You have found the person you want in Japan. A bilingual marketer in Tokyo, a developer in Fukuoka, a sales consultant who already knows your category. You are not ready to open an entity, so you will engage them as a contractor, on your standard agreement, paid on your standard cycle, through your standard procurement system. That plan was fine until 1 November 2024.
On that date the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators — Act No. 25 of 2023, known in Japan as the Freelance Act — came into force. It is not a tax rule or a visa rule. It is a set of duties imposed on the party placing the order: give a written statement of the terms immediately, fix a payment date within 60 days of receiving the work, run a harassment consultation channel, and, past certain durations, stop doing a list of things that are ordinary commercial behaviour in other markets.
Most English-language coverage of this Act describes it from the freelancer’s side, or stops after listing the obligations. That leaves the two questions an overseas client actually has. The first is operational: what has to change in the contract, the purchase order and the payment run. The second is jurisdictional: does any of this reach a company with no establishment in Japan? The first has clear answers in the official material. The second, as set out below, does not.
Much of the detail here comes from Japanese-language guidance published by the Japan Fair Trade Commission and the Ministry of Health, Labour and Welfare, because no English equivalent of that guidance exists. The interpretation document was revised on 1 October 2025 and the harassment guideline on 26 February 2026, so treat this as preparation for a conversation with Japanese counsel rather than as advice you can act on directly.
What this article covers
- Which contractors the Act protects, and the numeric test that decides it
- The eight items you must state in writing or electronically, and when
- How the 60-day payment deadline is counted, and the practices that breach it
- The one-month and six-month thresholds that switch additional duties on
- What the Japan Fair Trade Commission actually did in the year to March 2026
- What compliance costs the ordering side, and the scope question the official guidance leaves open
Key facts at a glance
| Item | What the law and the official guidance say |
|---|---|
| The law | Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators, Act No. 25 of 2023. Passed 28 April 2023, promulgated 12 May 2023. |
| In force | 1 November 2024, set by the Order for Enforcement. |
| Who is protected | An individual with no employees, or a corporation with no officer other than a single representative and no employees. |
| “Employs employees” | Employing a worker whose scheduled hours are 20 or more per week and who is expected to be employed continuously for 31 days or more. |
| Your role | Any enterprise that entrusts business to such a person is an “entrusting business operator”. If you employ employees, or are a corporation with two or more officers, you are also a “specified entrusting business operator” and carry the fuller set of duties. |
| Any duration | Article 3 written or electronic notice of eight items, immediately. Article 14 harassment consultation system and related measures. |
| Payment | A payment date fixed within 60 days of receiving the work, and within as short a period as possible. Thirty days from the original payment date where the work is re-entrusted and specific disclosures are made. |
| One month or more | Seven prohibited acts under Article 5, including refusal to receive, reduction of agreed remuneration, and unjustly low pricing. |
| Six months or more | Consideration for pregnancy, childbirth, childcare or nursing care on request (Article 13). Thirty days’ advance notice of cancellation or non-renewal (Article 16). |
| Enforcement | Guidance and advice, recommendation, order, and publication, by the JFTC, the Commissioner of the SME Agency, or the Minister of Health, Labour and Welfare. |
| Penalties | A fine of up to ¥500,000 for breaching an order, failing to report, filing a false report, or obstructing inspection. The corporation is punished as well as the individual. |
| Fiscal 2025 activity | Measures were taken in 1,552 cases: 10 recommendations and 1,542 instances of guidance. |
Who the Act protects, and which client role you are in
Article 2 defines the protected party, the “specified entrusted business operator”, by one characteristic only: the absence of staff. It is either an individual who does not employ any employees, or a corporation that has no officers other than a single representative and employs no one. Sector, revenue and seniority are irrelevant. The JFTC’s Q&A gives a lawyer instructed by a company to conduct its litigation as an example alongside a delivery rider and a sole-trader construction worker.
“Employs employees” has a numeric definition that appears nowhere in the Act itself, only in the interpretation document issued jointly by the JFTC and the Ministry of Health, Labour and Welfare. It means employing a worker, in the sense of Article 9 of the Labor Standards Act, whose scheduled working hours are 20 or more per week and who is expected to be employed continuously for 31 days or more. Someone hired for a few hours or a few days does not count. Accepting a dispatched worker on the same two thresholds does count, even though you are not the employer.
On your side of the transaction there are two roles, and the distinction matters. Every enterprise that entrusts business to such a person is an “entrusting business operator” and owes the Article 3 notice. If you employ employees, or you are a corporation with two or more officers, you are additionally a “specified entrusting business operator”, which is the status that brings the payment deadline in Article 4 and the prohibitions in Article 5. Almost every company reading this falls into the second category, because two directors is enough.
Status is assessed at the moment the work is entrusted. The JFTC expects the client to check whether the contractor has employees at that point, and recommends doing it in a form that leaves a record, such as email or a messaging tool. If a contractor who has no employees tells you that they do, and you rely on that answer, the Q&A states that the JFTC will not move straight to a recommendation or an order, though it may still issue guidance and require the position to be corrected.
The Article 3 notice: eight items, immediately, every time
Article 3 requires the client, immediately on entrusting the work, to state to the contractor in writing or by electronic means the content of the work, the amount of remuneration, the payment date and other prescribed matters. The JFTC’s Q&A lists the full set of eight: the names of both parties; the date on which the work was entrusted; the content of the goods or services; the date for delivery or provision; the place; the amount of remuneration and the payment date; the date on which inspection will be completed, if you inspect; and the details of the payment method, if you are paying by something other than cash.
The delivery mechanism is permissive. Email, chat tools, SMS, and the messaging functions of social platforms, websites and apps all qualify, and you may send a link to a page carrying the items rather than the items themselves. What is not permissive is the timing. “The date on which the work was entrusted” means the day the two of you agreed to it, and that agreement can be oral, so the clock starts at the handshake and not at the signature. If a contractor who received the terms electronically asks for a paper document, Article 3(2) requires you to deliver one without delay.
Where a term genuinely cannot be fixed at the outset there is an exception, but it is narrow. The reason must be objective — the Q&A’s examples are a software build where the end user’s specification is not yet settled, and a broadcast programme where the fee cannot be set because the content has not been decided. Once the reason disappears, the item has to be stated immediately.
Two practical traps sit here for a foreign client. Renewal counts as a fresh entrustment: if a contract that predates the Act renews, including by automatic renewal, a notice is required unless the existing paperwork already contains all eight items in written or electronic form and nothing has changed. And a master services agreement signed at headquarters is unlikely to carry items two, four, seven and eight, which are per-order facts rather than framework terms. Failure to state the terms was the second most common violation type the JFTC recorded in fiscal 2025, at 1,126 counts.
Sixty days is a ceiling, not a target
Article 4 requires a specified entrusting business operator to fix the payment date within 60 days of receiving the work, and within as short a period as possible, whether or not it inspects the work in detail. For a service, the clock starts on the day the service was provided; where the service runs over several days, on the day the series ends. For a deliverable sent by email, the JFTC’s Q&A puts the start at the moment the file is recorded on your computer. The day of receipt is counted as day one.
The provision has teeth built into it. If you fix no payment date at all, the day you received the work is deemed to be the payment date. If you fix a date in breach of the rule, the sixtieth day is deemed to be the payment date. You do not get a grace period for having failed to set one.
Four points in the Q&A repeatedly catch procurement processes designed elsewhere. An invoice is not a precondition: if the contractor does not send one, you must still pay by the fixed date, and the absence of an invoice is not a ground attributable to the contractor. Deducting the bank transfer fee from the remuneration is treated as a reduction of remuneration and is a problem under the Act whether or not the contractor agreed to it. Where you run a monthly cut-off and pay on a fixed day, the JFTC operates the 60-day rule as two months, so a 61st or 62nd day arising purely from month lengths is not treated as a breach. And if you already pay a contractor promptly, moving them to 60 days on the basis that the Act allows 60 days breaches the “as short a period as possible” requirement.
There is one extension. Where you have been entrusted with work by someone else and re-entrust part of it, the payment date may instead be fixed within 30 days of the date you are paid for the original work. It is conditional: the Article 3 notice must state that the work is a re-entrustment, name the principal client, and give the original payment date. Late payment was the single most common violation type in fiscal 2025, at 1,135 counts.
One month, six months: the thresholds that switch rules on
The Act does not apply as a single block. Two of its chapters are gated by the duration of the engagement, and the periods are set by the Order for Enforcement: one month for Article 5, six months for Article 13 and Article 16.
At one month or more, the seven prohibited acts in Article 5 apply. The JFTC summarises them as refusal to receive the work, reduction of the agreed remuneration, return of delivered goods, setting a price conspicuously lower than what is ordinarily paid for comparable work, coercing the purchase of designated goods or services, demanding money or other economic benefits for yourself, and changing the specification or requiring rework without bearing the cost. Cancelling an order and declining to take delivery counts as refusal to receive. Collecting a contribution, under any label, counts as reduction.
At six months or more — “continued business entrustment” — two further duties attach. Article 13 requires you to give necessary consideration, on request, so the contractor can keep working while managing pregnancy, childbirth, childcare or nursing care; below six months the same duty exists as an obligation to endeavour. Article 16 requires 30 days’ advance notice before you cancel such a contract or let it lapse without renewal, and requires you to disclose your reasons without delay if the contractor asks during the notice period.
Duration is calculated generously against you. The start is the earlier of the date the individual contract was concluded and the date any master agreement was concluded; the end is the latest of the stated delivery date, the contract end date, and the master agreement end date. A ten-day piece of work placed under a two-month framework is therefore a one-month-or-more entrustment. Article 14, the harassment provision, carries no duration threshold at all, so it applies however short the engagement is.
What enforcement looked like in the year to March 2026
This is the part that separates the Freelance Act from rules that exist mainly on paper. The JFTC published its fiscal 2025 figures on 10 June 2026. Freelancers filed 604 reports of suspected violations. The Commission opened 1,626 new cases, disposed of 1,597, and took measures in 1,552 of them: 10 recommendations under Article 8 and 1,542 instances of guidance under Article 22. It surveyed 30,000 ordering businesses in sectors where problems cluster, and handled 4,351 consultations.
The 1,552 cases produced 2,727 counts of violation. Late payment accounted for 1,135 of them, at 41.6%; failure to state the transaction terms for 1,126, at 41.3%; and unjustly low pricing for 250, at 9.2%. Those three types made up more than nine-tenths of everything recorded. By sector, information and communications led with 575 cases, or 37.0%, followed by scientific research and professional and technical services with 326, or 21.0%. Restitution to contractors totalled ¥17.34 million across the year.
The escalation path runs guidance, then recommendation, then order, and the visibility changes at each step. The JFTC issued its first recommendation on 17 June 2025; its Secretary General noted at the time that the Act had been in force for not quite eight months. Recommendations are published on the Commission’s website by name and by fiscal year. Of the ten issued in fiscal 2025, all ten involved failure to state the terms and nine involved late payment. Separately, a focused sweep of the broadcasting and advertising sectors produced guidance to 128 businesses by October 2025.
The statutory fine is modest — up to ¥500,000 for breaching an order, failing to submit a report, submitting a false one, or obstructing an inspection, with the corporation punished alongside the individual. The exposure that matters to a company entering a market is not the fine. It is that your name appears on a government list, in Japanese, at the point when Japanese counterparties are searching for it.
What this costs you, and the question the guidance does not answer
Engaging contractors instead of employees is the model this company exists to support, so it is worth being direct about what the Freelance Act does to it. It moves administrative cost onto the client. Every order needs an eight-item notice. Payment terms have to be shortened to fit a Japanese statute rather than a group treasury policy. And Article 14 requires a working harassment consultation system, which under the Ministry of Health, Labour and Welfare’s guideline means ten specific measures — publicising your policy, writing sanctions into internal rules, naming a contact point and making it known to the contractor, responding even where it is unclear whether conduct qualifies, investigating promptly, acting towards both the affected person and the perpetrator, preventing recurrence, protecting privacy, and guaranteeing no detriment for raising a complaint. For a company whose entire Japanese presence is two contractors, that is real overhead, and it exists whether the engagement lasts a year or a week.
There is a second cost that is easy to miss. The Act only applies where the person really is an independent business. The JFTC’s Q&A is explicit that if the relationship is in substance employment, the contractor is a worker under the Labor Standards Act and similar legislation, is not a specified entrusted business operator, and the Freelance Act does not apply — the employment statutes do instead. On 1 November 2024, the same day the Act commenced, the Ministry of Health, Labour and Welfare opened consultation desks at Labour Standards Inspection Offices nationwide specifically for people who suspect their contractor status is nominal. Complying carefully with the Freelance Act does not protect an engagement that is structured as employment in everything but name.
Then there is the question this article opened with. Article 2 defines the client purely by what it does and by whether it has staff or multiple officers; there is no condition anywhere in the definitions about nationality, place of incorporation or having an establishment in Japan. That is the whole of what can be stated from the text. The JFTC and MHLW interpretation document, the JFTC’s Q&A, the JFTC’s pamphlet and the Ministry’s outline of the working environment provisions contain no discussion of businesses established outside Japan. We could not find an official statement either way, so we are not going to supply one.
What follows from that is a planning position rather than a legal conclusion. Assume the requirements apply to your Japanese engagements and put a Japanese lawyer on the specific question of your entity’s exposure, because the answer determines whether this is a contract-template problem or an enforcement-risk problem. The requirements themselves — state the terms, pay inside 60 days, do not cut the agreed fee, give notice before you end a long engagement — are close to what a client would want to do anyway, which makes the cost of assuming they apply considerably lower than the cost of assuming they do not.
Questions to ask before you commit
Worth putting to Japanese counsel before the first order goes out, not after the first complaint:
- Given where our contracting entity is established, on what basis would the Freelance Act be applied to us, and what would enforcement against us look like in practice?
- Does our purchase order carry all eight Article 3 items, and does it issue at the point of agreement rather than at the point of signature?
- What is the actual elapsed time in our payment run from delivery to cleared funds, including cross-border settlement, and where does it sit against 60 days?
- Who absorbs remittance and correspondent bank charges on a payment from overseas, and does our arrangement risk being treated as a reduction of remuneration?
- Which of our intended engagements will cross one month, and which will cross six months once master agreements are counted?
- Where is the harassment consultation point for a contractor in Japan, in what language, and how will they be told about it?
- Looking at how we intend to direct this work day to day, is there a risk it is characterised as employment rather than independent business?
Frequently asked questions
Does Japan’s Freelance Act apply to a company based outside Japan?
The definitions in Article 2 do not contain any condition about nationality, place of incorporation or having an establishment in Japan; a client is defined by entrusting business and by whether it has employees or two or more officers. The published guidance from the Japan Fair Trade Commission and the Ministry of Health, Labour and Welfare does not address businesses established outside Japan, and we have not found an official statement resolving the point. Take the question to Japanese counsel rather than to a general guide.
Who counts as a freelancer under the Act?
An individual who employs no one, or a corporation with a single representative, no other officers and no employees. “Employing” means a worker whose scheduled hours are 20 or more per week and who is expected to be employed continuously for 31 days or more, so a contractor who uses occasional short-term help is still covered. Status is assessed when the work is entrusted, and the client is expected to check.
Can the Article 3 notice be an email?
Yes. Email, chat tools, SMS and platform messaging all satisfy Article 3, and a link to a page containing the required items is acceptable. What matters is that all eight items are stated immediately on entrusting the work, and that you provide a paper document without delay if the contractor requests one.
Is the 60-day payment deadline counted from the invoice?
No. It runs from the day the work is received or the service is provided, with that day counted. The Q&A states that the absence of an invoice does not excuse late payment. If no payment date is fixed, the date of receipt is deemed to be the payment date; if a date is fixed in breach of the rule, the sixtieth day is deemed to be it.
Can we deduct the bank transfer fee from a freelancer’s payment?
The JFTC’s Q&A states that deducting the transfer fee from the remuneration is a problem under the Act as a reduction of remuneration, regardless of whether the contractor agreed to it. The guidance addresses domestic bank transfers and does not deal with cross-border remittance charges, which is a point to raise with Japanese counsel if you are paying from overseas.
Do the prohibitions apply to a short one-off engagement?
The seven prohibited acts in Article 5 apply to engagements of one month or more, and the childcare and cancellation-notice duties apply at six months or more. The written notice under Article 3, the payment deadline under Article 4 and the harassment measures under Article 14 have no duration threshold. Note that duration is measured from any master agreement, so a short order under a longer framework can cross the line.
What are the penalties for breaching the Freelance Act?
The authorities first give guidance, then may issue a recommendation, then an order, and may publicise the order. Recommendations are listed on the JFTC website by company name. A fine of up to ¥500,000 applies to breaching an order, failing to report, filing a false report or obstructing an inspection, and the corporation is punished as well as the individual responsible.
Does the Act apply if the person is really working as an employee?
No, and that is a worse outcome rather than a better one. Where the substance of the relationship is employment, the person is a worker under the Labor Standards Act and the Freelance Act does not apply, because the employment statutes apply instead. Since 1 November 2024 the Ministry of Health, Labour and Welfare has run consultation desks at Labour Standards Inspection Offices for people who believe their contractor status is nominal.
Summary
- The Freelance Act has bound the ordering side since 1 November 2024. The protected party is defined by having no staff, and the client is defined by entrusting the work, with no revenue or size threshold.
- Two duties attach to every engagement regardless of length: the eight-item Article 3 notice, issued immediately, and the Article 14 harassment measures.
- The payment date must fall within 60 days of receipt and be as short as practicable. An invoice is not a precondition, transfer fees cannot be deducted, and existing faster terms cannot be stretched to 60 days.
- One month brings the seven prohibited acts; six months brings the childcare consideration duty and 30 days’ notice before cancellation or non-renewal.
- Enforcement is active rather than theoretical: the JFTC took measures in 1,552 cases in fiscal 2025, and recommendations are published by name.
- Whether the Act reaches a company with no establishment in Japan is not addressed in the official guidance we could find, and nothing here should be read as settling it.
The useful way to read this Act is not as a compliance burden bolted onto contractor engagement in Japan, but as a description of what a Japanese contractor now expects as a baseline. Terms in writing before work starts. Payment on a date that was agreed and is not far away. No unilateral reduction after delivery. Notice before a long engagement ends.
Those four things are what the JFTC recorded 2,727 breaches of in a single year, which is a reasonable measure of how often ordering parties get them wrong. The administrative work is genuinely a cost. It is also, for a company with no name recognition in Japan, one of the few available signals that you are a serious counterparty.
BLP is a Japanese company that helps overseas businesses enter the Japanese market by breaking the work into defined scopes 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
- Japan Fair Trade Commission, “Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators” (tentative English 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 English translation) — sets the one-month and six-month periods and the 1 November 2024 commencement date — 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/
- Japan Fair Trade Commission, Freelance Act portal (Japanese) — https://www.jftc.go.jp/fllaw_limited.html
- Japan Fair Trade Commission, Freelance Act Q&A (Japanese) — https://www.jftc.go.jp/fllaw_limited/fllaw_qa.html
- Japan Fair Trade Commission and Ministry of Health, Labour and Welfare, “Interpretation of the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators”, 31 May 2024, revised 1 October 2025 (Japanese, PDF) — https://www.jftc.go.jp/file/fl_jftcmhlwguidelines.pdf
- Japan Fair Trade Commission, “Enforcement of Chapter II of the Freelance Act in fiscal 2025”, published 10 June 2026 (Japanese) — https://www.jftc.go.jp/houdou/pressrelease/2026/jun/260610_FL.html
- Japan Fair Trade Commission, “Guidance under the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators”, published 10 December 2025 (Japanese) — https://www.jftc.go.jp/houdou/pressrelease/2025/dec/251210_fl_shido.html
- Japan Fair Trade Commission, list of recommendations issued under the Freelance Act (Japanese) — https://www.jftc.go.jp/FL/FLkankoku/index.html
- Japan Fair Trade Commission, Secretary General press conference, 25 June 2025 (English) — https://www.jftc.go.jp/en/about_jftc/index_3_250625.html
- Ministry of Health, Labour and Welfare, “Outline of the Freelance Act: working environment provisions” (Japanese, PDF) — https://www.mhlw.go.jp/content/001470693.pdf
- Ministry of Health, Labour and Welfare, information for freelancers and for businesses that entrust work to them (Japanese) — https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/koyou_roudou/koyoukintou/zaitaku/index_00002.html
- Ministry of Health, Labour and Welfare, consultation desks at Labour Standards Inspection Offices for people whose worker status is in doubt, opened 1 November 2024 (Japanese) — https://www.mhlw.go.jp/stf/newpage_44487.html
- Japan Institute for Labour Policy and Training, “Freelance Act Comes into Effect in November 2024”, Japan Labor Issues vol.8 no.49 (English, PDF) — https://www.jil.go.jp/english/jli/documents/2024/049-01.pdf
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