Problem: I’m a foreigner working at an English language school. I’m considering changing to another company which offers a better pay. However, as I’m still in a contract with the company, I was asked to pay a three-month indemnity for breaching the contract according the clause of the contract. Is such clause valid under law?
Advice: According to Article 16 of the Labour Standards Law, “An employer shall not make a contract which fixes in advance either the sum payable to the employer for breach of contract or the amount of indemnity for damages.” Therefore, the contract is considered invalid if it includes terms that penalise the worker for premature contract cancellation. On the other hand, Article 628 of the Civil Code states that “Even in cases where a period of service has been fixed by both parties, either may immediately terminate the contract if an unavoidable cause exists.” In this case, only if the unavoidable cause has arisen by the fault of one of the parties, the party is liable for compensation for the damages.
Previous court cases have found the contractual clause as a breach of law in that it refuses to pay off the agreed superannuation as an indemnity for premature contract cancellation. The contract that contains such a clause is therefore deemed invalid. For more details, please contact the Assistant counselor for Foreign Workers at the Aichi Labour Bureau.
This article was originally aired on ZIP FM’s Global Voice in August 2006.
