I am working at a factory, and the factory manager told me that I would be fired by the end of this month because the company’s performance had worsened. Do I have to leave because the company’s performance is getting worse?

2022/5/17

Dismissal due to financial difficulties of the company is called “dismissal for the purposes of reorganization.”
Dismissals deprive workers of the foundations of their lives and livelihoods. For this reason, it is strictly judged whether there is a justifiable reason for a dismissal.

In particular, “dismissal for the purposes of reorganization” is judged more strictly because it is a dismissal due to the company’s business conditions rather than due to any fault on the worker’s part.
In case of dismissals for the purpose of reorganization, the following four requirements must all be satisfied:

1. Necessity to reduce personnel
   A pressing need to reduce personnel may be objectively recognized in such cases as when the company is in financial distress and on the brink of failure.
2. Efforts to avoid dismissal
   The company has to have made its utmost efforts to avoid dismissals, such as reallocation of personnel, external assignment, seeking voluntary retirement, salary reductions, etc.
3. Rationality in selection of personnel
   The criteria for selection must be rational, such as years of service or age of the workers, and these criteria must be applied appropriately.
4. Labour-management dialogue
   The company has to have made its best effort to gain the consent of workers after adequate discussion regarding the necessity, timing, method, number of dismissals and criteria for personnel selection.

If you are dismissed for the purpose of reorganization, please consult with your local Labor Standards Inspection Office, labor union, or lawyers with the Labour Lawyers Association of Japan.