my dismissal? Can I claim compensation?"

Being dismissed from your job can be a shocking and frustrating experience—especially if you feel that the decision is unfair. However, under Japanese labor law, a dismissal is invalid if it lacks an objective and reasonable reason or if it is not considered socially appropriate (Labor Contract Act, Article 16).

Is the dismissal legal?

Your case appears to fall under redundancy dismissal (also known as economic dismissal), which happens when companies lay off employees due to financial difficulties. Since redundancy dismissals are not based on employee misconduct, strict legal requirements must be met for them to be considered valid. The court will assess the following factors:

• Was the dismissal truly necessary? Could the company have avoided layoffs through other cost-cutting measures?

• Were fair selection criteria used? Why were you chosen over others?

• Were alternative options considered? Did the company attempt to reassign employees before deciding on dismissal?

• Did the company provide explanations and consultations? Were you properly informed and given an opportunity to respond?

If any of these conditions were not met, your dismissal may be invalid.

What Can I Do?

If your dismissal is ruled invalid, your employment remains legally intact. This means:

• You may be entitled to back pay. The company may be required to compensate you for the wages you would have earned since your dismissal.

• You may claim damages. If you suffered emotional distress or financial hardship due to the unfair dismissal, you could seek compensation.

• Legal action may be an option. A lawyer can help you negotiate with your employer or take legal steps if necessary.

Don't Face This Alone – Get Legal Support

Unfair dismissals are complex, and every case is unique. If you believe your termination was unjust, consulting a lawyer is the first step toward protecting your rights and securing the compensation you deserve. Contact us today to discuss your case.

What is a Mutual Separation Offer?

A mutual separation offer is when a company encourages an employee to resign. It is different from dismissal because the employee must agree to leave.

For example, a company might say:

"We’re sorry, but your performance has not been satisfactory, and we’d like you to leave."

Do Employees Have to Accept a Voluntary Separation Offer?

The simple answer is NO – you are not obligated to accept a mutual separation offer!

Japanese courts have ruled that employees are not required to accept such offers (Tottori District Court, December 4, 1986).

So if your company asks you to resign, you can simply refuse.
However, refusing a mutual separation offer may lead to the risk of dismissal.

Will Refusing a Mutual Separation Offer Lead to dismissal?

Companies offer mutual separation mainly because they want an employee to leave. However, dismissal laws in Japan are very strict, so companies must be careful.
If a court rules that a dismissal is unlawful, it can cause serious problems for the company. Therefore, employers hesitate to dismiss employees outright.
Instead, many companies offer financial incentives (severance packages) to encourage employees to leave voluntarily.

What is the Typical Severance Package?

The severance package amount varies, but in general, it ranges from three months to one year of salary.

What Not to Do When Facing a Mutual Separation Offer

When facing a mutual separation offer, be careful about the following:

• Do not sign the resignation letter or agreement prepared by the company.

• Do not discuss your job search progress with company staff or colleagues. Company would think you do not want money.

• Do not state your desired severance amount first. Company would think you can easily leave with chip.

Consulting a Professional

There are many other important considerations, but they depend on each case and cannot be generalized.
While you can negotiate on your own, consulting a specialist ensures a smoother and more beneficial outcome.