When an engineer at a major tech company in Tokyo was called into a meeting and handed a Performance Improvement Plan (PIP), his first thought was simple: “I’m getting fired.”
He had seen this before at his previous job in San Francisco. A PIP meant you had maybe 60 days before termination. The document in front of him looked official, with targets, timelines, and manager signatures. It felt final.
But his assumption was wrong. It’s a mistake tech workers make every day across Japan.
In the United States, a Performance Improvement Plan is widely understood as the final step before dismissal. Companies use it to document poor performance and build a legal paper trail before termination. Workers from the US, Britain, India, and other tech hubs naturally assume the same logic applies in Japan. It doesn’t.
Japanese employment law works very differently. Dismissal requires strict legal justification under Article 16 of the Labour Contract Act.
The real problem is that workers don’t know this. An international worker receives a PIP, assumes termination is inevitable, and either resigns immediately or accepts whatever severance package the company offers.
In Japan, receiving a PIP rarely ends a job. Misunderstanding it often does.
What a PIP is supposed to do—and what to watch for in yours
For the purposes of this article, a Performance Improvement Plan refers to any structured process in which an employer identifies performance issues, sets improvement goals, and evaluates whether an employee can continue in their role. In Japan it may also be called “ability improvement guidance” (能力改善指導, nouryoku kaizen shidou) or “work improvement guidance” (業務改善指導, gyoumu kaizen shidou).
At its best, a PIP ensures that problems are clearly defined, expectations are realistic, support is provided, and progress is monitored over a reasonable period of time. In these cases workers often do improve, and even when they don’t, the process itself may satisfy what courts expect.
However, those are not the cases that usually come through the union. What’s more, we’ve found that even PIPs that look reasonable on paper often fail to meet the legal standards Japanese courts apply when evaluating dismissals for lack of ability.
In consultations with tech workers at the General Union, the performance issues listed in PIPs are frequently subjective: “lacks leadership,” “needs better communication,” “insufficient cultural fit.” These are difficult to measure and nearly impossible for a worker to prove they have addressed.
In other cases, workers are given two or three weeks to demonstrate “significant improvement,” paired with intensive reporting requirements and almost no practical support. These processes may carry the name of an improvement plan, but they fail to function as one.
A recurring feature is the pairing of PIPs with resignation offers. Workers are presented with a choice: enter the PIP process, or accept a severance package and leave “amicably.” Sometimes managers skip the subtext entirely. In one consultation, a manager told a worker directly: “We cannot fire you without evidence, and we need that evidence via a PIP.”
That kind of reasoning is not unusual. I spoke with Sonomi Terao, Staff Executive Officer with the General Union’s IT/Tech sector, and she described what she’s seen repeatedly in PIP disputes: severance offers structured to pressure quick decisions, timelines designed to limit options, and, for non-Japanese workers, visa status issues adding a layer of urgency that has nothing to do with the merits of the case.
She added that the psychological effect is often decisive. Workers placed on a PIP frequently conclude there is no future at the company and resign before the legal question is ever tested—even in cases where dismissal would have been very difficult to justify.
How Japanese courts actually evaluate performance-based dismissals
What Japanese courts examine in these cases is whether the employer provided meaningful guidance and a genuine opportunity for improvement before attempting a dismissal for lack of ability.
Under Article 16 of the Labour Contract Act, a dismissal must have “objectively reasonable grounds” and be “appropriate under social norms.” Courts therefore work through a series of concrete questions:
- Did the employer clearly identify the performance problem with concrete evidence?
- Did the company provide real guidance, training, or support?
- Was the employee given enough time to realistically improve?
- Were the goals reasonable, or structured in a way that made success unlikely?
- Was the evaluation process transparent and based on objective criteria?
- Did the employer consider alternatives such as reassignment?
- And ultimately, was dismissal truly unavoidable?
A well-run process can satisfy those requirements. But simply placing an employee on any improvement or evaluation plan—or stating that they failed it—does not. Courts need evidence that continued employment could not reasonably be expected, and that the employer had already exhausted every reasonable alternative before deciding to terminate.
This is exactly what the Japan Hewlett-Packard case (日本ヒューレット・パッカード事件, Nihon Hyu-retto Pakka-do jiken) demonstrates. The court didn’t rely on the label of the process, but instead examined the substance: years of documented guidance and repeated attempts at correction. The company succeeded not because the employee failed a PIP, but because it could show it had already done everything Japanese law requires before dismissal.
How Japanese courts have evaluated PIP-related dismissals
Bloomberg L.P. (2012)
Bloomberg placed a journalist on a Performance Improvement Plan beginning in December 2009 and later dismissed him for “lack of capability.” The company relied on the PIP and a set of performance targets to argue that it had given the employee a fair opportunity to improve.
The Tokyo District Court rejected that argument. The court found that the targets imposed under the PIP were unrealistic and that the dismissal could not be justified as a genuine performance-based termination. In effect, the court concluded that the PIP had been used as a downsizing tool rather than a meaningful opportunity to improve.
The dismissal was therefore invalid. The Tokyo High Court upheld the ruling on April 24, 2013.
IBM Japan (2016)
IBM Japan used a different approach. Employees were informed that they would have to leave the company within a short period due to “poor performance,” after which they were effectively locked out of the workplace and prevented from returning.
When the case reached court, the Tokyo District Court examined IBM’s internal evaluation system. The company relied on a relative evaluation system, sometimes described as forced ranking, in which a fixed percentage of employees must be placed in the lowest performance category.
Chief Judge Toru Yoshida ruled on March 29, 2016 that the dismissals were invalid. Being ranked at the bottom of a relative evaluation system did not automatically prove that an employee was incapable of performing the job. The court ordered reinstatement and payment of wages retroactive to the dismissal.
One English-language analysis of the decision summarized the ruling with a striking headline: “Tokyo District Court Rules that ‘U.S.-Style’ Dismissal is Invalid.”
Huawei Technologies Japan (2024)
A more recent case involved Huawei’s Japanese subsidiary. A digital marketing manager was placed on a “Business Improvement Plan” in 2019. After a period of resignation pressure, the company terminated the employee in March 2020 on the grounds of lack of capability.
The Tokyo District Court did not object to the existence of an improvement plan itself. What mattered was how the employer used it. The court found that the company had not provided sufficiently concrete guidance or instruction before concluding that the employee was incapable of doing the job. In the court’s view, there was still room for further training and support before dismissal became unavoidable.
Google Japan (2024–present)
Google Japan is currently involved in a similar dispute. An employee was placed on a PIP in 2024 and later dismissed that same year. The worker, supported by the Alphabet Union branch of JMITU, argues that the dismissal occurred even though they had met the goals set out during the improvement process.
In January 2025 the worker applied to the court for a provisional disposition seeking provisional payment of wages and reinstatement while the case proceeds. As of early 2026, no decision has been issued and the case remains ongoing, reflecting the typically slow pace of civil dismissal litigation in Japan.
The dispute highlights a recurring issue in PIP-related cases: when expectations shift after the improvement process has begun, courts often examine closely whether the employer ever intended the process to succeed.
What companies can and cannot do
In Japan companies can:
- Provide regular performance feedback
- Create internal improvement plans as part of normal management
- Offer voluntary resignation packages, as long as they are genuinely voluntary
Companies cannot:
- Treat an improvement or evaluation plan as a legally-binding process that creates automatic grounds for termination
- Dismiss workers solely for failing targets without meeting the full legal test
- Use unreasonable or vague goals as “evidence” of lack of ability
- Skip support, training, or reassignment options before deciding on dismissal
- Automatically link failure to demotion or salary reductions without meeting the tests for disadvantageous changes
Practical steps for workers
Following are some of the immediate actions you can take if issued a PIP in Japan:
- Request specific, measurable criteria for what “improvement” means
- Ask for written clarification of goals, support, and evaluation methods
- Keep records of all meetings, instructions, and feedback—or the absence of them
- Record meetings where legally permitted (Japan is a one-party consent jurisdiction)
- Avoid signing documents that assign blame or frame the evaluation plan as voluntary agreement
Most importantly, you should understand that resignation is voluntary, not required. Do not enter negotiations about severance until you fully understand your position. Once you discuss money, you signal willingness to leave and lose all leverage.
Finally, consulting a labour union or labour lawyer early—before signing anything—is far more effective than trying to challenge decisions after the fact.
Closing: PIPs in Japan are often more psychological than legal
Performance Improvement Plans are widely used across Japan’s tech sector, but they are weakly grounded in law. Japanese courts have repeatedly rejected dismissals based on PIP failure when employers could not demonstrate genuine performance problems and a fair opportunity for improvement.
Bloomberg, IBM, Huawei, and the ongoing Google Japan disputes all tell the same story: importing the global tech industry’s PIP-to-termination logic into Japan does not work, because Japanese employment law simply does not allow it.
Japan’s tech sector faces a projected shortfall of roughly 600,000 workers by 2030, while domestic IT investment is approaching 22 trillion yen. Tech workers have real leverage in this market—but only if they fully understand their legal rights in this country.
