Protection of Migrant Workers under Japanese Law: One Step Forward After Two Steps Back? —Regulation of intermediary exploitation in the Employment for Skill Development Programme

Imagine the following situation. You are drawn to an advertisement promising to find your ideal job. Through the introduction of Company A, you are hired by Company B with a monthly salary of 250,000 yen. Then, Company A demands a payment of 500,000 yen as a placement fee. In fact, the contract clearly specifies that "in the event of a successful job placement, a fee equivalent to the expected salary for two months at the place of employment shall be paid to Company A." Since this was agreed upon and Company A is engaged in job placement as a business, would it be acceptable for them to charge such a fee?

As I will explain below, this constitutes a clear violation of Japanese labor law. Regulation of such placement fees is regarded as necessary to protect the human rights of workers. However, when examining the newly established framework for accepting foreign workers (Employment for Skill Development Programme or ESDP), it appears that Japanese policymakers consider it permissible to weaken such protections for workers coming from overseas.

In addition to the concerns over an international treaty that have already been noted, such differential treatment carries the risk of creating a contradiction within Japan's domestic legal system. I have already discussed this issue in a separate paper^[1], but since the aforementioned differential treatment has now been codified into ordinance, I wish to briefly restate the main points in the hope of prompt legislative revision. At the same time, I intend to propose a way of applying the current law that avoids self-contradiction.

As my readers may already know, the ESDP was established as a developmental replacement for the Technical Intern Training Programme (TITP), which had been an important channel for the acceptance of unskilled labor in Japan. There are several key points in the revision; however, this paper will focus on proposed measures to address the high fees charged to workers by overseas sending organizations. Although I will omit the details in this article, overseas sending organizations are positioned as entities that provide employment placement by partnering with domestic organizations responsible for introducing workers to accepting companies (referred to under the new law as "the supervising and support organization").

The issue lies in the fact that, under the new law, fee collection by sending organizations is limited to amounts not exceeding the worker's expected salary for two months (Article 21, Ordinance for Enforcement of the Act on Employment for Skill Development [Orders of the Ministry of Justice and Ministry of Health, Labour and Welfare, No. 4 of 2025]). At first glance, this provision appears to regulate the collection of fees. Conversely, it also means that, at least within the framework of the new law, fees of up to two-month expected salary are permitted. Consequently, fee collection from workers as in the above hypothetical example would not constitute a violation under the ESDP.

However, paid employment placement involving such a collection of fees from workers is prohibited under Japanese labor law (Articles 30, Paragraph 1 and 32-3 of the Employment Security Act [hereinafter the "ESA"]). In addition, Article 6 of the Labor Standards Act (hereinafter the "LSA") prohibits such intermediary exploitation as an important human rights protection measure, alongside the prohibition of forced labor under Article 5 of the LSA.

Various measures are prepared to ensure the effectiveness of these regulations. First, there are measures involving the exercise of public authority. Under the ESA, administrative authorities may give guidance and advice (Article 48-2), issue improvement orders (Article 48-3, Paragraph 1), and, as a prerequisite, request reports or conduct on-site inspections of business establishments (Article 50). Failure to comply with an improvement order, or failure to appropriately cooperate with requests for reports or on-site inspections, may result in criminal penalties (Article 65, Item 8 and Article 66, Items 9-10). Penalties are also provided for illegal paid employment placement operations themselves (Article 64, Item 1 and Article 65, Item 2). Under the LSA, labor standards inspectors are granted the authority, for instance, to conduct on-site inspections (Article 101), and failure to cooperate appropriately may likewise lead to criminal penalties (Article 120, Item 4). Violations of the prohibition against intermediary exploitation are also subject to penalties (Article 118).

Furthermore, mandatory regulation of the legal relationship between the parties is also enforced (so-called "mandatory effect under private law"). In the hypothetical example presented at the introduction to this article, the agreement to pay a fee is invalid, including in cases where the placement is conducted without a license. The ESA regulations imply this form of mandatory control, as supported by legal precedents, and there is no objection to interpreting Article 6 of the LSA in the same manner.

The prohibition of intermediary exploitation, accompanied by the various measures to ensure its effectiveness described above, has historical justification. Specifically, particularly before World War II, fee collection was carried out in ways that were linked to human rights violations such as human trafficking and forced labor. Japanese law aimed to eliminate the abuses of these premodern employment practices.

Viewed in this way, one can understand the problematic fit of the fee regulations under the ESDP within Japanese legal system. In fact, it appears that Japanese policymakers regard foreign workers entering Japan under this system as inhabitants of a completely different world. It was the government that originally proposed setting the fee ceiling at two-month expected salary. At that time, a model case was presented in which the fee would be financed through loans or similar means and repaid over a period of one and a half years. The very situation that, as a premodern employment practice, should have been eliminated under domestic law is thus positioned as permissible under the ESDP.

This situation also raises concerns regarding debt bondage, which is recognized internationally as a typical form of unfair treatment of migrant workers. During the public comment process on the draft ordinance, some comments questioned their consistency with international law, particularly ILO Convention No. 181, which Japan has ratified. These comments are legitimate and must be taken seriously. In this article, however, I wish to emphasize the contradictions within the Japanese legal system. For some reason, this problematic aspect of the ESDP has hitherto been left unaddressed.

In this regard, although I have not been able to find confirmation in the form of official documents, I have heard from practitioners involved in the TITP an explanation for the contradictory treatment of the migrant workers. Namely, fee collection as in the hypothetical example at the beginning of this article is conducted by sending organizations located abroad toward workers also located abroad, and because of the extraterritorial nature of such cases, Japanese law is said not to apply. At times, this is explained in terms of the so-called "territoriality principle" characteristic of the ESA and LSA.

However, the international application of these labor laws is not so simple as to be fully explained by the territoriality principle. It is true that if Japanese administrative authorities were to conduct on-site inspections of foreign business establishments, this could raise issues in relation to the sovereignty of the relevant country, and in that sense, there are territorial limitations. On the other hand, in the absence of such enforcement-related issues, the international scope of application of the above laws is not necessarily constrained territorially. Due to space limitations, I will omit details in this article. However, this is particularly true with respect to the scope of the mandatory effect under private law described above. In addition, even in administrative guidelines, it is stated that Japanese law applies to cross-border employment placement "if part of the act is conducted within Japan" (Employment Security Bureau of the Ministry of Health, Labour and Welfare, Guidelines for the Operation of Employment Placement Services, June 2025, Section 1-2 (4)). There is also material suggesting that this would apply even in cases where only the employer is located in Japan^[2].

In short, the newly established ESDP appears to have introduced an internal contradiction into the Japanese legal system by implementing a partial and incomplete regulation of fees. In other words, in order to set a ceiling of two-month expected monthly salary (one step forward), the existence of the normative prohibition on fee collection was disregarded (two steps back), and from the perspective of the legal framework as a whole, worker protection can be said to have been weakened.

Of course, given that large sums are currently being collected by sending organizations, it is understandable that a ceiling of two months was established as a practical baseline for ensuring compliance. However, considering the connection with human rights violations such as forced labor, I believe that it would have been more appropriate to clearly establish a principle of prohibition, both to address the human rights concern and to demonstrate Japan's commitment to business and human rights.

To avoid contradictions with international norms and the Japanese legal system, prompt revision of the laws related to the ESDP is required. However, since the program has only just been established, immediate progress of this kind is unlikely. Therefore, as a temporary measure, I would like to indicate a way to interpret the current law in a consistent manner.

Namely, the two-month ceiling under the ESDP should be interpreted merely as a threshold for the imposition of sanctions under the program, and it does not legalize fee collection within that range. In other words, the application of the ESA and Article 6 of the LSA remains intact, and fee collection is in principle illegal even if it does not exceed two-month expected salary. However, the two-month threshold simply triggers additional sanctions in cases of particularly egregious fees exceeding that amount. It is desirable that administrative authorities clearly confirm this interpretation before the mistaken message spreads that fees within two-months expected salary are legally permissible.

Note: Part of this research was supported by JSPS Grants-in-Aid for Scientific Research (KAKENHI) Grant Number 22K13294.

[1] Ikawa, S., "We Need to Confirm That the Prohibition on Intermediary Exploitation Also Applies to Foreign Workers for the ESDP," appeared in Quarterly Journal of Workers' Rights, No. 361, p. 102. The reference and citation information provided there is omitted here due to space limitations.
[2] Okayama, S., "Theory and Practice of Cross-Border Employment Placement," (Institute of Labour Administration, 1993), pp. 38 to 39.