Japan has ushered in significant labor reforms aimed at protecting workers in small and medium-sized enterprises (SMEs), with new legislation taking effect on January 1, 2025, that promises to reshape wage negotiations and employee rights across the country. The centerpiece of these reforms is the newly implemented "Chusho Jutaku Torihiki Tekiseika-ho" (SME Subcontracting Transaction Optimization Act), commonly referred to as "Toritekiho." This law represents a comprehensive revision of Japan's previous subcontracting regulations and specifically targets unfair business practices that have historically suppressed wages at smaller companies. According to NHK, the law prohibits larger companies from unilaterally determining transaction prices without consulting with their subcontractors, a practice that has long squeezed profit margins at SMEs and limited their ability to raise employee wages. For foreign workers employed at Japanese SMEs—which account for approximately 99% of all businesses in Japan—this legislation could have meaningful implications. The law aims to ensure that when large corporations negotiate contracts with smaller suppliers and service providers, they must engage in proper consultation about pricing. This protection is designed to preserve profit margins at SMEs, theoretically enabling these companies to offer better compensation to their employees. The timing of this reform coincides with broader wage increase momentum in Japan. Keidanren Chairman Tsutsui emphasized in recent interviews with media outlets that despite recent wage increases, current raises have not kept pace with inflation. He stressed the importance of establishing sustained wage growth through base salary increases (base-up) rather than one-time bonuses, according to NHK reporting on December 31. As Japan approaches its annual "shunto" spring wage negotiations for 2025, the business community appears committed to continuing wage increase trends. However, foreign workers should understand that actual implementation will vary significantly by company size, industry, and individual employment contracts. Those working at SMEs that serve as subcontractors to larger corporations may see more direct benefits from the new protective legislation. Meanwhile, employee leave rights continue to generate confusion and disputes in Japanese workplaces. A recent case highlighted on Livedoor News involved a part-time worker whose request for paid leave during the New Year period was denied by their employer. This incident sparked online debate about the legality of such denials. Under Japanese labor law, employees are entitled to paid annual leave (yukyu kyuka) after working for six months, with the number of days dependent on working hours and contract type. However, employers maintain the right to request timing changes if granting leave would "significantly impede business operations"—a provision known as "jiki henkou-ken." This means that while employers cannot outright refuse paid leave requests without cause, they can negotiate alternative dates during peak business periods. For foreign workers, understanding these nuances is crucial. The legality of leave denials depends heavily on specific circumstances: the business's operational needs, advance notice provided, staffing levels, and whether alternative dates were offered. Part-time and contract workers have the same fundamental rights to paid leave as full-time employees, though the number of entitled days may differ based on working hours. Experts recommend that foreign employees familiarize themselves with their specific entitlements under their employment contracts and Japanese labor standards law. When requesting leave during high-demand periods like New Year, Golden Week, or Obon, providing maximum advance notice and demonstrating flexibility about specific dates can help avoid conflicts. These reforms and ongoing discussions reflect Japan's gradual shift toward stronger worker protections and wage growth. For the country's foreign workforce, staying informed about these legal changes and understanding one's rights under Japanese labor law remains essential for navigating employment successfully in Japan's evolving workplace landscape.