Guidelines and Best Practices for Background Checks in Japan

Japan is an attractive business destination for many foreign investors, given its stable economy accounting for about 10% of the global economy. It also has the biggest stock exchange in Asia.

While the Japanese government has introduced several laws to ease Foreign Direct Investments (FDIs), the strict legislature surrounding employee background screening in Japan may seem daunting. Japan values the privacy of its citizens, and violating it can lead to hefty fines.

This article guides you on the employment background check in Japan.

An employee background verification All corporations conduct a standard employee background screening in Japan as a standard measure before job hiring fresh recruits to check their suitability. 

The HR department goes through the criminal, financial records, social media activities, and past employment records of potential employees. This standard verification process helps employers check whether new hires are reliable and do not have any anomalies in the employment history. 

Hence, a pre-employment background check in Japan helps employers to:

• Enhance the quality of the recruitment process
• Protect the company from liability issues and safeguard company assets
• Maintain a safe and secure work environment for all employees
• Preventing the possibility of hiring risky candidates
• Comply with state labor laws, federal and industry rules, and regulations
• Check for the authenticity of all the submitted employee documents

Background checks in Japan present the following advantages for the recruiters looking to hire prospective employees. 

• Improve the quality of the hiring process by hiring candidates with glowering qualifications and work experience.
• An exhaustive screening process will save corporations from employing incompetent applicants who lack the required qualifications. 
• Pre-employment background checks on prospective hires will drastically reduce the rate of unwelcome turnover.
• Employers can assess their employees’ trustworthiness and work ethics before hiring them for essential positions.

While the stringent Japanese legislature prohibits employers from gathering a vast array of personal information, a carefully and compliantly planned pre-employment background check in Japan will lessen the cost-per-hire and secure positive business outcomes. 

While background checks are not encouraged, it is not illegal in Japan. 

Since Japan takes personal privacy quite seriously, most individuals’ private information is not available in the public domain. Hence, companies require subpoenas or court orders to get them. This means it is almost impossible to acquire any applicant’s private information, criminal and civil records, or educational qualifications without their prior written consent for a pre-employment background check in Japan.

There is no single specific law governing employee screening in Japan. However, there are pieces of legislation that do various aspects of the screening process. The five laws that all employers need to consider while running a background check on employees are:

• Labor Standards Law 1947 (Chapter 1, Article 3 )
• Human Resource Development in High-level IT – Ministry of Economy, Trade, and Industry (METI)
• Japan’s Personal Information Protection Law (PIPL)
• Action Guide Regarding the Protection of Personal Information of Workers 
• Welfare (MHLW) in 2000

Corporations heavily relied on third-party agencies and private investigators (PIs) to conduct a pre-employment background check in Japan. 

However, a few unfortunate incidents resulted in the government introducing stringent privacy laws to crack down on the somewhat illicit government sources and methods used by these agencies. 

Plus, new legislation has substantially limited the practice of background screening in Japan in the past years. These laws value privacy and are very strict in dealing with discrimination and third-party agencies.

We’ve collated an overall summation of what goes into employee background screening in Japan. 

Personal Information

‍Residential address, marriage status, family history are registered on Koseki family registry records and Juminhyo residence records in Japan. However, they are strictly confidential and require a clear legal purpose to be disclosed. Therefore, it is nearly impossible to get them for mere due diligence or employee screening in Japan.

Professional History

Obtaining educational records and past employment history are also challenging in Japan. Due to strict Japanese background check laws and privacy laws, Japanese universities can decline to disclose any personal information without an applicant’s signed release form. Also, most companies ignore any queries on the employment records of their past employees. 

Financial Status

The National Gazette provides a publicly available database for searches related to bankruptcy. Since the records list only the full name and address of the individual, corporations need a complete residential address to run a perfect search. Similar problems arise while checking the Sieger records listed on the real estate property records at the Legal Bureau.  

Criminal Records

All criminal and civil court records are confidential in Japan and not available in the public domain, except for Supreme Court records. Most employee background checking agencies have accumulated data to create their database on these legal proceedings. They have to rely heavily on news media organizations to search for information to conduct a criminal background check in Japan.

Assets

The real estate registry database of the Legal Bureau does not provide any name-based searches. It is impossible to gather information on real estate properties, ownership of vehicles, watercraft, aircraft, or bank account details from the public records for employee screening in Japan. 

Corporations need a subpoena from the Bar Association or a court order to get this information from relevant ministries. However, some agencies have proprietary databases on real estate information. If an applicant owns more than 5% of shares in a public company, it can be obtained from the public domain. 

Business Interest

The company registry records database of the Legal Bureau prohibits name-based searches. However, corporations can run these searches on proprietary databases such as TSR (Tokyo Shoko Research) or the company credit reporting agencies.

Social Media Activities

Corporations can run social media checks on their potential hires during background checks in Japan. The HR Department can go through all employees’ Facebook, Twitter, Instagram, Linkedln accounts to get a clear view of their characters and working ethics and integrities. 

Human Intelligence

The Japanese business network is founded on close communities forged of mutual acquaintances. And, reputation intelligence is protected under the Act on Protection of Personal Information (APPI). So, it is illegal to gather information on applicants by talking to their mutual acquaints, friends, or neighbors for a pre-employment background check in Japan.

A pre-employment background check in Japan is something all corporations go through before hiring fresh recruits. Hence, the employee screening process is necessary as making false claims and giving fraudulent documents has become almost a norm nowadays.

Japanese employment and privacy laws prohibit employers from seeking various personal details, criminal and litigation records. Employers must strictly comply with federal law while asking applicants to furnish documents to conduct the employment background check in Japan. 

All potential recruits must submit their employers’ power of attorney for various disclosures. Most past employment records and other personal data are treated as confidential on the grounds of protection of labor rights. 

However, as a potential employer, here is a general list of documents you can ask your prospective employees to produce:

• Full name as provided in official documents
• Permanent and temporary addresses
• Date of birth as mentioned in official documents
• Relevant degrees, mark sheets, certificates of educational qualification 
• Finance documents such as bankruptcy and credit records (if any)
• Japanese citizenship certificate
• Visa details (for foreign applicants)
• A clear photograph of the applicant

The employment background check in Japan is regulated very strictly under Japanese laws. The HR departments of all business organizations must abide by them to escape heavy fines. 

An overall view of the company background check in Japan is listed below:

Get consent from the applicant: Employers need written consent from all applicants and a power of attorney before running any pre-employment background check in Japan. This is an essential step for all corporates to avoid future legal troubles.

Provide the subject’s name in Japanese characters: Foreign corporations often fail to provide the subject’s name in Japanese characters. This is because the English alphabet typically produces around 20 combinations of Japanese characters, and it becomes impossible to get precise results unless the correct Hiragana or Kanji of the name has been provided. 

Determine the details you need to gather: The next step is to pick the particulars employers may require to evaluate the candidate’s competency. Set definite policies following the Japanese legislature for the HR department to follow while gathering relevant information. Some of the primary documents and information employers are allowed to collect in Japan are:

• Citizenship certificate (for natural residents)
• Finance details and credit reports
• Social media activities 
• Visa details (for non-native candidates)

Collect the relevant documents/information: All corporations must go through proper legal channels while gathering information on potential employees. Taking the help of dubious third-party agencies might land companies in legal trouble. 

Hence, corporations must attain whatever information is permissible to gather from relevant ministries and nationally accredited agencies per the Japanese background check law. 

‍Perform the background check: After gathering all the relevant documents and information, corporates can cross-check and authenticate all the details. They can search on popular social media platforms such as Facebook, Twitter, LinkedIn, Instagram, and other such sites to check the social media presence of their prospective employees.

The Japanese government does not encourage running background checks on employees due to privacy issues and has introduced strict laws to protect the citizens’ privacy. However, corporations must perform employee screening in Japan before hiring them for significant positions. The finance, health, and education sectors must be vigilant while hiring. 

Some industries that run background checks in Japan on employees are:

• Healthcare
• Educational institutions 
• Finance sector
• Government services
• Legal firms
• Recruiting candidates who are non-native of Japan

Multiplier is your one-stop solution for challenges entrepreneurs face while setting up their businesses on foreign soil. Our in-house legal experts of Multiplier will help you develop a comprehensive employee benefits package offering in-depth knowledge of local labors laws, taxation, employee benefits, and much more