Freelancer Contracts in Japan: What Changed with the 2024 Freelance Protection Act

Japan's freelance economy has grown rapidly — over 4.6 million people now work as independent contractors. But until recently, freelancers had few legal protections against late payments, unilateral contract changes, or unfair treatment. The Freelance Protection Act (フリーランス・事業者間取引適正化等法), enacted in November 2024, changed everything.

This guide covers the new law, essential contract clauses, tax obligations, and how to share contract drafts securely.

The 2024 Freelance Protection Act: Key Provisions

Mandatory Written Terms

Businesses hiring freelancers must provide written contract terms specifying:

• Scope of work (業務内容) — Detailed description of deliverables
• Compensation amount (報酬額) — Exact amount or calculation method
• Payment date (支払期日) — When payment will be made
• Delivery date — When work must be completed

Verbal agreements are no longer sufficient. The terms can be provided electronically (email, PDF, or online platform).

60-Day Payment Rule

Payment must be made within 60 days from the date work is completed and accepted. This is a hard deadline — no exceptions for "net 90" or "net 120" payment terms that were common in the past.

Prohibited Practices

The law explicitly prohibits:

Practice	Example
Unilateral price reduction	Cutting agreed fees after work is done
Unreasonable return of goods	Rejecting completed work without cause
Below-cost pricing pressure	Forcing freelancers to accept unprofitable rates
Retaliation for complaints	Terminating contracts because freelancer raised concerns
Harassment	Any form of power harassment or sexual harassment

What's NOT Covered

Freelancers are not covered by the Labor Standards Act (労働基準法). This means:

• No mandatory overtime pay
• No paid leave entitlements
• No social insurance contributions by the client
• No wrongful dismissal protections (contract termination terms apply instead)

Essential Clauses in a Freelancer Contract

1. Scope of Work (業務内容)

Be extremely specific. Vague scope descriptions lead to scope creep and disputes. Include:

• Specific deliverables with quantities
• Quality standards and acceptance criteria
• Revision limits (e.g., "up to 2 rounds of revisions included")
• Out-of-scope work pricing

2. Compensation and Payment (報酬・支払条件)

Item	Best Practice
Amount	Fixed price per project or hourly/daily rate
Payment timing	Within 60 days of acceptance (legal requirement)
Payment method	Bank transfer (specify who pays fees)
Late payment penalty	Include interest rate clause
Expense reimbursement	Specify which expenses are covered

3. Withholding Tax (源泉徴収)

Japan applies withholding tax (源泉徴収) to many freelancer payments:

• 10.21% on payments up to 1 million yen
• 20.42% on the portion exceeding 1 million yen

The client is responsible for withholding and remitting to the tax office. The freelancer claims credit when filing their annual tax return (確定申告).

4. Intellectual Property (知的財産権)

Without explicit agreement, the creator retains copyright under Japan's Copyright Act (著作権法). If the client needs ownership:

• Specify transfer of copyright (著作権の譲渡)
• Include moral rights waiver (著作者人格権の不行使) — though this is debated
• Define usage rights scope

5. Confidentiality (秘密保持)

Include a confidentiality clause or reference a separate NDA. Cover:

• Definition of confidential information
• Duration of obligation
• Permitted disclosures
• Return/destruction of materials

6. Termination (契約解除)

Specify:

• Notice period (typically 30 days)
• Grounds for immediate termination
• Payment for partially completed work
• Intellectual property rights upon termination

How to Share Contract Drafts Securely

Contract drafts contain sensitive business terms — compensation amounts, IP arrangements, and strategic information. Sharing them carelessly creates risks.

LOCK.PUB offers password-protected memos that work well for contract draft sharing:

• Paste your contract draft text into a LOCK.PUB memo
• Set a password and share it via a separate channel (e.g., send the link by email, the password by iMessage or Messenger)
• Set an expiration date so the draft doesn't remain accessible indefinitely
• No accounts needed on either side

For ongoing contract negotiations, create a new memo for each revision to maintain version control.

Dispute Resolution

If a dispute arises:

1. Negotiation — Direct discussion between parties
2. Mediation — Through local bar associations or commercial mediation services
3. Arbitration — Japan Commercial Arbitration Association (日本商事仲裁協会, JCAA)
4. Litigation — Japanese courts (specify jurisdiction in contract)

The Freelance Protection Act also allows complaints to the Fair Trade Commission (公正取引委員会) for violations of prohibited practices.

Common Mistakes

1. No written contract — Now illegal under the 2024 Act
2. Vague scope — Leads to unlimited revisions and disputes
3. No IP clause — Creator retains rights by default
4. Payment terms exceeding 60 days — Violates the law
5. No termination clause — Makes exit difficult for both parties

Conclusion

The 2024 Freelance Protection Act has given Japanese freelancers meaningful protections for the first time. But the law only works if contracts are properly drafted. Use this guide as a checklist, have a lawyer review your specific agreement, and share drafts securely using tools like LOCK.PUB.

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Need to share a contract draft securely? LOCK.PUB lets you create password-protected memos with expiration — no sign-up required.