What does “business licence disqualification” mean?

In July 2026, it was reported that the Immigration Services Agency plans to request that relevant ministries add illegal employment promotion offences to the statutory disqualification rules for business licences, permits, approvals and registrations.

A disqualification rule prevents a person or company that meets specified conditions from obtaining or retaining a regulated business licence.

If sector-specific laws are amended, a business owner, company or corporate officer convicted of an illegal employment promotion offence may be unable to obtain a new licence or renew an existing licence for a specified period.

The proposed rules have not yet been finalised

The most important point is that the reported measure remains at the proposal and inter-ministerial consultation stage.

The following matters have not yet been finalised across all industries:

• The industries that will be covered
• The licences, permits or registrations that will be affected
• The length of the disqualification period
• The treatment of companies, representatives and corporate officers
• Whether existing licences may be cancelled or only denied renewal
• The treatment of convictions or conduct that occurred before implementation
• The effective date and transitional measures

It would therefore be inaccurate to state that every business convicted of an illegal employment promotion offence is already prohibited from operating in its industry.

Employers should monitor bills, ministerial ordinances, official notices and guidance issued by the ministries responsible for their particular sector.

What is an illegal employment promotion offence?

An illegal employment promotion offence may arise where an employer or another party causes, assists or arranges for a foreign national to work unlawfully in Japan.

This may include employing a person who is not permitted to work, assigning duties outside the scope of the person’s status of residence, or arranging unlawful employment.

A valid residence card does not mean that the holder may perform any type of work.

Each status of residence permits specific activities. Foreign nationals with Student or Dependent status may work only where they have obtained permission to engage in activities outside their status, and they remain subject to restrictions on working hours and types of work.

A valid residence card does not automatically make the work lawful

The validity of a foreign national’s residence card and the legality of the duties currently assigned to that person are separate issues.

The actual duties do not match the status of residence

For example, a foreign national holding Engineer/Specialist in Humanities/International Services status may face compliance problems if the person is routinely assigned simple manual work that does not require the professional knowledge or skills covered by that status.

The actual workplace differs from the sponsoring organisation

Where a foreign employee works at another company, worksite or business location, the employer should review the organisation named in the immigration records, the relevant dispatch or subcontracting agreement and the actual chain of supervision.

Work exceeds the scope of permission for outside activities

Students and Dependents who hold permission to engage in activities outside their status remain subject to working-hour limits and restrictions on certain types of businesses.

The employer relies only on the employee’s explanation

An employee’s statement that the work is permitted or that an immigration application is pending may not be sufficient.

The company should independently review the residence card, passport, immigration permission, application receipt and actual job description, and should retain a record of the review.

Why this could be particularly serious for regulated businesses

For a business that cannot legally operate without a licence, permit or registration, the addition of an illegal employment promotion offence to the relevant disqualification rules could have a major impact.

Until now, many businesses have primarily considered criminal penalties, immigration consequences and the employee’s status of residence.

If illegal employment is directly linked to sector-specific business licensing rules, the issue may also determine whether the company can continue its core operations.

The affected industries, treatment of corporate officers and possible cancellation of existing licences will depend on the final legislation.

Seven checks employers should conduct now

Employers should not wait until the final legislation is enacted before reviewing their foreign employment procedures.

1. Check both sides of the residence card
   Review the status of residence, period of stay, employment restrictions and any permission for activities outside the authorised status.
2. Manage the period of stay
   Record the planned renewal date, application date and the date on which the new residence card is received.
3. Review employment restrictions
   Confirm whether there are restrictions on working hours, duties, workplaces or types of business.
4. Compare the status of residence with the actual duties
   Review the daily work actually performed, rather than relying only on the contractual job title.
5. Confirm the actual workplace
   Where the employee works at another branch, company, client site or project location, review the legal and operational arrangement.
6. Examine dispatch, subcontracting and secondment arrangements
   Identify who gives work instructions and who controls working hours, attendance and holidays.
7. Keep a written compliance record
   Retain not only a copy of the residence card, but also the job description, workplace details, review date, reviewer and conclusion.

A recruitment-stage check is not enough

The duties assigned at the time of recruitment may comply with the employee’s status of residence, but later staffing shortages or organisational changes may lead to the employee performing unauthorised work.

Employers should conduct another immigration compliance review when:

• The department or duties are changed
• The workplace, branch, store or worksite is changed
• The employee is seconded to another company
• A dispatch or subcontracting arrangement is changed
• The contract changes between employee, part-time worker or independent contractor
• An extension or change of status of residence is filed

Even where the human-resources department conducts appropriate checks, a site manager may assign duties that were not included in the approved job description.

Foreign employment compliance should therefore be shared among management, corporate officers, human-resources personnel, workplace supervisors and the foreign employee.

Points to monitor as the proposal develops

Employers should monitor official announcements and proposed legislation issued by the relevant ministries.

News reports, government policy discussions, enacted legislation and the final rules in force should be treated as separate stages.

Conclusion

The proposal to add illegal employment promotion offences to business licence disqualification rules would significantly increase the importance of foreign employment compliance.

If implemented, improper employment of a foreign national could affect not only criminal liability and immigration procedures, but also whether a company can continue operating its regulated business.

At present, however, the measure remains at the proposal stage. The affected industries, disqualification period, treatment of existing licences and implementation date have not yet been finalised.

Employers should nevertheless review residence cards, statuses of residence, actual duties, workplaces and contractual arrangements now, rather than waiting for a compliance problem to occur.