Illegal Contract Clauses (Part VII): Small Schools And Wage Theft And Fines (Oh My!)

Mar 12, 2018

However, if the big companies are the sharks of the proverbial ocean, the smaller private schools and companies are the piranhas, ready to strip the rights from a employee’s carcass with alarming effectiveness.

In this edition of our “Illegal Contract Clauses” series, we’ll take a look at the contract (and, by extension, working conditions) of one such small school chain in Osaka to show just how bad these man-eating shoals can be.



Before we begin dissecting this contract, you may be curious as to why we’re not “naming and shaming” the company in question.

While it is tempting to think that exposing a small company would lead to improved conditions for all involved, the truth is that we’re talking about a place that employs about seven or eight foreign employees – some of whom hail from Southeast Asian countries.

Far from seeing the error of its ways and vowing to do better, such a company is instead more likely to smoke out whichever employee it was that told a union about the company’s illegal business practices and then retaliate against them accordingly.

We’d rather not be responsible for that kind of witch hunt.

With bigger companies, the chance of finding the person who blew the whistle is near impossible (unless the person draws unwanted attention to themselves).

There’s also a case to be made that the potential for bigger companies to enact change via such exposure is greater because they hate negative press – especially if it causes potential future employees (aka the lifeblood of the business model) to take their job seeking elsewhere.

With that established, let’s move on to the contract itself and all the illegal wonders that it holds.



The first three sections of the contract include such clauses as “CONTRACT PERIOD”, “PLACE OF EMPLOYMENT”, and “TEACHER RESPONSIBILITIES”.

icc contract wt 01

While these are not particularly interesting, one issue that immediately stands out is that the working times and working hours are not written anywhere on the contract at all.

icc contract wt 02You’d think they’d be in the section called “Working Hours” – but you’d be wrong.

This is cause for alarm because Article 15 of the Labour Standards Act requires an employer to clearly indicate salary and working hours to an employee via a labour contract, as stated below:

 Clear Indication of Working Conditions

Article 15
In concluding a labour contract, the employer shall clearly indicate the wages, working hours and other working conditions to the worker.

In this case, matters concerning wages and working hours and other matters stipulated by Ordinance of the Ministry of Health, Labour and Welfare shall be clearly indicated in the manner prescribed by Ordinance of the Ministry of Health, Labour and Welfare. 

Suffice to say, the lack of any clear working hours raises more red flags than playing minesweeper on the hardest difficulty.

minesweeper flags
Like this, but less fun.

The reason for the lack of working hours and working times is that this is, for all intents and purposes, a zero-hour contract.

Although the people who work for [COMPANY] are clearly employees of the company (as opposed to “independent contractors”), the company has decided that it is not obliged to provide work for the employees in question.

An employer not providing work for employees is what many would call “a big problem”.

Our source reported that a typical employee could see their teaching hours vary from one lesson per-week to eight lessons per-week to four lessons per-week as randomly as the wind blows.

If you’re looking for stability, you’re unlikely to find it here.

In addition, employees are ONLY paid (at variable rates) for the time that they’re teaching or doing “administration work” – which lesson preparation (more on this later).

If you thought this was bad, then – surprise! – we have wage theft and spurious illegal penalties ahead!



 a) Arrive at least 15 minutes prior to the lesson starting. This time is designated for material preparation and consultation with the Japanese assistant (where applicable).

*Arriving less than 10 minutes prior to the commencement of a lesson may incur a penalty, depending on circumstances. 

As the General Union often likes to remind people (so much so that it might be considered an unofficial motto at this point), work is work, and work has to be paid for.

This raises an important question:

Are those “15 minutes prior to the lesson starting” being paid for, or is this an overt example of wage theft?

Later on in the contract, we will see the breakdown of “WORKING HOURS AND WAGES”, along with remuneration and rates per lesson – rates that quite clearly indicate that the time is not, in fact, paid for.

If an average lesson is one hour in length, the company is effectively stealing one lesson’s worth of money from a teacher for every four lessons.

Then there is the threat of a penalty “depending on circumstances”.

If a teacher does not turn up at least ten minutes prior to the lesson, the company “may” penalize them for it.

So, not only is the company stealing fifteen minutes of a teacher’s time per lesson, they’re threatening to penalize the teacher if the teacher doesn’t let them steal at least ten of those fifteen minutes.

Here’s the problem with that: penalties are things that you incur while you are working.

If you’re not being paid, you are not working.

If you’re not working, you can’t incur any penalties.

You cannot be penalized for work that you’re not doing.

 c) Provide at least 2 weeks notice and receive permission from the COMPANY before taking personal leave.

* Penalties may apply. 

First of all, you cannot be penalised for taking paid holidays because paid holidays are your right under the Labour Standards Act.

In addition to that, you don’t need permission from a company to take personal leave, you don’t need to give a reason to be able to use personal holidays, and a company cannot (in most cases) refuse you the use of your personal holidays.

Denying an application for personal leave is not an easy task and would have to based on real and unpreventable hardship that the company would have to demonstrate actually exists.

You also do not need to give a company TWO WEEKS of notice before using holiday.

Two days is being generous; one day is sufficient.

 d) Arrange for substitute teacher before requesting personal leave. Notification of substitute must be provided to the COMPANY at the same time as request for personal leave is submitted. 

In addition to needing TWO WEEKS of notice AND the permission of the company, the company requires teachers to source and provide a substitute teacher as a prerequisite to submitting a holiday request.

Aside from being an absurd amount of hoops to jump through just to take a day off, the provision of substitute teachers is the responsibility of the COMPANY, not of the INDIVIDUAL.

 f) Provide adequate health, accident and liability insurance.

*The COMPANY assumes no responsibility, financial or otherwise, for any costs or charges resulting from the TEACHER’S lack of insurance coverage. 

We can take this to mean that shakai hoken is not provided.

No real surprise there, but let’s talk about that “accident and liability insurance” point for a moment.

Injury, illness, and disability, which occurs at work or while commuting to and from work, is covered by a national insurance scheme called “Workers’ Accident Compensation Insurance” – aka Rosai Hoken.

ALL Japanese companies MUST take out this insurance.

Therefore, to say that your company “assumes no responsibility, financial or otherwise” for “accident and liability” is either a lie or an accidental admission that the company is breaking the law.

Regardless of which it is, the intent likely being to convince employees that should they be involved in an accident, the company has no responsibility to do anything about it (which, of course, isn’t true at all).

 h) Fully co-operate with [COMPANY] staff to promote smooth running of all lessons and school related activities. 

This is one of those clauses that should go without saying, but some companies like to write it into contracts to introduce a bit of totalitarianism into the working relationship.

 i) Conduct yourself in a manner that creates and supports a positive image for [COMPANY] both inside and outside the office. 

Here’s one of those vague clauses that companies like to invoke to dismiss someone illegally.

Given that a “positive image” is a very nebulous and subjective thing to measure, it’s very easy for an employer to turn this into anything that they want it to be.

You’re not smiling enough, and that isn’t creating a positive image. Clean out your desk.



 a) TEACHERS holding part-time positions will be remunerated for lessons taught.

TEACHER remuneration for [COMPANY] lessons taught shall apply at the following 

Kid’s group lesson (min 3 students) ¥3000

Semi-private lesson (2 students) ¥2500

Private lesson (man-to-man) ¥2500

Trial lesson (30 minutes) ¥1500

Administration work p/hour ¥1500

* Preparation for lessons is not considered administration work. 

If you weren’t convinced that the previously mentioned fifteen minutes of time “prior to the lesson starting” for “material preparation and consultation” weren’t wage theft, [COMPANY] is kind enough to spell it out clearly:

 Preparation for lessons is not considered administration work. 

For every lesson that a teacher does, [COMPANY] will steal fifteen minutes of paid work from them.

If a teacher does not arrive at least ten minutes before the start of the lesson, [COMPANY] will penalize the teacher for turning up late for work that [COMPANY] isn’t paying them for.

You must be paid for all work done, and this includes any work – either explicitly ordered or inherantly understood to part of the job, that needs to be done before or after a lesson (e.g. lesson preparation).

The Kanagawa Labour Bureau recently issued a pamphlet to “juku” in the prefecture stating that they cannot pay their employees “by the class”.

Work must be calculated in hours in minutes – not by classes taught.

 b) In the case where a student leaves [COMPANY] and a class becomes empty, the class shall be struck from the schedule and the TEACHER’S wages and schedule adjusted accordingly. The TEACHER shall be notified in advance of wages/ schedule changes. 

To phrase it another way, the teacher will not be paid for any non-teaching time while they are at work – only for the times they are actually doing work – even though they are employees of the company.

Zero-hour contract.



 Holidays are unpaid and include school holidays and national holidays.

*Adult lessons may continue throughout the school holidays. 

Not only is this a zero-hour contract, teachers are also furloughed during certain times of the year. 



 a) For business classes a professional look and attire is required: collared shirt/ blouse and long, dark pants, business skirt; no jeans/ T-shirts/ shorts. 

We need to mention the dress code just to reinforce the point that people who work for this [COMPANY] are employees of the company.

 c) Eating in school classrooms when teaching is not allowed. Drinks between classes are acceptable. 

Drinks between classes, in that time the company isn’t paying you for, are acceptable. Good to know.

 d) In case of sickness/ emergency the TEACHER agrees to inform the COMPANY, by telephone, as soon as possible.

* Penalties may apply. 

Without anything else, the recurrent threat of “penalties” in this contract would be grounds enough to demonstrate just how horrible these work conditions are.

 e) In case of sickness, the TEACHER must provide the COMPANY with medical documents.

* Failure to provide medical documents to the COMPANY may result in penalties. 

You do not have to provide a company with medical proof to justify taking time off if you’re using one of your personal holidays.

This is absolutely no provision in the law to justify this kind of “prove that you were sick” nonsense.

It is your right to use your paid holiday (年休; nenkyū or 有給休暇; yukyukyuka) to take a day or two off work due to sickness.

Now, if you’ve used all of your paid holidays and you fall sick, or you are likely to be off work for an extended period of time (i.e. you will need to use Accident and Sickness Compensation) there may be a justified reason for the company to ask for proof that you were actually ill.

In any case, there’s that mention of “penalties” again, so let’s deal with that…



 a) Penalties for lateness, absenteeism, etc. will be determined by the COMPANY.  

For emphasis: “penalties will be determined by the company.

Although Article 16 of the Labour Standards Act prohibits “predetermined compensation”, Article 91 allows such sanctions, settings limits on how much an employer can fine an employee, but not what an employee can be fined for.

The upside to this is that the criteria for the fines have to be clearly stated in a company’s registered work regulations for them to actually be applicable, otherwise such fines are meaningless.

For example, if an employer wants to set a fine for being late, they have to spell out the fine for being late in their registered work regulations.

If the specific infractions and their fines are not outlined in the registered work regulations, the penalty can’t be enforced.

Therefore, while it is legal to set penalties and fees, the law also requires those penalties and fees to adhere to certain criteria.

You may have also noticed that we keep using the word “registered” when referring to “work regulations”.

This is because many companies that we deal with don’t actually have any registered working regulations at all – let alone regulations also have the backing of a duly elected employee representative.

Spurious or frivolous fines and penalties that a company will “determine” as it deems fit are illegal; penalties that are alluded to in an employment contract but are not also spelled out in the registered working regulations of a company are also illegal.

Simply put, a company has to do fines correctly if it wishes to do them at all.

Unless the company has their various penalties and fines fully listed in a separate registered work regulations document, the fines are illegal.

 b) In the case of TEACHER requesting personal leave, if the TEACHER can arrange an appropriate substitute, within a reasonable amount of time prior to the lesson, no penalties apply. 

As we mentioned, there are no pre-conditions for the use of paid holidays, and the responsibility to arrange a substitute teacher falls upon the company.

The threat of a penalty unless a teacher can find a substitute teacher to cover for them is illegal.

Paid holiday is your legal right.

 c) In the case of TEACHER requesting personal leave where the TEACHER can not arrange an appropriate substitute, within a reasonable amount of time prior to the lesson, then the penalty shall be a deduction of ¥1000. 

It’s illegal penalize someone for exercising his or her right to paid holidays.

 d) In the case of lateness, the TEACHER will be penalized at the following rates: arriving less than 10 minutes prior to the commencement of a lesson: ¥1000, arriving 10 minutes late after the commencement of a lesson: ¥2000, arriving 20 minutes late after the commencement of a lesson ¥3000, arriving more than 20 minutes late after the commencement of a lesson the TEACHER shall not be paid for the lesson and a warning will be issued by the COMPANY. 

Again, unless these fines are clearly established in the registered working regulations, they are not enforceable.

You cannot be fined for not showing up ten minutes before the lesson if the employer does not pay for this time.

You’ll notice that the first item on the list is “arriving less than 10 minutes prior to the commencement of a lesson: ¥1000”

That’s a ¥1000 penalty applied to time that you’re working but not being paid for, wiping out half of the money that you would have earned for your one-hour lesson.

This is akin to stealing money from someone, and then fining him or her additional money for having their money stolen.

 e) Further penalties may be determined by the COMPANY for repeated lateness or other failures by the TEACHER to abide by any of the responsibilities, conditions or instructions contained in this agreement. 

As we previously mentioned in the “positive image” part, the vague phrasing of a clause like this is rife with the potential for abuse.

The company has essentially written a clause into the contract that it thinks will allow it to penalize an individual based on whatever spurious reason it deigns fit to apply.

Well, it would have done, except that “penalties determined by the company” are illegal.



 b) In case the TEACHER breaches or defaults the performance of any of the provisions of this agreement, and such breach or default is not resolved within 14 days after the date of written notice by the COMPANY demanding the performance, the COMPANY shall have the right to dismiss the TEACHER and terminate this agreement without any further notice or demand. 

The law requires a company to give THIRTY days of notice for dismissal OR thirty days of salary IN LIEU OF thirty days of notice.

A company cannot bestow upon itself the right to ignore labor law just because it uses the words “shall have the right” in a contract.

This is yet another invalid clause.

It’s also a strange addition because the company invokes the “thirty days of notice” law in the subsequent clause:

 c) The COMPANY may terminate this agreement, if it has turned out that the TEACHER is or becomes incompetent to, or is lacking or has lost the skills or qualifications require to, duly perform his or her duties as provided for hereunder. The COOMPANY shall provide the TEACHER with a thirty-day notice period or a notice allowance equivalent to thirty days’ average wages as stipulated in the Labour Standards Law. The thirty-day notice period may be shortened only by the amount of days for which average wages are paid. 

Something as vague as “becomes incompetent” is not a valid reason to dismiss someone in Japan.

A company would have to prove a pattern incompetence, with evidence, including the steps that the company took to try to make the employee “competent” again.

That may sound like Japanese law protects “lazy” workers, but the truth is that the labor law is protecting workers from being called “lazy” by an employee as a convenient excuse to dismiss them for spurious reasons.

However, the downside to this is that if you are dismissed for such reasons, you would still have to fight it out in court or through a union.

It still takes a judge to rule that something is illegal (even if it clearly is).

Anyway, here we have a contract clause that directly contradicts the one above it (if we ignore the company’s attempt to give itself rights that supersede Japanese labour law).

 d) The TEACHER voluntarily and unconditionally voids this agreement at the instance of any of the following:

if the TEACHER is present in the workplace while intoxicated, if the TEACHER vandalizes company property, or if the TEACHER engages in behaviour expressly forbidden by Japanese labour law and including, but not limited to, sexual and/or verbal harassment, and any other serious problem that merits dismissal after the appropriate procedures have been taken. 

The “after the appropriate procedures have been taken” part is the key point of this clause.

Up until that point, everything about the clause was illegal and invalid.

A company cannot force an employee to “voluntarily and unconditionally” void a contract via their actions – nor can an employee have their contract “voided” and dismissed on the spot for something like being “present in the workplace while intoxicated”.

The company can use those actions as the basis for a dismissal, but it cannot dismiss someone “on the spot” for their behavior.

In fact, the only way a contract can be terminated without thirty days notice is for the Labour Standards Office to provide prior permission to the employer.

This permission is not given easily.

 e) In the event of termination due to the TEACHER’S personal reasons or due to termination of the contract period, the following procedures shall apply:

(1) The TEACHER shall submit a statement of resignation with the reason to the COMPANY at least 60 days prior to termination.
(90 days prior preferred) 

There is some debate about how much notice an employee should given an employer if it is the first contract with the company due to a conflict between Contract Law and the Civil Code.

There is evidence to support the idea that 14 days is the requirement for any and all contracts, but, if you’re looking to resign before the end of your first contract, we recommend giving as much notice as the company requires (within reason).

However, from the second contract onward, only 14 days of notice are required no matter what is written in the contract.

Regardless of how much notice someone decides to give, if an employee breaks the contract, the former employer can only sue in a civil court to recover any percieved losses from a former employee.

They can’t fine you for it. 

Finally: you do not have to provide a reason for resignation. 

It’s absurd that the company expects employees to provide justification for their resignation as a condition of resignation.

 (2) In the case where the TEACHER fails to inform the school of the TEACHER’S intent to resign one month prior to leaving, penalties will be determined by the company. 

While we’ve now established that penalties that will be “determined by the company” are illegal, this clause is also illegal for another reason.

As we wrote earlier, Article 16 of the Labour Standards Act prohibits “predetermined compensation” penalties such as this one.

 (3) In the case where the TEACHER fails to return rented materials, other school items/ material, rental deposit will be withheld. 

This clause is also a violation of Article 16 of the Labour Standards Act, albeit for a slightly different reason than the one above (in a “same but different” kind of way).

Simply put, if an employer wants money from an employee that the employee refuses to pay, the employer can get their money only by going to court and only after having paid the wages.

If the company wanted to get the material assets back, it would have to get them back via the court system.

It cannot just take someone’s money as it deems fit (which you might know as “theft”).

This clause also raises another important question:

Why do employees have to “rent” materials from a company that should be providing them as part of operating a business?



 b) When so requested by the COMPANY, the TEACHER must observe, implement and sign any COMPANY documents regarding confidentiality (namely the Statement of Treatment of Personal Information). 

A company can ask an individual to sign such a confidentiality agreement.

However, there is no requirement for an individual to sign such a document, especially after a contract is signed.

For example, if you give notice of resignation to a company and then they start thrusting confidentiality agreements at you, you’re under no obligation to sign them (especially if they’re not offering any kind of compensation for the hardships that such agreements impose).

Therefore, in this case, the phrasing of “must observe, implement, and sign any COMPANY documents” is little more than an intimidation tactic.

A point of caution, however: if a confidentality agreement is a condition of employment at the time of signing a contract, a company may decline to hire you should that condition not be met.



 The TEACHER may not become a director or TEACHER of another company or conduct a business without permission/ approval from the COMPANY.

* The COMPANY encourages transparency for the purposes of scheduling and TEACHER availability for [COMPANY] lessons. 

This wouldn’t be an “Illegal Contract Clauses” article without a non-compete clause making an appearance, right?

Naturally, the phasing of “encourages transparency” is little more than manipulation, but we wanted to highlight this section in particular to reinforce just how abusive this contract is.

Think back to the “SALARY PERIOD CALCULATION” section.

Here’s what we said:

“Not only is this a zero-hour contract, teachers are also furloughed throughout the year.”

We can expand on that:

Not only is this a zero-hour contract, not only do teachers suffer wage theft, not only are teachers not paid for time they’re not teaching, and not only do teachers no receive work during school- and national-holidays, but they’re not permitted to work other jobs without the “permission/approval” of the company.

Think about that.



 a) Any matters not covered by the above agreement shall be determined by the Labour Standards Law and other related laws.

This agreement shall take effect upon receipt from the Japanese government of work and residence permission or renewal of that permission. 

We signal the end of our exploration of this contract by appreciating the irony of including such mention of “Labour Standards Law and other related laws” in a document filled with illegalities.


People who follow us on Facebook may recall that we recently held a poll to see if we should rename this series from “Illegal Contract Clauses” to “Contracts From Hell”.

This contract was the reason for that poll.

Sometimes, you need to stand your ground and fight for change at a company.

No one deserves to be treated unfairly just because they happen to work for a certain company that has a certain reputation, and no one should be expected to have to take an employment law attorney with you to an interview to make sure that any contracts are up to snuff when it comes time to sign them.

Be that as it may, there are times when it might be best to look at a contract and then immediately NOPE the heck out of there.

Armed with the knowledge that we’re trying to impart, you’ll hopefully be well informed when the time to make that decision comes.

Caveat subscriptor.