Evaluating Employee Status

Hello, Visitor,
Thank you for visiting the  Self-Assessment Checklist for Determining Employee Status.
Nowadays, there are many kinds of jobs becoming available and people working under service or freelance contracts, but those who are engaged in such jobs are not recognized as employees to whom labor laws apply.

When judging worker status, the case is judged based on the above-mentioned "Substantial criteria for determining employee status," and the method of judging is to evaluate the worker under the Labor Standards Act if a large number of these criteria are met, by reviewing each case individually and comprehensively. The criteria can be divided into human subordinate relations, economic subordinate relations, and the dual judgment factors.
Judgment of employee status should be centered on subordinate relations, and each case should be analyzed individually and comprehensively.
In other words, human subordinate relations (10 points),
economic subordinate relations (8 points),
and dual judgment factors (reflected only when positive - 2 points), are judged for a total of
20 points. If there is no relevant item to be determined, that part is not reflected.
Application of Judgment of Employee Status
* In the review opinion, weights are allocated, and the number of items marked on the ‘employee’ side when employee status is strong, and on the ‘independent contractor’ side when independent-business status is strong, are added together to determine employee status.

1. Human subordinate relations (10 points – 2 points for each item below)
Human subordinate relation factors are the degree to which an employer manages and supervises workers in the course of their work. In recent years, this situation has been judged by reducing the employer's work instructions from "specific and individual command and supervision" to "significant command supervision" in determining human subordinate relations in consideration of the occurrence of various jobs and the related independent contractors.
Name of the subject for employee-status determination
Supreme Court Ruling
(Items: details for judgment)		 Factual Grounds for Employee Status Weight Judgment
Not selected Employee Employer
1) Human subordinate relations (weighting: 2 points for each item = 10 points in total)
1) Type of contract Type of contract (employment contract or service contract)
If the contract uses the title “Employment Contract,” please check “Employee.”
If it is not an employment contract but some other type of agreement, please check “Contractor.”		 2
2) Application of Rules of Employment; Right to manage personnel Whether rules of employment were applied; Right to hire, dismiss, and discipline employees
If the individual is subject to the company’s rules and must strictly comply with them, please check “Employee.”
In contrast, if the individual exercises disciplinary authority—such as hiring or dismissing employees—please check “Contractor.”
If the individual is neither subject to company rules nor has any personnel authority over employees, you may leave both boxes unchecked.		 2
3) Arrival/departure from work, annual leave No control over arrival/departure time, no annual leave granted
If the individual is subject to control over working hours—such as required commuting times or vacation approval—please check “Employee.”
If the individual is not subject to such controls, please check “Contractor.”		 2
4) Supervision during work performance Supervision and control during work performance
If the individual performs work under substantial direction and supervision, please check “Employee.”
If, on the other hand, the individual performs work independently and does not report on the work process while carrying out the tasks, please check “Contractor”.		 2
5) Working hours; Work place Whether working hours are controlled; Whether the workplace is mandated
If the individual must comply with company-designated working hours and work at a workplace designated by the company, please check “Employee.”
However, if the working hours are not fixed and the individual may determine their own work location, please check “Contractor.”		 2
2. Economic subordinate relations (8 points – 1 point for each item below)
Economic subordinate relations depend on whether workers can make a profit on their own. In the case of part-time instructors, a performance-based pay system was used to apportion tuition fees with an employer according to the number of students who attended an academy. In this case, part-time instructors were not considered workers.
Supreme Court Ruling
(Items: details for judgment)		 Factual Grounds for Employee Status Weight Judgment
Not selected Employee Employer
2) Economic subordinate relations (weighting: 1 point for each item = 8 points in total)
1) Ownership of equipment, working tools Who owns the equipment, tools, etc.; Whether damage claims are possible or not
If the individual purchases and uses their own work tools, and if they are personally responsible for any damage that occurs in the course of performing their duties, please check “Contractor.”
However, if the company provides the work tools, and the individual is still responsible for any damage that occurs during the performance of their duties, please check “Employee.”		 1
2) Expenses Whether operating costs are subsidized, expenses reimbursed, corporate credit card usage, etc.
If the individual bears the operating expenses incurred in the course of performing their duties, please check “Contractor.”
However, if the company bears the costs incurred during the performance of duties, please check “Employee.”		 1
3) Substitution by a 3rd party Whether work is exclusive or if another person can be substituted in the event of absence
If the individual may appoint another person to perform the work during their absence, and if they are free to engage in other work, please check “Contractor.”
However, if the individual cannot hire someone else to substitute for them during their absence, and if they are not allowed to engage in other work during working hours, please check “Employee.”		 1
4) Profit Generation, Individual Business Nature Whether pursuit of profit through individual effort is possible; Whether the individual can generate his own profit
If the individual can generate profit through their own business efforts and either keep that profit or share it with the company, please check “Contractor.”
If the individual receives the profit generated by their efforts in the form of a performance bonus, please check “Employee.”		 1
5) Independent business Whether independent business is possible
If the individual is free to work for another company, please check “Contractor.”
If the individual is not allowed to work for another company while serving the current company, please check “Employee.”		 1
6) Liability for damages Whether the director is responsible for losses
If the individual bears responsibility for the business’s failure, please check “Contractor.”
If the individual does not bear responsibility for the business’s failure, please check “Employee.”		 1
7) Remuneration for labor Whether wage is decided by evaluation of total sales, or paid at a fixed amount in return for work provided
If the individual’s income is received as a share of revenue (based on sales), please check “Contractor.”
If the individual’s income is received as compensation for labor, please check “Employee.”		 1
8) Continuous work; Exclusive work Work is continuous; Whether the work is exclusive
If the individual is a long-term worker and is prohibited from being employed by another company while performing their duties, please check “Employee.”
If the individual is permitted to work for another company and engage in dual employment while performing their duties, please check “Contractor.”		 1
3. Dual judgment factors (2 points – 1 point for each item below)
The dual judgment factors are whether a basic or fixed salary has been established: matters concerning remuneration, such as whether income tax is withheld, and whether the relationship is recognized as a worker in the social security system. If this is recognized, it can be a factor in affirming a judgment of employee status. If it is not recognized, the situation should not be denied employee status solely on this basis.
Supreme Court Ruling
(Items: details for judgment)		 Factual Grounds for Employee Status Weight Judgment
Not selected Employee Employer
3) Dual judgment factors (if positive, score 1 point for each item)
1) Whether basic pay is fixed Majority of pay is based on basic wage or incentive pay
If the individual’s wage structure consists of a base salary plus various allowances, please check “Employee.”
If the individual has no base salary and receives only performance-based pay, please check “Contractor.”		 1
2) Income tax and social security insurances Whether corporate tax or income tax is deducted; Whether premiums for social security insurances are deducted
If the individual pays employment income tax and is covered by the four major social insurance programs, please check “Employee.”
If the individual pays business income tax, please check “Contractor.”		 1