Occasionally I get questions from people already working in a Japanese company who are struggling to determine if they are being discriminated against. Here is one such case:

AB: I’d like to ask you about the distinction that many Japanese companies place between Contract and regular Seiki (full-time) employees. I have worked for a major electronics company for four years now, and despite a relatively enlightened view towards employing non-Japanese, the company seems extremely reluctant to employ us gaijin on anything more than a yearly contract basis. I am now settled in the area and would like to purchase a house. However, the annual uncertainty of the contract renewal does not make home buying an attractive option…

Terrie Lloyd’s response

Hmmm, well, what can I say? You’re being discriminated against, plain and simple. Lodging a case of discrimination based on nationality is indeed an option, and you can contact the Tokyo Employment Service Center for Foreigners (or local office), who will be able to advise you on how to do so. Four years would certainly prove that you’re working there in a greater capacity than just a contractor, and you actually now have certain labor standards rights regarding compensation, benefits, etc.

I have seen many cases where worthy, hard-working foreign employees are denied full time employment by their Japanese employer. There are many reasons, some positive and some negative. Let’s look at the positive ones first:

・ Contract status means that the company can pay you more than the normal salary schedule. Maybe they’re helping you out here. Don’t push for a status change if you haven’t checked the implications!

・ Contract status is a way for some companies to overcome headcount freezes – it allows them to record the contractor’s cost as Operations rather than Salary – thus slipping in under the Head Office’s radar. Again, pushing for a status change may endanger your job!

・ Contract status allows genuine contractors to decide whether they want Shakai Hoken or not. Maybe your employer was asked by an earlier foreign employee to be taken off Japan’s high cost, often inadequate health system, and so now the company thinks all foreigners want that condition. If you have the choice, I ABSOLUTELY recommend that you take a foreign travel insurance policy (of course with a reputable company) instead of Kenko Hoken (national health insurance) – it’s cheaper, faster, gets you in to foreign doctors, and can be used overseas anywhere except your home country.

The possible negative reasons they are keeping you on as a contractor:

・ Maybe your Japanese employer doesn’t know how to handle foreign managers and maybe your changing to a Seishain status would force them to appoint you as a manager at some point in the future – which would be DIFFERENT and therefore hard to do. There is quite likely the perception that you might create problems with reading ringi-sho, using a registered hanko, understanding or questioning company directives, dealing with office politics, etc

・ Maybe they had problems with foreign staff previously and don’t trust them.

・ Maybe your job isn’t worth all the hassle to keep on as a full-time position.

・ Maybe deep down they just never thought about their position as being racist.

In the 20 years I’ve been in Japan, I can’t remember EVER seeing a foreigner rise to prominence in a traditionally run Japanese company without special circumstances. Having a foreigner in that kind of position – unless there is a foreign operation, foreign ownership, or a foreign joint venture, is a complete antithesis of traditional Japan. Did I hear someone say “What about Carlos Ghosn?” Remember, his company had to rescue Nissan – so his was indeed a special case.

Personally, rather than fight it, I would suggest you either need to ask for a pay rise – to compensate you for the ‘mental stress of having to renew the contract yearly’, or you should start looking for a job in a foreign company with responsibility, stability and long term prospects. Not doing anything about it means you have to look at your probable value to the company, take a risk that indeed they want to keep you, and get that house loan. Another option could always be to start your own company….

As always, my contact details are simply: terrie.lloyd@daijob.com. Looking forward to getting some enquiries…