Subcontract Act (Japan)

When a contractor outsources work to a substantially smaller subcontracting firm, differences in economic power can lead to unfair contract conditions, especially with regard to payment.

In light of this, Japan’s Subcontract Act makes transactions between contractors and subcontractors more fair, including by preventing delays in payment of subcontracting fees. It also clearly designates certain conduct as unlawful, in an effort to quickly and effectively protect subcontractors.

A contractor is subject to penalties for not complying with the Act when outsourcing work to a smaller subcontractor. To avoid these penalties, it is important that every firm and its employees understand and comply with the Subcontract Act.

By the end of this e-learning course, employees/learners will be able to:

• List the key aspects of the Subcontract Act
• Describe the scope of the Act
• Recount what the Act requires and prohibits
• Define the penalties for breaching the Act