Proposal to Allow Employees to Stay On in event of Corporate Ownership Change

It is proposed by the labor authority (Council of Labor Affairs) that it will be a default rule for the employment contracts to survive material corporate restructuring such as business combination (mergers and acquisitions), spinoff, and sale of the whole or a substantial part of business or its assets. Currently, the Labor Standards Law provides that in the event of material corporate restructuring, the new and existing business owners will need to agree on the retention of employees and those whom are not going to be retained will be severed and receive severance payments pursuant to the applicable law. The proposal if passed into law will make it a default rule that employment contracts will remain valid as between the employee and the new owner after the new owner takes over the business.