Japan's Freelance Protection Act: What Independent Workers Need to Know

On November 1, 2024, Japan's Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators — commonly called the Freelance Protection Act (フリーランス保護法) — took effect. This landmark legislation fundamentally changes the legal landscape for Japan's estimated 4.62 million freelance workers.

For years, freelancers in Japan operated in a legal gray zone. Contracts were often verbal, payments delayed indefinitely, and fees cut unilaterally — with little recourse. The new law directly addresses each of these problems.

What the Law Covers

Element	Details
Who is protected	Freelancers (sole proprietors, one-person companies) receiving commissioned work
Who must comply	Businesses commissioning work to freelancers
Effective date	November 1, 2024
Enforcement	Fair Trade Commission (FTC), Small and Medium Enterprise Agency, MHLW

Key Difference from the Subcontracting Act

The existing Subcontracting Act (下請法) only applied based on the parent company's capital size, leaving many freelancer transactions unprotected. The Freelance Protection Act applies regardless of capital size — any business commissioning a freelancer must comply.

Core Obligations for Businesses

1. Written Disclosure of Contract Terms (Article 3)

When commissioning work, businesses must provide the following in writing or electronic format:

• Scope of work
• Compensation amount
• Payment deadline
• Date of commissioning
• Delivery/service date
• Other items specified by FTC rules

Verbal-only orders are now illegal.

2. Payment Within 60 Days (Article 4)

Compensation must be paid within 60 days of receiving deliverables (or the date of service provision). Payment terms exceeding 60 days violate the law.

3. Prohibited Practices (Article 5)

For commissions lasting one month or longer, the following are prohibited:

• Unjustified fee reductions — Unilateral cuts after ordering
• Unjustified returns — Refusing deliverables without valid reason
• Undercutting — Setting fees significantly below market rates
• Forced purchases — Requiring freelancers to buy company products
• Unreasonable demands for benefits — Extracting money or free labor
• Unjustified rework — Demanding revisions not caused by the freelancer
• Late payment

4. Harassment Prevention (Article 14)

Businesses must take measures to prevent sexual harassment, maternity harassment, and power harassment against freelancers.

5. Advance Notice of Termination (Article 16)

For continuous commissions of 6+ months, businesses must provide 30 days' advance notice before terminating or not renewing.

How to Securely Record Contract Terms

The law requires written documentation, but in practice, terms may be verbally changed or emails deleted. Using LOCK.PUB, you can save contract details as password-protected links — creating a secure backup of fee agreements, scope changes, and payment terms that can't be altered or deleted by the other party.

Penalties for Violations

Violation	Penalty
Failure to disclose terms	FTC recommendation/order
Unjustified fee reduction/delay	FTC recommendation/order
Violating an FTC order	Fine up to ¥500,000
False reporting/refusing inspection	Fine up to ¥500,000

Pre-Contract Checklist for Freelancers

• Is the scope of work clearly documented in writing?
• Are the compensation amount and payment date specified?
• Are deliverable specs and deadlines concrete?
• Is intellectual property ownership addressed?
• Are termination conditions stated?

Where to Get Help

• Freelance Trouble Hotline (110-ban) — Phone and email consultation (MHLW-funded)
• Fair Trade Commission — Abuse of superior bargaining position
• Small and Medium Enterprise Agency — Fair trade practices
• Attorney specializing in freelance issues

Protecting Your Contract Records

For freelancers, contract documentation is a lifeline. LOCK.PUB's encrypted memo feature lets you securely record key contract terms, invoices, and order details — shareable only with those who have the password.

Practical uses include:

• Backing up client contract terms
• Preserving evidence of payment negotiations
• Securely managing contract info across multiple clients

Conclusion

The Freelance Protection Act marks a significant step forward for independent workers in Japan. But knowing the law isn't enough — you need to document everything, store records safely, and know where to seek help when problems arise. Use encrypted tools like LOCK.PUB to protect your most important business records, and don't hesitate to contact the Freelance Trouble Hotline when issues come up.