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Article: November 2016: Asia-Pacific Update

Business Litigation Reports

Privacy and Government-Issued Identification in Japan. In this age of proliferate information and increased cyber crime, securing personal information is critical. Even the disclosure of no more than an individual’s social security number could lead to complete identity theft.  Japan is now struggling with such security concerns as it enacts a new social security system.

Under the “My Number System,” which became effective this year, a new “Individual Number” is assigned to every Japanese and foreign resident, as well as to businesses. To address privacy concerns, the Individual Number is supposed to be used only for limited purposes, such as tax, social security and disaster control. The Japanese system prohibits companies from using the Individual Number for any other reason; for example, companies are not allowed to use the Individual Number for routine identification needs. The My Number Act sets forth detailed regulations and severe criminal penalties for violations of the Act, including prison sentences and other austere censure.

Despite these safeguards, critics are concerned that the new Japanese system as a whole still significantly expands the use of government-issued identification, increasing the risk of personal information being made vulnerable to hackers or even inadvertently disclosed. Of particular importance is the issue of companies protecting their employees’ personal information. With more sensitive details to defend, and these new strict prohibitions on how that information can and cannot be used, both foreign and domestic companies operating in Japan will need to ensure that their compliance and security protocols sufficiently address both increased risks and regulations. Failure to do so may result in significant liabilities and future litigation. Companies operating in Japan should keep a careful eye on the developing social security law and ways to prevent breaches of their internal security systems.

Protection of Disabled Employees in Japan. In stark contrast to the Americans with Disabilities Act, Japanese law, until recently, did not have enforcement mechanisms aimed at curbing disability discrimination in the workplace. While employers were obligated to employ a certain number of persons with physical or mental disabilities under the Act on Employment Promotion of Persons with Disabilities, the law was considered inadequate. It did not sufficiently prohibit discrimination, nor provide a means to ensure that disabled employees were given accommodations in the workplace. The Act, which took effect in April, addressed these shortfalls by (i) prohibiting employment discrimination on the basis of disability, (ii) making reasonable accommodation a mandatory provision, and (iii) providing a mechanism for processing and resolving complaints. Legal commentators credit the American ADA as a source for prompting the amendments.

With respect to the Act’s prohibition of disability discrimination, the law was amended to explicitly prohibit discrimination against an employee with a disability, with respect to any aspect of employment. The Act clarifies that this includes discrimination in any aspect of the employment process, including recruiting, hiring, promoting, training, fringe benefits, job assignments, retirement age, and layoffs. The Act also affirmatively requires employers to provide a person with a disability equal opportunities at the recruiting and hiring stages. This reasonable accommodation requirement further encourages active participation in the workplace from those who previously had limited opportunities to do so. Compliance and acceptance could be an issue for companies facing these requirements for the first time in Japan.