Manager Basics - Part One: Firing an Employee

Manager Basics - Part One: Firing an Employee

This next series of columns is aimed at people who have just been promoted to become a manager in their company, as well as those being transferred in from overseas.

In conservative Japan, one of the most important acts you can perform as a manager is to let a staff member go. Not only are there legal issues, but also a political minefield to negotiate if you want to maintain the morale of your remaining staff.

Firings happen for many reasons. While in the West, the most common reason and acceptable reason is lack of personal performance, in Japan it is more likely to be a case of company performance. Thus, this gives you a clue of how in each respective environment, companies let someone go. In the West, it is a focus on personal failings, in Japan it is a focus on cash flow and, more recently, seniority. You can use both techniques legally in Japan, but the methods in carrying out each method is quite different.

I'll go into the politics of letting staff go in a later article. For the time being, let's focus on the law and when you can and cannot simply fire someone.

Especially in Japan, the art of firing someone smoothly is a process which takes some effort to get right - or else you'll soon be slapped with a law suit or an administrative action from your local Labor Standards Office. Naturally, I hope you never have to use this information, but people being what they are, dealing or resolving conflict is an innate part of working with others, so firing is definitely a conclusive way of dealing with conflict.

I'll start by saying that the only time it is really safe to fire someone is AFTER you've hired them, and no later than 14 days into their employment. During this 14-day period, which isn't much use for anything more than checking whether your new recruit is insane or not - you are legally allowed to let someone go with nothing more than written notice. As with any termination action you take, be sure to pass the termination letter by your HR Manager, to make sure that the reasoning and treatment of the person is done right.

The next safest period to let someone go is within the first 3 months, which for most companies is the accepted probation period. However, this is only if the employment contracts state that there is a 3-month probation period. Does your company have an employment contract? If so, check and be sure what it says.

Note also that you can add into your contracts that the company reserves the right to extend the employee's probation period by another 3 months if their performance is inadequate. Probation longer than 6 months is not illegal, but less likely to be viewed as fair and reasonable in a legal claim. Most HR people consider 6 months as the limit.

Although an employee may be in probation, they get all the rights and benefits that your regular staff do. You are supposed to treat them with respect and make efforts to train them for the job. If you want to let someone go while they are on probation, you have to prove that the person was unable to do the job, even after effort by the company. For this reason, there is an established termination process which demonstrates fairness and concern over the well-being of your employee. In other words, you can't just treat them like dirt and throw them out the door. The Japanese labor authorities won't stand for that kind of mistreatment.

The times you do NOT want to fire someone is before the person has started work and after their probation period is finished. The period between when a candidate has received a formal letter of offer (or a verbal offer) but hasn't yet started work, is considered contractually binding. Not fulfilling a promise to employ someone can get you into a court case and most likely a ruling to pay 3-6 months salary, while they look for another job, or, worse still, you may be ordered to hire them after all.

After the probation period finishes, you can still let a difficult employee go, but it is more likely that you will have to make a significant separation payment, or else prove that the company is suffering economically. More on this later.