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Hastings International and Comparative Law Review

Authors

Miwako Ogawa

Abstract

Like employers in the United States, employers in Japan seek to prevent their former employees from competing with them by using noncompete covenants. As Japan's work force and employment system become more diverse, individualized and laterally mobile, noncompete provisions are appearing before the Japanese courts with increasing frequency.

The Japanese courts' approach to noncompete clauses is to scrutinize their "reasonableness" by balancing the competing interests of the employer in protecting its business goals and the employee in preserving his right to freedom of occupation. However, the notion of "reasonableness" has been elusive, causing the Japanese courts to struggle with application of that rule to noncompete clauses in individually executed agreements, collective work rules provisions and retirement allowance forfeiture provisions. This Note examines the recent developments in the case law and jurisprudence concerning post-employment noncompete covenants in Japan and analyzes the current Japanese approach in light of the idiosyncrasies of its employment system and the changes currently underway.

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