United States: Amendment To Japan's Omnibus Data Protection Law Means New Compliance Requirements For U.S. Multinational Employers With Operations In Japan

Last Updated: July 7 2017
Article by Aki Tanaka, Trent M. Sutton and Philip L. Gordon

Effective May 30, 2017, Japan amended its omnibus data protection law, the Personal Information Protection Act ("PIPA"), to add new compliance requirements that will have an immediate impact on many U.S. multinational employers with employees in Japan. As with the European Union's recent revamping of its data protection regime through the General Data Protection Regulation, which will go into effect on May 25, 2018,1 the amendment to PIPA (the "Amendment") is intended to update Japan's data protection regime to address the rapid advance in information technology, the rise of the Digital Economy, and the massive increase in global data transfers.  The Amendment is the first material change to PIPA since it was originally enacted in 2003. 

The Amendment introduces three changes to existing law of particular importance to U.S. multinational employers with employees in Japan.  First, the Amendment abolishes the exemption for small businesses.  Second, it introduces a new sub-category of "personal information," referred to as "sensitive personal information," that is subject to certain heightened data handling requirements. Third, the Amendment establishes new rules governing the transfer of personal information outside of Japan.  In addition, the Amendment establishes a new, independent, regulatory authority, the Personal Information Protection Commission ("PPC"), which replaces the previous supervising authority.2

1.   The Amendment Abolishes the Exemption for Small Businesses

Japan's PIPA regulates the collection, transfer, and processing of personal information.  The Act broadly defines personal information to include any information about a natural person that can be used to identify that specific individual, including, for example, the individual's name, date of birth, passport number or any other descriptive information.3

Under prior law, businesses that handled 5,000 items or less of personal information were excluded from PIPA's privacy requirements.  This meant that some smaller Japanese subsidiaries of U.S. multinational corporations, particularly those involved exclusively in business-to-business commerce, were not required to comply with PIPA.  The Amendment, however, eliminated this exemption.  As a result, all businesses that collect personal information, regardless of the number of items collected, are required to comply with PIPA. 

This change is important for employers because employers regularly collect personal information about their employees in order to administer the employment relationship and provide the necessary benefits, compensation, or other entitlements of employment.  By eliminating the 5,000-item threshold for coverage, the Amendment extends PIPA's coverage to even small employers within Japan. 

2.   The Amendment Establishes A New Category Of "Sensitive Personal Information" With Heightened Compliance Requirements

The Amendment creates a new, sub-category of personal information, referred to as "sensitive personal information," and establishes corresponding compliance requirements. Sensitive personal information is defined to include personal information that "require[s] special consideration in handling so as to avoid any unfair discrimination, prejudice or other disadvantage to an individual based on . . . race, creed, social status, medical history, [and] criminal records".4  This definition encompasses information that employers may collect from job applicants, for example, through pre-employment medical exams and background checks, and from employees, for example, through diversity initiatives, fitness-for-duty tests and sick leave requests.

Under the Amendment, employers generally are required to obtain consent from employees before collecting their sensitive personal information subject to limited exceptions.  As relevant to the employment context, consent is not required when collection of sensitive personal information is required by law — as might be the case, for example, when documenting a workplace injury.  Consent also is not required when the sensitive personal information is needed to protect health or safety, for example, in the case of a medical emergency.5

Under prior law and under the Amendment, employers are required to provide employees with notice of the purposes for which they will use employees' personal information.  This notice would have to include the purposes for using any sensitive personal information that the employer might collect. The notice, therefore, provides a convenient opportunity to obtain employees' consent to the collection of sensitive personal information.  In addition, employers in Japan should now consider obtaining consent from applicants before running a criminal history background check because criminal records are included within the definition of sensitive personal information.

One key difference in the treatment of sensitive personal information versus personal information is that personal information may be disclosed to a non-agent, third party (i.e., a third party that is not a service provider) through an 'opt-out' scheme.  This means that personal information can be disclosed to a third party without the prior express consent of the individual as long as the individual is notified that personal information might be disclosed to the third party.  The individual has the right to stop (or opt out of) the disclosure upon request and a notification to the regulator, among other things.  This opt-out provision does not apply to sensitive personal information, however.  An employer must obtain prior, opt-in consent to the disclosure of sensitive personal information to a non-agent, third party except in the few specific situations referenced above.

3.   The Amendment Establishes New Cross-Border Data Transfer Rules

Like many countries outside the United States, Japan now regulates the transfer of personal information to a third country.  The Amendment establishes a general rule that the subject of the personal information must consent to the cross-border data transfer.  The consent must specifically indicate that the personal information will be transferred to an entity outside of Japan.  As with obtaining consent for the collection and disclosure of sensitive personal information, employers can use the mandatory notice regarding the purpose of use as a vehicle for obtaining employees' consent to cross-border data transfers.

The Amendment establishes three circumstances in which consent for cross-border transfers is not required.  These circumstances include the following:

  1. the receiving party is in a country which has been recognized by the PPC to have standards for the protection of personal information equivalent to those required by PIPA;6
  2. the transferring party and receiving party have ensured that the receiving party will handle the personal information appropriately and reasonably based on the intent of the provisions under Chapter IV, Section 1 of new PIPA (i.e., executing a data transfer agreement similar to the Standard Contractual Clauses approved by the European Commission for transfers of personal data outside the EU);7 or
  3. the receiving party has a certification recognized by the PPC based on an international framework for handling personal information, such as a certification from the Asia-Pacific Economic Cooperation (APEC) forum's Cross-Border Privacy Rules (CPBR) system.8

For U.S. multinational employers, these exceptions likely will not eliminate the need to obtain employees' consent.  The transfer of employees' personal data from a Japanese subsidiary to the U.S. parent corporation or a U.S. affiliate would be a disclosure of personal information to a non-agent, third party, putting aside the fact that the personal information is being transferred outside of Japan.  Consequently, as explained above, the employee would have to consent to the disclosure.9

4.   Enforcement by the PPC

The Amendment establishes a new, independent, regulatory authority, the PPC, to oversee implementation of, and enforce compliance with, PIPA.  Previously, the ministry responsible for each economic sector or industry had authority to enforce PIPA.  This arrangement made it difficult to ensure uniform enforcement. The PPC now exercises its power independently from other administrative bodies and provides guidance and advice, conducts on-site inspections, offers recommendations, and addresses violations of PIPA.

Employers contacted by the PPC for an on-site inspection, or that are subject to compliance recommendations or an order to take steps to mediate alleged violations of PIPA, generally should endeavor to cooperate with the Commission to reduce the risk of criminal prosecution and administrative penalties.  PIPA authorizes, in certain circumstances, criminal fines of up to 500,000 yen or one year imprisonment and civil penalties of up to 100,000 yen.10


In light of the Amendment, U.S. multinational employers with employees in Japan should consider taking the following steps: 

  1. Update existing data privacy policies and procedures as may be necessary to comply with the Amendment or implement policies and procedures if none have been implemented to date;
  2. Audit the company's practices for collecting, processing, and transferring employees' and applicants' personal information, including sensitive personal information, to ensure compliance with PIPA;
  3. Obtain consent of current employees and of new hires to (a) the collection of sensitive personal information, if any; (b) the disclosure of personal information to a non-agent third party; and (c) the cross-border transfer of personal information.


1 See Philip L. Gordon, "Ten Steps for U.S. Multinational Employers Towards Compliance with Europe's New Data Protection Regime — The General Data Protection Regulation" (Jan. 21, 2016), available at  https://www.littler.com/publication-press/publication/ten-steps-us-multinational-employers-towards-compliance-europe%e2%80%99s-new.


3 See Article 2 of PIPA

4 See  Article 2, §3 of PIPA

5 See Article 17-2 of PIPA

6 See Article 24 of PIPA (The country covered by this provision has not been specified yet).

7 See Article 24 of PIPA and Article11-1 of Enforcement Rules of PIPA

8 See Article 24 of PIPA and Article11-2 and  Enforcement Rules of PIPA

9 See Article 24 of PIPA

10 See Articles 83, 84, 85, and 88 of PIPA

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Weintraub Tobin Chediak Coleman Grodin Law Corporation
In association with
Practice Guides
by Mondaq Advice Centers
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Weintraub Tobin Chediak Coleman Grodin Law Corporation
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions