Japanese Whistleblower Protection Laws: What You Need to Know
Japan’s corporate culture has traditionally been rooted in loyalty and collectivism, making it challenging for whistleblowers to speak up without fear of retaliation. However, recent amendments to the country’s Whistleblowers Protection Act (WPA) have expanded protections for employees who report misconduct, fraud, or other harmful behaviors.
History of the Whistleblowers Protection Act
The WPA was first implemented in 2004 and has undergone significant changes since its introduction. The latest amendments took effect in June 2022, imposing new obligations on Japanese organizations.
New Requirements under the WPA
For companies with subsidiaries in Japan, implementing a compliant global whistleblowing system is crucial.
Internal Reporting Channels
The WPA mandates that all Japanese organizations establish a system to record whistleblower reports and employee concerns. Internal reporting channels were previously lacking, making it essential for employers to implement such systems.
- Companies with more than 300 employees are required to have an internal whistleblowing system in place.
- Those with fewer employees are strongly encouraged to do so.
Global Organizations: Matching Subsidiary Requirements
At the global level, organizations must ensure that their whistleblowing policies comply with the requirements of all subsidiaries. Japan-based subsidiaries must also develop their own internal reporting policy, adhering to the new WPA guidelines.
Expansion of Whistleblower Protection Scope
The scope of protected whistleblowers has been expanded to include:
- Retired employees (within one year after retirement)
- Officers (including directors, executive officers, accounting advisers, company auditors, and liquidators)
The scope of reportable matters has also been clarified and extended to include:
- Administrative violations, in addition to crimes
- Employees can now choose to report to administrative agencies instead of employers
- Public reporting is permitted in cases of serious violations or damage
Confidentiality and Protection Against Retaliation
Organizations and individuals handling reports must maintain confidentiality regarding any data or information that could identify the whistleblower. Failure to do so may result in a criminal fine of up to 300,000 yen (approximately $2,800).
Any form of retaliation against whistleblowers is strictly prohibited.
Education and Training of Stakeholders
The WPA requires employees, retired employees (within one year after retirement), officers, and executives to be informed and educated about available reporting options. Persons responsible for handling reports must also receive training on their confidentiality duties and roles.
Best Practices for Implementing a Whistleblowing System
Implementing a decentralized whistleblowing management system can serve as a tool for good corporate governance.
- Data security and safe data transfer processes
- Anonymity and confidentiality options
- Multilingual platform
- Simplify the reporting experience
- Comply with Japanese requirements now and in the future
By implementing these best practices, companies can ensure compliance with the WPA and create a secure and effective whistleblowing system for their employees.