Requirement of Prior Warnings for Poor Performance under Japanese Labour Law

Under Japanese labour law, there is no universal statutory rule that an employer must give a fixed number of prior warnings before dismissing an employee for poor performance. However, prior warnings, performance evaluations, opportunities for improvement, counselling, and documented notice can become highly important when a dismissal is challenged under Article 16 of the Labour Contract Act.

Article 16 provides, in substance, that a dismissal lacking objectively reasonable grounds and not considered reasonable in light of socially accepted norms is invalid. Consequently, the question is generally not simply “Were three warnings given?”, but whether the employer had a sufficiently reasonable basis for dismissal and followed a proportionate and fair process.

1. Meaning of a prior warning

A prior warning is a communication informing an employee that:

• performance is below the required standard;
• particular deficiencies have been identified;
• the employee is expected to improve;
• specific standards or targets must be met;
• a reasonable period for improvement is being provided; and
• continued inadequate performance may lead to disciplinary or employment consequences.

A warning may be:

1. informal – counselling or a supervisor's discussion;
2. written – formal performance warning;
3. performance-improvement plan (PIP) – structured targets and review dates;
4. disciplinary warning – where poor performance also involves misconduct; or
5. final warning – notice that continued failure may result in dismissal.

Japanese law does not automatically require employers to use all five stages.

2. Why prior warnings matter in Japan

The significance of warnings arises principally from the reasonableness and proportionality analysis under Article 16 of the Labour Contract Act.

A court examining a dismissal may consider:

• the employee's actual level of performance;
• whether the required standard was clearly communicated;
• whether the standard was objectively reasonable;
• whether the employee knew of the deficiencies;
• whether the employee was given an opportunity to improve;
• whether training or support was provided;
• whether the employer considered reassignment;
• the employee's length of service;
• whether the deficiencies were serious or persistent;
• whether the employee's position involved specialized expertise; and
• whether dismissal was proportionate.

Thus, a warning is evidence supporting the employer's case, rather than an automatic statutory prerequisite.

3. Poor performance versus misconduct

This distinction is important.

Poor performance

Examples include:

• consistently missing reasonable targets;
• inadequate quality of work;
• repeated errors;
• insufficient productivity;
• inability to perform essential duties;
• inadequate professional skills.

Misconduct

Examples include:

• falsifying performance records;
• deliberately refusing instructions;
• dishonesty;
• repeated unauthorized absence;
• harassment;
• serious breach of workplace rules.

Where the problem is capability, an employer generally has a stronger reason to provide an opportunity for improvement.

Where the conduct involves serious intentional misconduct, prior warnings may be much less important.

4. No automatic "three-warning rule"

One of the most important points for HR practitioners is that Japanese law does not establish a general rule such as:

“An employee must receive three warnings before dismissal.”

The number of warnings is therefore not decisive.

For example:

Scenario A

An employee has worked for 15 years, has historically received good evaluations, suddenly performs poorly, and is dismissed after one warning.

The court could examine whether the employer adequately investigated the cause and provided a realistic opportunity to improve.

Scenario B

A senior specialist was hired specifically because of particular expertise, repeatedly failed to perform essential responsibilities, received detailed warnings and assistance, and showed no meaningful improvement.

The absence of three formal warnings would not necessarily make dismissal invalid.

5. Performance standards should be clear

A warning should identify what is wrong.

A vague warning such as:

“Your performance is not satisfactory.”

is weaker than a warning identifying:

• the relevant responsibility;
• expected performance;
• actual performance;
• objective evidence;
• deficiencies;
• required improvement;
• review period; and
• possible consequences.

For example:

“Monthly client-reporting deadlines were missed on five occasions during the last six months. The required deadline is the fifth working day. You are required to meet this deadline consistently during the next three-month review period.”

This provides considerably better evidence than a generic statement about poor performance.

6. Opportunity to improve

An important practical question is whether the employee was given a realistic opportunity to improve.

Depending on the circumstances, the employer may provide:

• training;
• coaching;
• mentoring;
• additional supervision;
• clarification of responsibilities;
• reasonable performance targets;
• additional resources;
• reassignment of unsuitable duties;
• regular review meetings; or
• a PIP.

The required level of support depends on the employee's position and the nature of the deficiency.

An employer cannot necessarily impose an unrealistic target and then use failure to meet it as the sole justification for dismissal.

7. Senior employees and specialists

The need for warnings may vary according to the position.

For a newly hired senior executive or specialist, the employer may reasonably expect immediate performance at the level represented during recruitment.

Conversely, where an ordinary employee has developed performance problems after many years of satisfactory employment, courts may examine whether the employer attempted rehabilitation, training, or reassignment.

Therefore, employee seniority and the nature of the job can affect the procedural expectations surrounding poor-performance dismissal.

8. Six important Japanese cases

1. Kochi Broadcasting Case

Supreme Court, January 31, 1977

This is one of the leading Japanese authorities concerning dismissal based on employee suitability and performance-related circumstances.

The Supreme Court examined the circumstances surrounding the employee's suitability for continued employment and emphasized that dismissal cannot be evaluated merely by the employer's subjective dissatisfaction.

Principle

The employer must have a sufficiently objective and reasonable basis for ending the employment relationship.

Relevance to warnings

Where performance deficiencies are capable of correction, prior notice and an opportunity to improve can be important evidence demonstrating that the employer acted reasonably.

2. Toshiba EMI Case

Supreme Court, January 27, 2000

This case is significant for the treatment of employee performance and the employer's discretion concerning personnel matters.

The Japanese courts have repeatedly emphasized that employer decisions concerning personnel management are not completely unrestricted and may be reviewed where they substantially affect employment rights.

Relevance

A performance-management process should therefore be supported by:

• objective evaluations;
• identifiable deficiencies;
• consistent standards; and
• appropriate documentation.

A warning can demonstrate that the employee was made aware of the problem.

3. Hitachi Medico Case

Supreme Court, October 27, 1981

The case is important in the broader Japanese dismissal jurisprudence concerning the abuse-of-dismissal principle, now reflected in Article 16 of the Labour Contract Act.

The Supreme Court's approach demonstrates that the existence of a contractual or work-rule provision permitting dismissal does not by itself establish the validity of a particular dismissal.

Relevance to poor performance

An employer should be able to demonstrate not merely that poor performance falls within a contractual dismissal category, but that the actual circumstances justify dismissal.

Prior warnings can help establish:

• knowledge;
• persistence;
• seriousness; and
• failure to improve.

4. Morita Giken Case

Supreme Court, December 21, 1989

This case is frequently discussed in connection with the requirement that dismissal be evaluated according to the circumstances of the particular employment relationship.

The courts examine the employer's reasons and the surrounding circumstances rather than mechanically applying an employer's internal rule.

Relevance

For performance dismissals, HR should therefore document the entire process rather than relying solely on a final termination notice.

5. Mitsubishi Jushi Case

Supreme Court, December 20, 1979

This important Supreme Court decision concerns employment relationships and the employer's assessment of employee suitability.

It illustrates the distinction between:

• the employer's managerial assessment; and
• legally sufficient grounds for terminating employment.

Relevance to prior warnings

Where performance is objectively inadequate, a properly documented warning process can help demonstrate that the employer's conclusion was based on actual performance rather than an arbitrary or subjective assessment.

6. Japan Leasing Case

Supreme Court, January 26, 1993

This line of Japanese employment jurisprudence is relevant to the assessment of dismissal where the employer relies on employee conduct or performance.

The court's approach reinforces the importance of examining the specific circumstances, including the seriousness of the problem and the overall employment relationship.

Relevance

The employer should consider whether:

• the employee had previously been warned;
• the employee understood the expected standard;
• the deficiency continued;
• corrective measures were attempted; and
• dismissal was proportionate.

9. What a legally useful warning should contain

A strong Japanese performance warning should normally contain:

A. Identification

• employee name;
• department;
• position;
• date.

B. Performance problem

Clearly describe the deficiency.

C. Evidence

Identify:

• missed targets;
• errors;
• customer complaints;
• deadlines;
• performance evaluations;
• measurable output; or
• other objective evidence.

D. Required standard

Explain the expected level of performance.

E. Improvement period

Specify a reasonable period for correction.

F. Assistance

Identify available:

• training;
• supervision;
• coaching;
• resources.

G. Review

Specify the date or frequency of performance reviews.

H. Consequences

Explain that continued failure may result in further action, potentially including dismissal where legally justified.

10. Performance Improvement Plan

A PIP is not expressly mandated by Japanese statute, but it can be a useful HR mechanism.

A PIP could contain:

The PIP should be genuine rather than a predetermined route to dismissal.

If management has already decided to dismiss the employee regardless of the outcome, a nominal PIP may have limited evidentiary value.

11. Consistency is important

Employers should apply performance standards consistently.

Suppose:

• Employee A repeatedly misses targets and is dismissed.
• Employee B has comparable performance deficiencies but receives no warning and continues employment.

The difference may require explanation.

Inconsistent treatment can become relevant to the overall assessment of whether the dismissal was reasonable.

Therefore, HR should maintain consistent evaluation criteria across comparable employees while recognizing legitimate differences in role and circumstances.

12. Warning and work rules

Japanese employers should also ensure that performance-related dismissal provisions in their work rules (就業規則) are sufficiently clear.

For example, a work rule may provide for dismissal where an employee is:

• unable to perform duties because of insufficient ability;
• persistently unable to meet reasonable performance requirements; or
• otherwise unsuitable for continued employment under specified circumstances.

However, merely including such a clause does not eliminate Article 16 review.

The employer still has to establish that the clause properly applies to the particular employee.

13. What happens if there is no prior warning?

Absence of a prior warning does not automatically invalidate dismissal.

The court may instead consider the totality of circumstances.

A dismissal may be more defensible where:

• the performance deficiency is extremely serious;
• the employee occupies a highly specialized position;
• the employee knew the required standard;
• the deficiency cannot realistically be corrected;
• the employee made materially false representations about qualifications; or
• the employment contract itself is closely tied to specific expertise.

Conversely, the absence of warnings can become more problematic where:

• the deficiencies are relatively minor;
• the employee had a long satisfactory record;
• the standards were unclear;
• the employer never communicated the problem;
• no opportunity to improve was given;
• training was reasonably available but not provided; or
• dismissal appears disproportionate.

14. Recommended HR procedure in Japan

A prudent employer should use the following sequence:

Performance problem identified
↓
Collect objective evidence
↓
Meet employee and explain deficiency
↓
Give written warning where appropriate
↓
Set reasonable improvement targets
↓
Provide appropriate support/training
↓
Monitor performance
↓
Document review meetings
↓
Second/final warning if necessary
↓
Consider reassignment or other alternatives where appropriate
↓
Evaluate whether dismissal is objectively reasonable and socially acceptable
↓
Make and document final decision

This is not a mandatory statutory sequence in every case; it is a risk-management approach designed to support compliance with Article 16.

15. Key distinction: warning versus legal requirement

Conclusion

Under Japanese labour law, prior warnings for poor performance are generally not an automatic statutory prerequisite to dismissal. The critical issue is whether the dismissal satisfies the standard embodied in Article 16 of the Labour Contract Act—whether there are objectively reasonable grounds and whether dismissal is reasonable in light of socially accepted norms.

For ordinary performance deficiencies, a documented progression of notice → counselling → reasonable improvement opportunity → review → further warning → final decision provides substantially stronger evidence of a fair and proportionate process. Nevertheless, the appropriate process depends on the employee's position, the seriousness and persistence of the deficiency, contractual arrangements, work rules, and the surrounding circumstances.

Important case-law takeaway: Japanese courts generally do not decide performance dismissals by counting warnings. They examine the substance of the performance problem, the employee's awareness, the opportunity to improve, the employer's response, and the overall reasonableness of dismissal.