PREDICTIONS FOR 2026
JAPAN
Service Industries Will Scramble to Protect Customers By October, Japan will be the first country to legally mandate employer responsibility for protecting workers from abusive customer behavior. Companies will face JPY 500,000 fines for failing to establish anti-harassment policies, consultation systems, and incident response protocols. Employers can no longer claim customer misconduct is outside their control, and retail, hospitality, and healthcare will scramble to We expect to see whistleblower claims increase 200- 300% over the next two years, thanks to new criminal penalties (up to six months imprisonment, JPY 30 million corporate fines) for retaliation claims. There’s also a new presumption of retaliation – any adverse action within 12 months of a report is presumed retaliatory unless proven otherwise – and freelancers and independent contractors are protected for the first time. Gender Pay Gaps Will Be Revealed Once new requirements kick in by April 2026 that require companies with 101+ employees to disclose pay gap statements (down from 301+), thousands of additional companies will be forced to explain the reasons behind the gaps. This will create legal exposure for unjustifiable disparities, and Japan’s 22% gender pay gap for mid-sized companies will face unprecedented public scrutiny. implement compliance systems. Whistleblower Claims Will Explode
2025 IN REVIEW
Japanese Companies Will Continue to Expand in North America As companies accelerate US expansion – due to favorable policy shifts, rising demand for domestic supply chains, and shifting population – you’ll need to carefully evaluate if a potential landing site makes strategic, operational, and financial sense. You can review our site selection checklist here, but if you’re unsure about where to start, check out why many Japanese companies are heading to Texas. Regardless of where you land, your leadership teams will need to understand the nuances of US workplace law. Expect Strong Leadership on the AI Front Japan’s new AI law charges the national government with creating AI policies and establishing an AI Strategy Headquarters within the Cabinet. A strategic priority is to demonstrate international leadership and promote collaboration. As a result, we expect major strides in AI development, use, and international collaboration in 2026. Now is a good time to ensure your AI policies are transparent and align with the new framework. You should also consider actively participating in voluntary initiatives that support responsible AI development and use. We’ll See Expanded Protections for Non Traditional Workers and Freelancers The first-ever law protecting freelancers and independent contractors in Japan came into effect in 2024. It applies to any company or business that assigns work to an individual or to an entity with no employees or officers other than a legal representative (freelancer). The law already requires businesses that do work in the country to review their workplace practices and adjust as necessary, and we expect regulations to be expanded and refined in 2026.
New Law Drives AI Innovation Earlier this year, the legislature in Japan passed a bill that encourages research and development – as well as advancements – in AI technology. Japan made a commitment to international leadership and cooperation, and the new law sets expectations for businesses to cooperate with key principles for AI governance, including transparency and risk mitigation. Businesses operating in Japan should be encouraged by the innovation-focused approach. Major Step to Support Working Parents Japan introduced new rules providing more support for working parents. These rules, which took effect April 1, amend the Child and Family Care Leave Act and the Next-Generation Children Act with the goal of helping parents balance work and childcare and addressing Japan’s rapid societal aging. Notably, working parents in Japan now have more flexible work options, such as extended nursing leave and the ability to work from home and decline overtime assignments.
Nan Sato, CIPP/E, CIPP/C Philadelphia/New York/Tokyo Partner, Co-Chair
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