What Is the Freelance Protection Act?
The Act on Proper Transactions with Specified Consignment Business Operators (commonly the "Freelance Protection Act") took effect on November 1, 2024.
Freelancers had historically fallen outside the protection of the Subcontracting Act and labor laws. This statute introduces clear rules governing transactions between freelancers and their clients.
Covered Persons: "Specified Consignment Business Operators"
The Act protects specified consignment business operators: sole proprietors or corporations with no employees.
In essence, this covers individuals working independently as freelancers. Even a corporate entity qualifies if it has no employees.
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Try for free →Client Obligation 1: Written Disclosure (Articles 3–4)
Basic Obligation (Article 3)
When commissioning work, clients must disclose contract terms in writing or electronic form (e.g., email): - Scope of work - Amount of remuneration - Payment due date - Client's name and address - Location and method of performance
Ongoing Commissions (Article 4)
For commissions lasting 1 month or more (transaction value ≥ ¥200,000), clients must also disclose: - Contract period - Conditions for termination or renewal
Client Obligation 2: Payment Deadline (Article 4-2)
Remuneration must be paid by a specified date within 60 days of receiving the deliverable. This prohibits extended payment delays.
Prohibited Conduct (Article 5)
For ongoing commissions (over 1 month), clients are prohibited from:
| Prohibited Act | Content |
|---|---|
| Refusal to accept | Rejecting deliverables without cause |
| Reduction of payment | Unilaterally reducing agreed remuneration |
| Return of goods | Returning deliverables without cause |
| Lowballing | Setting remuneration far below market rate |
| Forced purchases | Requiring purchase of unneeded goods/services |
| Demanding economic benefits | Requesting contributions/sponsorships unfairly |
| Unilateral changes/rework | Requiring changes without bearing costs |
These parallel the Subcontracting Act but apply regardless of capital size.
Client Obligation 3: Harassment Prevention (Article 14)
Clients must establish systems for freelancers to report harassment (sexual, power, pregnancy/childbirth-related): - Designated consultation contact - Appointed person-in-charge - Communication to freelancers
Client Obligation 4: Childcare/Nursing Consideration (Article 13)
When a freelancer requests consideration for childcare or nursing care, the client must make efforts to accommodate adjustments to work content or conditions.
Advance Notice for Termination (Article 16)
For ongoing commissions lasting 6 months or more, clients must provide 30 days' notice of non-renewal and 60 days' notice of mid-term termination.
Penalties for Violations
| Violation | Consequence |
|---|---|
| Failure to disclose in writing | Guidance, recommendation, public disclosure, orders, fines |
| Prohibited conduct | Same as above |
| Inadequate harassment prevention | Guidance, advice, recommendation |
What Freelancers Should Do
- Demand written contracts: If the client fails to provide terms, request them
- Document payment issues: Record due dates and late payments
- Report harassment: Use the client's channel or contact the Prefectural Labour Bureau
- Consult a lawyer: Consider legal action for prohibited conduct
Summary
The Freelance Protection Act fills gaps left by the Subcontracting Act. Client companies must urgently implement written disclosure practices, payment deadlines, and harassment prevention systems. Freelancers should understand their rights and maintain thorough documentation.