Compliance Check: Japan: Freelance Act

The Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators (commonly referred to as the Freelance Act) introduces mandatory requirements aimed at protecting freelancers and improving transparency in freelance engagements. This edition of Compliance Check examines the compliance obligations on businesses that engage individuals as independent contractors in Japan.

Scope

The Freelance Act applies to business transactions where:

• the transaction is between a “specified entrusted business operator” (a freelancer) and a “specified entrusting business operator” (an outsourcer) and
• the transaction qualifies as business entrustment (outsourcing).

Under the Freelance Act, a "specified entrusted business operator" is defined as an individual who does not engage employees or a corporation with only one representative, no other officers, and no employees.