The “Freelance Act” as a platform and future challenges

New Freelance Act based on economic and labor law approaches

A freelancer, legally named as “a specified entrusted business operator,” refers to an enterprise who is the other party to the business entrustment and does not employ any employees (individuals who are expected to work 20 or more hours per week and for 31 or more days). Although individuals who have employees or conduct business with consumers may generally be included, they do not fall under “freelancers” under the new Freelance Act.

Existing labor laws have essentially been designed to protect those in employment relationships. However, as working styles diversify, the number of individuals who fall outside this category is increasing. The Labor Standards Act requires that workers be employed and paid wages to be eligible for protection. The scope of protection is the same under the Minimum Wage Act, the Industrial Safety and Health Act, and the Industrial Accident Compensation Insurance Act. (The Labor Union Act provides a broader scope of protection.)

The Freelance Act regulates two key aspects in order to create an environment where freelancers can work without worry. The first is to ensure proper transactions between freelancers and entrusting entities, including companies, and the second is to improve the working environment for freelancers. The former is based on the approach of economic law (a legal field including antimonopoly and subcontracting laws), while the latter is based on that of labor law.

For example, the Ministry of Health, Labour and Welfare, which oversees labor laws, is responsible for consideration for balancing work with childcare and nursing care as well as the development of a system for anti-harassment measures, as stipulated in the Freelance Act. On the other hand, the Japan Fair Trade Commission and the Small and Medium Enterprise Agency are responsible for clear indications of business terms in writing, etc. as well as the setting of dates of remuneration payment and timely payment, in the same way as under economic law.

Future challenges: the importance of exploring both theoretical and practical aspects

Although some labor laws have established systems to protect those who are not in employment relationships, this is the first time that a law generally targeting freelancers has been enacted. The Act is expected to serve as a platform for supporting freelancers.

In the next phase following the enforcement of the Freelance Act, it will be important to explore and consider both theoretical and practical aspects.

Even though the economic law and labor law approaches are similar in terms of protecting workers on the theoretical aspect, it is important to give deeper consideration to which approach to adopt. For instance, while the Labor Union Act protects the gathering of workers, economic law prohibits cartels, reflecting a reluctance to allow business operators to come together for certain purposes. Since there are some areas where the two approaches do not align, we need to consider their relation. Although there has not been much opportunity to think carefully about the relation between the two laws, it can no longer remain that way from now on.

Even though certain measures have already been provided to support freelancers on the practical aspect, there is still room for improvement. What measures are expected when a freelancer is injured, for example? A system has additionally been established to exceptionally allow individuals who are not employees to join industrial accident compensation insurance if they meet certain requirements. A system has been revised so that freelancers can also join such insurance voluntarily.

Meanwhile, do they need some form of income security if they lose their jobs? In the future, various ways of working are expected, such as freelancing, alternating between freelancing and employment, and working as an employee while freelancing as a side job. It will be essential to consider how to address what employment insurance covers employees, while also referencing foreign systems.

Essential system to support those working outside of employment relationship

Will the role of labor law change as working styles diversify? I believe that labor law will continue to be important because traditional working styles will also survive.

On the other hand, if individuals work as freelancers as well as employees, it appears necessary to establish a system particularly related to social insurance. It is also important to consider protection in light of discussions in other legal fields. In any case, since protecting workers including freelance or self-employed is essential, the need for discussions on addressing diverse ways of working is likely to increase.

With the Freelance Act and more detailed guidelines, it is critical for both freelancers and business operators to thoroughly understand the details of the Act before taking any action. As the labor shortage worsens, creating a comfortable working environment will become increasingly significant.

It goes without saying that workers are protected by law. In the future, however, that may be considered insufficient to conduct business. This is because it will become easier to make the actions of business operators public through social media and other channels, which put them under greater public scrutiny than before. The management of such reputation risks will become more important in the future. Business owners need to keep in mind the significance of creating an appropriate environment not only because it is required by law.

In addition to companies, if Japan fails to appropriately protect people working in the country, it may face severe criticism from the world for not adapting to the changing times. It is essential not only for workers and companies but also for the development of the country to keep pace with and address the reality, to establish rules for more comfortable working conditions, and to create an environment where everyone can play active roles. As the world changes, a system that flexibly supports individuals with diverse working styles is likely to become more important in every sense in the future.

* The information contained herein is current as of June 2024.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

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