Why Japan's Labor Law Reform Was Shelved — 7 Key Issues in the First Major Overhaul in 40 Years
In January 2025, a Ministry of Health, Labour and Welfare (MHLW) research panel proposed a sweeping overhaul of Japan's Labor Standards Act. The seven proposed reforms — including a ban on 14 consecutive workdays, mandatory 11-hour rest intervals, and a legal "right to disconnect" — aimed to move beyond the "factory labor model" of 1947. But a structural clash with the Takaichi administration's deregulation agenda caused the bill's submission to the 2026 regular Diet session to be shelved. With work-related deaths and injuries reaching a record 1,304 cases, why was reform stopped in its tracks? This article examines the seven key issues and the structural reasons behind the postponement.
TL;DR
- Japan's Labor Standards Act had been under discussion for its first major overhaul in approximately 40 years since 1987, but the bill was not submitted to the 2026 regular Diet session
- The reform package comprised seven items, including a ban on 14 consecutive workdays, mandatory rest intervals, and a right to disconnect
- The postponement reflects a structural conflict between the Takaichi administration and business community's "deregulation" agenda and the MHLW study group and labor organizations' proposed "regulatory strengthening" measures
"People assume a 5-day work week is natural, but it's a historically constructed institution — not a law of nature." — via Threads
"Isn't it time we removed the 'reason' field from paid leave request forms? Employees don't need to explain, and managers have no right to ask." — via Threads
What Is Happening
An overview of the seven proposed reforms to Japan's Labor Standards Act — the first major overhaul in 40 years — and the fact that the bill was not submitted to the 2026 Diet session
In January 2025, the Ministry of Health, Labour and Welfare (MHLW) published a report from its "Labor Standards Legal System Study Group," proposing a sweeping overhaul of Japan's Labor Standards Act, which was enacted in 1947. The last major revision was in 1987, when flextime and staggered work-hour systems were introduced — making this discussion the first major overhaul in approximately 40 years.
The reform package consists of seven key items.
* Submission to the 2026 Diet session was shelved in December 2025. Enactment expected 2027 or later.
① Cap on consecutive workdays (ban on working more than 13 days consecutively) — Under current law, as long as at least one statutory holiday per week is secured, an employee can legally work up to 12 consecutive days. Under certain variable-holiday arrangements, up to 48 consecutive workdays are theoretically legal. The reform would prohibit more than 13 consecutive workdays.
② Mandatory rest intervals between shifts (11 hours) — Employers would be required to ensure at least 11 hours of rest between the end of one shift and the start of the next, with penalties for violations. Currently, the 2019 Work Style Reform Act only established this as a "best-efforts obligation," and only 5.7% of companies have adopted it.
③ Designated statutory holidays — Currently, employers are only required to provide "one day off per week" without specifying which day. The reform would require employers to designate and communicate statutory holidays in advance, eliminating the common practice of nominal days off that are treated as working days in practice.
④ Unified paid leave wage calculation method — Under the "average wage" calculation method, employees can end up receiving less pay when they take paid leave than when they work — a counterintuitive outcome. The reform would standardize calculations using "ordinary wages" as the default, providing a genuine incentive to use paid leave.
⑤ Right to disconnect (regulation of after-hours contact) — Rather than explicit legislation, the direction is toward creating guidelines. This would establish, as a matter of policy, that employees have the right not to respond to work emails, messages, or calls outside of working hours without suffering any disadvantage.
⑥ Abolition of the 44-hour weekly exception — Small workplaces (fewer than 10 employees) in retail, healthcare, and hospitality have been permitted to set weekly working hour limits at 44 hours rather than 40. The reform would abolish this exception, applying the 40-hour standard uniformly across all workplaces.
⑦ Revision of overtime calculation rules for multiple employers — Current rules require employers to aggregate working hours across multiple jobs when calculating overtime pay, effectively discouraging employers from allowing side jobs. The reform would change this so that overtime calculations are applied separately for each employer.
However, this reform package was not submitted to the 2026 regular Diet session. Between December 23 and 26, 2025, the Minister of Health, Labour and Welfare officially announced that the bill would not be submitted to the 2026 regular Diet session.
Background and Context
The limitations of the 1947 factory labor model, the record-high number of work-related fatalities, and the structural conflict with the Takaichi administration
From the 1947 Factory to the 2025 Remote Workplace
Japan's Labor Standards Act was enacted in 1947, designed for workers on assembly lines in factories. The assumptions were clear: fixed start and end times, work confined to a physical workplace, a single employer.
78 years later, those assumptions no longer hold. People work from home via telework. Others simultaneously work for multiple employers through side jobs. Gig workers take on assignments through digital platforms. The legal framework has failed to keep pace with how work actually happens.
It was this growing gap that prompted the MHLW to establish the Labor Standards Legal System Study Group in January 2024.
The Reality of Record-High Work-Related Fatalities
The statistics behind this reform debate are sobering. The number of workers' compensation cases approved for work-related death or injury in FY2024 reached a record 1,304. Of these, 159 involved death or suicide (including attempts). Approved compensation cases for mental disorders numbered 1,055 — a sixth consecutive year of increase.
The National Network of Families of Victims of Karoshi holds annual coordinated actions at the MHLW each November and has gathered over 550,000 signatures in its push for legislation. The government has set "zero karoshi" as a policy goal, yet the numbers continue to move in the wrong direction.
The Gap with International Standards
Japan's labor law lags significantly behind other major developed nations.
| Country | Rest Interval | Right to Disconnect | Paid Leave Rate |
|---|---|---|---|
| Japan (current) | Non-binding | None | 63% |
| EU Directive | 11h mandatory | Under discussion | — |
| France | 11h mandatory | Law since 2017 | 94% |
| Germany | 11h mandatory | No law | 93% |
Paid leave rate source: Expedia 'Global Vacation Deprivation Survey 2024'
The EU Working Time Directive requires all member states to provide workers with at least 11 consecutive hours of rest per 24-hour period. France sets the statutory workweek at 35 hours and codified the right to disconnect in its Labor Code in 2017 (Article L.2242-17, Clause 7). Germany also mandates 11-hour rest intervals under Section 5 of the Working Hours Act (ArbZG).
In Japan, rest intervals remain a "best-efforts obligation," and 14.7% of companies are not even aware that such a system exists. The government aims to raise adoption to 15% or above and reduce non-awareness to below 5% by 2028 — targets that seem ambitious given the current adoption rate of 5.7%.
Paid leave utilization follows a similar pattern. Japan's paid leave utilization rate reached 65.3% — a record high, but still low by international standards. In a private-sector survey by Expedia covering 11 countries, Japan ranked last at 63%, more than 30 percentage points behind France (94%) and Germany (93%).
Labor productivity also raises questions. Japan's hourly labor productivity stood at $56.8, ranking 29th out of 38 OECD member countries. While low productivity has multiple causes — including industrial structure and exchange rate effects — the coexistence of long working hours and low productivity suggests that reforming working-time regulations is not unrelated to improving output.
Why It Was Shelved — The Clash with the Takaichi Administration
The Takaichi Sanae administration, which took office in October 2025, instructed the MHLW to "consider relaxing working hour regulations, premised on maintaining physical and mental health and ensuring employee choice." The direction was toward deregulation rather than tightening. Behind this lay a growth strategy emphasizing startup promotion and international competitiveness, underpinned by the view that rigid time-based regulation impedes innovation.
The business community also took a cautious stance toward the MHLW's proposals. Keidanren called for "flexible responses tailored to specific industries and business types" regarding mandatory rest intervals. Among small and medium-sized enterprises (SMEs), concerns were voiced that "if we must guarantee 11 hours of rest, operations become unsustainable amid labor shortages." The Japan Chamber of Commerce and Industry also argued for phased implementation and transitional measures for SMEs.
On the other side, the MHLW study group's proposals represented regulatory strengthening. Banning 14-day work streaks, making rest intervals mandatory, abolishing the 44-hour exception — each of these would impose new obligations on employers and increase compliance costs.
The conflict between "deregulation (the administration and business community)" and "regulatory strengthening (the MHLW study group and labor organizations)" was never resolved. On December 24, 2025, Jiji Press reported "Working hour regulation reform: no resolution in sight". The result: the bill was postponed.
Rengo, Japan's largest labor union federation, has consistently pushed for mandatory rest intervals and codification of the right to disconnect. "Qualitative improvement of working conditions" was a central theme in the 2025 spring wage negotiations as well — but the political wall held firm.
Reading the Structure
The political conflict between deregulation and worker protection, and the structural gap between Japan's labor law and international standards
Is "Deregulation vs. Worker Protection" Really a Binary Choice?
There is some logic to the Takaichi administration's push for "flexible work promotion." As telework and side jobs become more widespread, rigid time-based regulations increasingly fail to fit how actual work is done. Some items in the reform package — such as abolishing the 44-hour exception and revising the multiple-employer overtime rule — blend both deregulation and worker protection.
However, rest interval requirements and caps on consecutive workdays concern what could be called the "minimum defensive line" for health. Relaxing these measures in the name of "flexibility" would mean falling below the standard that the EU enforces as legally binding.
As legal scholar Yuichiro Mizumachi argues in Introduction to Labor Law, New Edition, labor law is designed with the inherent power imbalance between employers and employees in mind. Deregulation premised on employees "freely choosing" ignores the realities of that power dynamic.
The Structural Pattern of "Postponed Again"
The shelving of this labor law reform fits into a recurring pattern in Japan's labor administration.
The exemption for small businesses from higher overtime wage premiums lasted 25 years: the 2010 amendment raised the overtime premium to 50% for monthly hours exceeding 60, but small businesses were exempted until 2023. Seven years after rest intervals were made a best-efforts obligation, the adoption rate still stands at 5.7%.
"Mandatory measures are premature." "Let's start with voluntary initiatives." Each time this argument recurs, the gap with international standards widens and the count of work-related fatalities grows.
What Is at Stake Heading Toward 2027
Multiple media reports have referenced the possibility of submitting the bill to the 2027 regular Diet session. However, since the bill's fate depends on the administration's policy direction, this remains far from certain.
Corporate preparation cannot wait. If mandatory rest intervals are enacted, approximately 94% of companies — given the current adoption rate of 5.7% — would face new compliance requirements. Updating time-tracking systems, overhauling shift management, tracking working hours for employees with multiple employers — none of these can be accomplished overnight.
To return to the Threads post quoted at the start: "A five-day workweek isn't a natural law" — and that is exactly right. The working-time framework designed in 1947 should be rewritten to match the times.
The question is the direction of that rewrite. Should it prioritize worker health protection, or employer flexibility and competitiveness — or is a system design that achieves both possible? The business community's call for "phased implementation by industry and scale" and labor organizations' demand for "uniform mandatory minimum standards" are not necessarily mutually exclusive. The EU itself maintains the 11-hour rest interval as a baseline while allowing sector-specific exceptions — proof that there is room for compromise depending on institutional design.
Work-related fatality compensation: 1,304 cases. Paid leave utilization improving but still far from international norms. Rest interval adoption: 5.7%. These numbers show that Japan's labor law system is at a stage where it must change. Whether the reform debate heading into 2027 can encompass both economic rationality and worker protection will be the central question.
Related Columns
- Rest Interval Regulation and Japan's Structural Labor Challenges
- The Right to Disconnect — Why Japan Cannot Implement It
- The Structural Transformation of Non-Regular Employment
Related Guides
References
FY2024 Survey on Workers' Compensation for Work-Related Deaths and Injuries — Ministry of Health, Labour and Welfare. Ministry of Health, Labour and Welfare
Labor Standards Act reform bill not to be submitted to 2026 Diet session — Nikkei Shimbun. Nikkei Shimbun
Survey on the Introduction and Operation of Rest Interval Systems in Other Countries — Japan Institute for Labour Policy and Training (JILPT). JILPT Research Materials Series No.282
Key Points in the Approximately 40-Year First Major Reform of the Labor Standards Act — SmartHR Mag. Editorial Team. SmartHR Mag.
Working hour regulation reform: no resolution in sight — Labor Standards Act reform bill shelved from regular Diet session — Jiji Press. Jiji Press
