特定受託事業者に係る取引の適正化等に関する法律（フリーランス新法)1
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The Subcontract Act in Japan regulates the relationship between contractors and subcontractors, ensuring fair treatment and preventing abuses such as delayed payments, unfair price reductions, and coercive purchasing. This article examines the specifics of Japan’s Subcontract Act, comparing it with similar laws in other countries, and highlights trends in global business practices.
Legal Classification
Type of Law: Japan’s Subcontract Act is part of the broader framework of competition law. Its primary aim is to regulate business relationships between larger companies and smaller subcontractors, addressing both goods manufacturing and service provision contracts.
Objective: The law seeks to prevent larger businesses from exploiting subcontractors by enforcing fair payment schedules and prohibiting coercive business practices.
Historical Context
The Subcontract Act emerged in response to the growing power imbalance between large corporations and small- and medium-sized enterprises (SMEs) in Japan’s post-war economy. Initially focused on manufacturing contracts, the law has expanded to cover a wide range of service contracts. The Japanese government, led by the Japan Fair Trade Commission (JFTC), has continuously revised the law to ensure that smaller subcontractors receive fair treatment and timely payments.
Implementation and Impact
Oversight: The Japan Fair Trade Commission (JFTC) enforces the Subcontract Act, with the power to investigate and penalize companies that violate its provisions. Investigations often follow complaints from subcontractors, and the JFTC has the authority to issue corrective orders.
Impact: The law has improved transparency and fairness in subcontractor relationships, especially by enforcing timely payments and curbing the practice of forced price reductions. It also helps maintain Japan’s complex supply chain by ensuring smaller firms can operate sustainably.
International Comparisons
United States
Similar Law: The Fair Labor Standards Act (FLSA) indirectly protects subcontractors, mainly focusing on labor rights. Additionally, certain states, such as California, have passed laws like the Subcontractor Fair Practices Act, aimed at protecting subcontractors from payment abuses.
Key Differences: Unlike Japan’s Subcontract Act, U.S. federal law does not specifically regulate business-to-business subcontracting transactions in a unified way. U.S. laws tend to focus more on labor rights than business transactions between subcontractors and main contractors.
United Kingdom
Similar Law: The Late Payment of Commercial Debts (Interest) Act mandates payment within 60 days for business transactions, including subcontractors. Businesses that delay payments can be required to pay interest to the affected parties.
Key Differences: The UK's focus on timely payments overlaps with Japan's Subcontract Act, but Japan’s law provides broader protections, such as preventing price reductions and unfair contract modifications, which are not directly covered by UK law.
France
Similar Law: France’s Commercial Code includes provisions that protect subcontractors by prohibiting unfair payment terms and ensuring transparency. The Duty of Care Law also mandates that companies ensure fairness throughout their supply chains.
Key Differences: France places a heavier emphasis on corporate responsibility, ensuring that the entire supply chain is held to fair practices, whereas Japan’s law is focused more on payment and contractual obligations.
Global Trends
As global supply chains grow more complex, subcontractor protections are becoming more prominent worldwide. Many countries are considering legislative updates to ensure fair treatment and transparency in business transactions.
Key trends:
Digital Transformation: As services become increasingly digital, the scope of subcontracting laws must expand to cover IT services and software development. Japan’s Subcontract Act is gradually evolving to address these newer types of subcontracting relationships.
Sustainability and Corporate Responsibility: With the rise of sustainability practices, businesses are expected to ensure that their subcontractors also adhere to ethical and responsible business practices. This trend is most prominent in Europe, but Japan is beginning to follow suit.
Advice for Foreigners in Japan
Understand Your Contract: Ensure that the terms regarding payment schedules, service provisions, and responsibilities are clear. This will help you protect your rights under the Subcontract Act.
Check Payment Terms: Payments must be made within 60 days of service completion under the Subcontract Act. Be aware of your rights to timely payment and interest for delayed payments.
Report Violations: If you experience issues such as delayed payments, forced contract modifications, or other unfair practices, you can report the violation to the Japan Fair Trade Commission (JFTC).
Tables
Conclusion
Japan’s Subcontract Act is essential in protecting subcontractors from unfair practices in business transactions. By ensuring transparency, timely payments, and preventing coercion, the law plays a crucial role in maintaining a fair and competitive business environment. Other countries, such as the U.S., UK, and France, offer similar protections, though Japan’s focus on business-to-business fairness is particularly robust. As global supply chains evolve, these laws are expected to continue adapting, especially with the rise of digital services and corporate responsibility initiatives.
References
Japan Fair Trade Commission: Detailed overview of the Subcontract Act, including obligations and prohibitions for main contractors. Link(
Monolith Law Office: Analysis of the Subcontract Act’s application in system development and IT service contracts. Link(
Shimada Hamba & Osajima: Insights on how the Subcontract Act affects manufacturer transactions in Japan. Link(
U.S. Department of Labor: Overview of the Fair Labor Standards Act (FLSA) and its impact on subcontractors. Link.
UK Government: Details on the Late Payment of Commercial Debts (Interest) Act. Link.
Legifrance: France’s Commercial Code and related subcontractor protections. Link.
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