How to Hire Freelancers in Japan: The Gyomu Itaku Contract, Seen From the Client Side

You have decided that the first person working for you in Japan will not be a permanent employee. You will engage a freelancer instead, on a contract, and see how the market responds before you commit to a payroll. Then you start looking for how that is actually done, and you find that the English-language internet has almost nothing for you.

Search for gyomu itaku — the Japanese term for the family of contracts that covers this — and what comes back is written for the freelancer. How to price yourself, how to read the contract you have been handed, how to file your own taxes. That is a reasonable state of affairs, because there are a lot of freelancers in Japan and not many foreign clients. Using the 2022 Employment Status Survey by the Ministry of Internal Affairs and Communications, JILPT puts the number of freelancers at 2.57 million, of whom 2.09 million treat it as their main job — about 3.0% of the labour force.

The client side of that transaction has changed materially, and recently. Since 1 November 2024, a statute usually shortened to the Freelance Act has placed specific, enforceable duties on the party placing the work: what you must put in writing, how fast you must pay, what you may not do to the fee, and how much notice you owe before you walk away. Those duties attach to you as the client. They are not something your contractor has to opt into.

This article is written from that side of the table. It covers what you are signing, what makes the arrangement collapse into employment, and what your standard master services agreement will get wrong in Japan. Statutes and the guidance under them are revised, and the classification question in particular turns on facts a general article cannot see. Treat this as preparation for a conversation with a Japanese lawyer and a certified social insurance and labour consultant (sharoushi), not as advice you can act on directly.

What this article covers

• What a gyomu itaku contract is under the Civil Code, and why the two underlying forms buy you different things
• The criteria a Japanese authority applies to decide whether your contractor is in fact your employee
• Every duty the Freelance Act places on the client, with the thresholds that switch each one on
• The line between outsourcing and worker dispatching, which is a licensed activity in Japan
• What does not transfer to you by default, including copyright in the work you paid for
• The cases where contracting is the wrong instrument and direct employment is the more honest answer

Key facts at a glance

Item	What the law or the official guidance says
What gyomu itaku is	Not a statutory category. The underlying forms are a contract for work (Civil Code Article 632) and a mandate or quasi-mandate (Articles 643 and 656).
Who decides it is not employment	Not the parties. Labor Standards Act Article 9 plus published criteria, judged on substance “irrespective of the details and wording of a contract”.
The two core criteria	Whether labour is provided under the direction and supervision of an employer, and whether payment is compensation for labour supplied over a period of time.
Written terms	Freelance Act Article 3: immediately, in writing or by electronic or magnetic means — the details of the work, the amount of remuneration, the payment date and other matters.
Payment deadline	Fixed within 60 days of the day you receive the work or the service, and within as short a period as possible, whether or not you inspect the work (Article 4).
Prohibited conduct	Refusing receipt, cutting the fee, forcing returns, unjustly low pricing, tie-in purchases — where the entrustment runs one month or longer (Article 5; Enforcement Order Article 1).
Ending the engagement	At least 30 days’ advance notice of cancellation, including non-renewal, where the entrustment runs six months or longer, plus reasons on request (Article 16; Enforcement Order Article 3).
Harassment	The client must set up a system for handling consultations and must not retaliate against the person who raises one (Article 14).
Enforcement	The Fair Trade Commission, the Small and Medium-Sized Enterprise Agency and the Ministry of Health, Labour and Welfare. Recommendation, then order, then publication. Fine of not more than ¥500,000, with the corporation punished alongside the individual (Articles 24 and 25).
Directing a supplier’s staff	You may neither give orders to nor conduct personnel administration of another company’s workers. If the reality is worker dispatching, the Worker Dispatching Act applies, and dispatching without a licence is prohibited with criminal penalty.
Copyright	Where the work is made by a person who was commissioned, authorship does not belong to the commissioning company. Rights under Articles 27 and 28 are presumed retained by the author unless the assignment refers to them. Moral rights are inalienable.
Scale of the market	2.57 million freelancers in Japan; 2.09 million for whom it is the main job, or 3.0% of the labour force (2022 Employment Status Survey).

“Gyomu itaku” is a label for two different contracts

The first thing to understand is that gyomu itaku is not a contract type in Japanese law. It is a commercial label, and behind it sit two distinct Civil Code arrangements that allocate risk differently.

A contract for work, ukeoi, is defined in Article 632: it becomes effective when one party promises to complete work and the other promises to pay remuneration for the outcome of the work. The Ministry of Health, Labour and Welfare’s guidance for foreign employers puts the operational consequence in one sentence: “A contractor completes the work based on his/her own authority and responsibility without receiving direction or supervision from the client or employer.” You are buying a result. If the result does not arrive, you have not received what you contracted for.

A mandate, inin, is defined in Article 643, and the quasi-mandate for non-legal clerical work in Article 656. Here “a mandatary processes the work based on his/her own knowledge and experience”. You are buying the diligent performance of a service, not a guaranteed outcome. A country manager developing a distributor pipeline is almost always in this territory: nobody can promise the pipeline closes.

This distinction is not academic drafting trivia. It decides whether you can withhold payment because the deliverable is defective, whether re-work is inside or outside the agreed fee, and what “acceptance” means. A Japanese counterparty will usually send you a template that has already picked one of the two framings, often without flagging which. Establishing which one you are in, before you negotiate anything else, is the single most useful thing you can do with an hour of a Japanese lawyer’s time.

Note the phrase that recurs in both definitions: the person works under their own authority, or on their own knowledge and experience. That is the assumption the rest of Japanese law builds on, and it is the assumption most foreign clients unknowingly break in the first month.

The test that decides whether your contractor is an employee

The Labor Standards Act defines a worker as “one who is employed at a business or office and receives wages therefrom, regardless of the type of occupation” (Article 9). Whether someone meets that definition is judged “by examining whether the employment dependency is found in substance, irrespective of the details and wording of a contract”. Two basic criteria sit underneath it: labour is provided under the direction and supervision of an employer, and wages are paid as compensation for labour.

For the harder cases, the Ministry publishes a breakdown drawn from a 1985 study group report and from judicial precedent. On direction and supervision, it asks: whether the person has freedom to accept or reject a request for work; whether they receive concrete direction or order concerning the details of, or how to perform, the duties; whether they sometimes engage in duties other than their normal duties on the employer’s order or request; whether their workplace and working hours are designated and managed; and whether their labour can be substituted. On the wage side, it asks whether the payment is compensation for the provision of labour for a certain period of time under direction and supervision.

For consignment arrangements specifically — which is what gyomu itaku is — the guidance sets out the factors weighed together: the place of work, the details of the duties, working hours, required expenses, working status reports, obligations and responsibilities, any history of disadvantageous treatment and sanctions, the nature of remuneration and bonuses, and reports of absence from work. Then it states the conclusion that foreign clients most often refuse to believe. A person “falls under the category of worker even if a written contract clearly states that it is not a labor contract but a consignment contract, and the person has given his/her consent thereto”.

Read that list again as a description of your intended operating rhythm rather than as law. Daily stand-ups where tasks are assigned. Core hours. A seat in your co-working space. Approval needed before taking a day off. Expenses reimbursed as they arise. Whatever else comes up during the week. Every one of those is a factor on the list, and none of them is in your contract.

Nor does being a foreign company keep you outside the question. JETRO states that Japan’s labour statutes “apply in principle to all enterprises in Japan, regardless of whether the employer is Japanese or foreign”. The test looks at how the work is actually done in Japan, not at where the paying entity is registered.

What the Freelance Act requires of you as the client

The Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators came into force on 1 November 2024. It protects a “specified entrusted business operator”: an individual who employs no employees, or a company whose only officer is a single representative and which employs no employees (Article 2, paragraph 1). That is a precise definition, and it captures the typical Japanese freelancer whether or not they have incorporated.

Your own status matters too. Most of the duties fall on a “specified entrusting business operator”, defined as an individual who employs employees, or a corporation that has two or more officers or employs employees (Article 2, paragraph 6). Any company with a board is inside that definition on day one.

The disclosure duty in Article 3 is the broadest: when you entrust business, you must immediately and clearly indicate, in writing or by electronic or magnetic means, the details of the work, the amount of remuneration, the date of payment and other matters. If a matter genuinely cannot be determined yet, you may leave it out — and must supply it immediately once it is settled. If you disclosed electronically and the freelancer asks for a paper document, you must deliver one.

Article 4 sets the payment clock. The payment date must be fixed within 60 days of the day you receive the work, or the day the service was provided, and within as short a period as possible — expressly regardless of whether you inspect the work in detail. Fix no date and the day of receipt is deemed to be the payment date. Fix a date in breach and the 60th day is deemed instead. Where you are re-entrusting work you were yourself given, the window tightens to 30 days from the payment date of the original entrustment. If your group standard is net 90 from invoice, it does not survive contact with this provision.

Article 5 prohibits five acts once the entrustment runs one month or longer, a threshold set by Article 1 of the Enforcement Order: refusing to receive the work, reducing the remuneration, forcing the freelancer to take goods back, unjustly setting the fee conspicuously below the ordinary price for the same work, and coercing purchases of designated goods or services. Paragraph 2 of the same Article adds two more within that same scope: extracting cash, services or other economic gains, and demanding changes or re-work where there are no grounds attributable to the freelancer. Unlimited revisions inside a fixed fee is a common clause in agency templates, and it points directly at that second item.

Three duties then come from the labour ministry side. Recruitment information you publish must not be false or misleading and must be kept accurate and up to date (Article 12). You must give necessary consideration, on request, so the person can keep working while managing pregnancy, childbirth, childcare or nursing care — an obligation for entrustments of six months or more, and an obligation to endeavour below that (Article 13; Enforcement Order Article 3). And you must establish a system for responding to harassment consultations, covering sexual harassment, conduct related to pregnancy or childbirth, and abuse of a superior bargaining position, without retaliating against anyone who uses it (Article 14).

Article 16 is the one that surprises people who chose contracting for flexibility. Where the entrustment has run six months or longer, you must give at least 30 days’ advance notice before cancelling — and non-renewal at the end of the term counts as cancellation. If the freelancer asks why during that window, you must disclose the reasons.

Enforcement runs through the Fair Trade Commission, the Small and Medium-Sized Enterprise Agency and the Ministry of Health, Labour and Welfare, which can collect reports and inspect books and offices. The sequence is recommendation, then an order if the recommendation is ignored, and the ministry may publicise that an order was issued. Breaching an order, or failing to report, carries a fine of not more than ¥500,000, and Article 25 makes the corporation punishable alongside the individual who committed the violation. The financial penalty is small. Being named in a Japanese regulator’s publication while you are trying to recruit is not.

Where outsourcing turns into worker dispatching

The second way a contract fails is less discussed in English and catches companies that engage a small Japanese firm rather than an individual.

Worker dispatching is defined as causing a worker employed by one person to be engaged in work for another person under the instruction of the latter, while the employment relationship with the former is maintained. Supplying workers on that basis in the course of trade requires a licence from the Minister of Health, Labour and Welfare, and JETRO records that it “is prohibited with criminal penalty to engage in worker dispatching without a license”. The obligation is not only the supplier’s: clients may not receive workers dispatched by a company that has no licence.

JETRO describes the boundary in terms of who administers the person. Where one company subcontracts part of its work to another, the subcontractor must conduct its work, including personnel administration of its own worker, independently — so the client “can neither give orders to nor conduct personnel administration of said worker”. And then the same substance-over-form rule appears again: “Regardless of the name or the content of the contract, if the actual situation is confirmed to be applicable to worker dispatching, regulations related to worker dispatching will be applied.”

In practice the trap is mundane. You contract with a two-person Japanese studio for design work, then add their designer to your Slack, your sprint board and your daily calls, and start assigning her tasks directly. Nothing about that felt like a regulated activity when you did it. There are also categories where dispatching is not permitted at all, including port transport services, construction work and security services, so for those the reclassification has no lawful version to fall back on.

The workable discipline is to route instructions through the supplier rather than to the individual, agree deliverables and review points rather than daily tasks, and keep the supplier responsible for who does the work and when. That is less convenient than treating the person as a member of your team. The inconvenience is the point of the rule.

What does not transfer to you by default

Foreign clients routinely assume that paying for creative or software work means owning it. In Japan that assumption is wrong in three separate ways, and templates drafted for the United States or the United Kingdom do not fix any of them.

First, authorship. Copyright arises the moment the work is created, with no registration required. Article 15 of the Copyright Act does give authorship to a company for works made by its employee in the course of duty at the company’s initiative, but the Agency for Cultural Affairs is explicit about the limit: “If the work is made by a person who was commissioned to do so, or if the person is not in a controlling or subservient relationship with the company, the authorship of the work does not belong to the juridical person.” A freelancer is the author of what you commissioned. Anything you get, you get by assignment or licence.

Second, the scope of the assignment. Copyright may be transferred in whole or in part under Article 61, paragraph 1. But paragraph 2 adds a trap that has no analogue in most jurisdictions: “If a contract for the transfer of a copyright makes no particular reference to the rights set forth in Articles 27 and 28, these rights are presumed to be retained by the transferor.” Article 27 is the right to translate, arrange, reformulate, dramatise, adapt. Article 28 is the right in the exploitation of a derivative work. A clause saying all intellectual property rights are hereby assigned, with no more, leaves the freelancer presumptively holding the rights you need in order to localise, iterate on or rebuild what you bought.

Third, moral rights. Article 59 states that an author’s moral rights “are exclusive to that author, and are inalienable”. Those are the right to make the work public, the right of attribution and the right to integrity — the right to keep the work free from modification against the author’s intent (Articles 18 to 20). No assignment clause can move them, at any price. How that is handled in practice in Japanese contracts is a question for your lawyer, not something to improvise from a foreign precedent.

The cost of getting this right is one drafting session. The cost of getting it wrong surfaces two years later, when you want to reuse the brand system or fork the codebase and discover you need the original freelancer’s cooperation to do it.

Where a contractor is the wrong instrument

BLP’s business is placing work with contractors, so this section runs against our own interest. It is also the part that decides whether the model works for you, so it is worth more than the rest of the article.

Start with what you are giving up. The classification criteria are, read from the client’s side, a list of management tools you are agreeing not to use: assigning tasks day to day, setting the hours and the place, sending the person to whatever needs doing this week, requiring that this specific individual and no substitute performs the work. If the role you have in mind only functions with those tools — a first hire who is your eyes and ears, present at everything, absorbing whatever the market throws up — then the arrangement you are describing is employment, and no contract will relabel it. Choosing a contract in that situation does not reduce your risk. It converts a known cost into an unknown one.

Next, be clear that the Freelance Act is not a flexibility regime. Once an engagement passes one month you lose the ability to cut the fee or refuse the work without grounds attributable to the freelancer. Once it passes six months you owe 30 days’ notice to stop, including simply not renewing. You owe payment within 60 days whether or not you have finished reviewing. You owe a harassment consultation system and, on request, accommodation for childcare or nursing care. Compared with employing someone, that is a much lighter set of obligations. Compared with the mental model of “no commitment, cancel anytime” that usually drives the decision to contract, it is a good deal heavier.

Then the downside case. If an engagement is later found to have been employment in substance, the consequences are not confined to labour law. Labour insurance applies “as long as an employer employs at least one worker”, and the notice of establishment of the insurance relationship is due within 10 days from the day following the day the relationship arises — generally the day the first worker was employed. A finding that the relationship was employment from the outset therefore reaches backwards into obligations you did not know had started. What is recoverable, and over what period, is exactly the question to put to a sharoushi before you design the engagement, not after someone files a claim.

So the honest boundary is this. Contracting fits work that can be specified as an outcome or a defined service, delivered by someone exercising their own judgment about how, on a horizon you are willing to state. It does not fit an indefinite, exclusive, directed, full-time role. If what you need is the second thing, the sensible move is to price direct employment properly and go in with your eyes open, rather than to buy a contract that describes something you do not intend to do.

Questions to ask before you commit

Worth putting to a Japanese lawyer, a sharoushi and a tax accountant before the first engagement rather than after it:

• Is this engagement a contract for work or a quasi-mandate, and does our draft consistently reflect the one we intend?
• Looking at how we actually plan to run the first 90 days, which of the published classification factors point towards employment, and what would we have to change?
• Does our Article 3 disclosure cover every required matter, and is the medium we intend to use — email, a portal, a signed PDF — acceptable?
• Where do our group payment terms, setoff rights and revision clauses conflict with Articles 4 and 5, and which of them do we need to override for Japan?
• Does our assignment clause refer expressly to the rights under Articles 27 and 28, and how are we handling moral rights?
• Are we a withholding agent for these payments, and does the service we are buying fall within the categories the National Tax Agency lists as subject to withholding?
• If we engage a small company rather than an individual, who instructs the person doing the work, and does our intended way of working stay on the right side of the dispatching rules?
• Given that our entity is outside Japan, which of these obligations does our counsel consider reach us, and which would change if we set up a base here?

Frequently asked questions

What is a gyomu itaku contract?

It is a commercial label rather than a category in Japanese law. The arrangement behind it is either a contract for work under Article 632 of the Civil Code, where the contractor promises to complete work and is paid for the outcome, or a mandate or quasi-mandate under Articles 643 and 656, where the person processes the work using their own knowledge and experience. Which one applies changes what you can refuse to pay for.

Can we engage a freelancer in Japan without having a Japanese entity?

Nothing in the classification criteria turns on the client’s corporate form; they look at how the work is actually performed. On JETRO’s account, the labour statutes reach every enterprise operating in Japan whatever the nationality of the employer. Whether and how the Freelance Act reaches a company with no base in Japan is a question to put to Japanese counsel before you rely on either answer.

Do we have to withhold Japanese tax when we pay a freelancer?

Withholding on remuneration and fees paid to residents applies to a defined list of categories in the National Tax Agency’s guide, not to every payment to an individual. The list includes fees for manuscripts, lectures, designs, translation, interpretation and proofreading, remuneration for attorneys and tax accountants, and payments to models and entertainers. The headline rate is 10.21%, and for several of those categories the rate on the excess rises to 20.42% where more than ¥1,000,000 is paid to one person on one occasion, while other categories carry a fixed deduction before the rate is applied. The place of tax payment is the location of the office where the payer pays the income, so whether you are a withholding agent at all is a question for a Japanese tax accountant.

How quickly must we pay a Japanese freelancer?

The payment date must be fixed within 60 days of the day you receive the work or the service, and within as short a period as possible, regardless of whether you have inspected the work. If no date is fixed, the day of receipt is deemed to be the payment date. If a date is fixed in breach of the rule, the 60th day is deemed to be the payment date.

Can we end a freelance engagement whenever we want?

Not once it has run six months or longer. Article 16 requires at least 30 days’ advance notice of cancellation, and letting a fixed term expire without renewing counts as cancellation for this purpose. If the freelancer requests the reasons during that period, you must disclose them, subject to narrow exceptions.

Does a contract stating that this is not employment protect us?

No. The ministry’s guidance says a person falls under the category of worker even where a written contract clearly states that it is a consignment contract rather than a labor contract, and even where the person consented to that. Status is judged on the substance of the relationship, not on its wording.

Do we own the code, designs or copy a freelancer produces for us?

Not automatically. Authorship of commissioned work stays with the person who created it, so ownership has to come from an assignment. Even then, if the assignment makes no particular reference to the rights under Articles 27 and 28 of the Copyright Act, those adaptation and derivative-work rights are presumed to stay with the author, and moral rights cannot be transferred at all.

What happens if we direct the staff of a supplier company?

A supplier must conduct its own personnel administration independently, and the client can neither give orders to nor administer the supplier’s worker. Where the reality matches worker dispatching, the Worker Dispatching Act applies regardless of what the contract is called, dispatching requires a licence, and clients may not receive workers from an unlicensed supplier.

Summary

• Gyomu itaku is a label. Decide first whether you are buying an outcome under Civil Code Article 632 or a service under Articles 643 and 656, because everything downstream follows from that.
• Classification is judged on substance, irrespective of the wording of the contract, against published criteria covering direction, hours, place, substitutability and the nature of the payment.
• Since 1 November 2024 the client carries specific duties: written disclosure, payment within 60 days, a list of prohibited acts at one month, and 30 days’ notice to end an engagement at six months.
• Directing another company’s staff moves you into the Worker Dispatching Act, which is licensed and criminally enforced.
• Copyright in commissioned work starts with the freelancer, adaptation rights need to be named expressly, and moral rights cannot be assigned.

None of this makes contracting the wrong way to start in Japan. It makes it a specific instrument with a specific shape, and the shape is defined by rules that were written on the assumption that the person doing the work is running their own business. Most of the failures come from clients who wanted an employee, bought a contract, and then behaved like an employer.

The practical test is whether you can write down what “done” looks like. If the work can be specified as an outcome or a bounded service, with review points instead of daily instructions, the contract route is straightforward and the compliance load is a handful of clauses and a payment calendar. If you cannot specify it, that is useful information about the role rather than a drafting problem.

BLP is a Japanese company that supports overseas businesses entering the Japanese market by breaking the required work into defined tasks and placing it with contractors, rather than starting from a permanent hire. If you are working out what your first engagement in Japan should look like, we are happy to talk it through.

Sources

• JETRO, "4.3 Labor contracts", Setting Up Business in Japan — https://www.jetro.go.jp/en/invest/setting_up/section4/page3/
• JETRO, "4.1 Application of laws", Setting Up Business in Japan — https://www.jetro.go.jp/en/invest/setting_up/section4/page1.html
• Employment Consultation Center (established under the National Strategic Special Zones Act), "Explanations of Labor-Related Laws", October 2023 edition, Ministry of Health, Labour and Welfare — https://kecc.mhlw.go.jp/pdf/explanations_of_labor_related_laws_en_2310.pdf
• Japan Fair Trade Commission, "Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators" (tentative translation) — https://www.jftc.go.jp/en/legislation_gls/Act%20on%20Ensuring%20Proper%20Transactions%20Involving%20Specified%20Entrusted%20Business%20Operators%20(Tentative%20translation).html/
• Japan Fair Trade Commission, "Order for Enforcement of the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators" (tentative translation) — https://www.jftc.go.jp/en/legislation_gls/Order%20for%20Enforcement%20of%20the%20Act%20on%20Ensuring%20Proper%20Transactions%20Involving%20Specified%20Entrusted%20Business%20Operators%20(Tentative%20translation).html/
• Agency for Cultural Affairs, "Overview of the Copyright System" — https://www.bunka.go.jp/english/policy/copyright/system/
• Copyright Act (Act No. 48 of 1970), English translation of the Japanese text, via WIPO Lex — https://www.wipo.int/wipolex/en/text/504293
• National Tax Agency, "Withholding Tax Guide 2026" — https://www.nta.go.jp/publication/pamph/gensen/shikata_r08/pdf/15.pdf
• Koji Takahashi, "New Forms of Employment in Japan: Classifications and Statistics", The Japan Institute for Labour Policy and Training (JILPT), April 2025 — https://www.jil.go.jp/english/publications/materials/presentation/2025/documents/0430_takahashi-koji.pdf