Mari Hirata: Challenges and the Future of Freelance Work Styles

One year has passed since the Freelance Act came into effect in November 2024. While compliance challenges remain, the establishment of the new law is expected to reduce contract disputes for freelancers, who previously often had to suffer in silence in what was essentially a lawless zone. At the same time, it has become possible for freelancers in all occupations to enroll in special workers' accident compensation insurance.

The Freelance Association Japan, the first organization in Japan for freelancers that anyone can join regardless of occupation or region, is now in its 10th year of working on non-profit mutual aid and environmental improvements for freelancers. Over these nine years, the environment surrounding freelancers has changed significantly. In this article, I would like to look back on those transitions and provide an opportunity to broadly share the challenges of freelance work styles and the required measures.

People working as freelancers have long existed in industries such as arts, culture, and advertising media, but the concept only recently became widely recognized in Japanese society.

When I founded this association, there was no specific definition of "freelance," and the outline of its existence was vague. It was not uncommon for freelancers (business operators) and "freeters" (non-regular workers) to be confused in discussions.

To improve the environment, including legal systems, the definition of the target must first be clarified. Therefore, we defined a freelancer as "an independent individual who does not work exclusively for a specific company, group, or organization, and who provides their specialized knowledge or skills for compensation." Simply put, they are people who work through outsourcing or self-employment rather than employment (Figure 1).

We began our activities as the "Professional & Parallel Career Freelance Association" to convey the message that both independent professionals, such as sole proprietors and single-person company presidents, and parallel workers who work as company employees during the day while doing side jobs outside of working hours, are all autonomous freelancers.

As the outline of freelancers became clearer, the government also began to grasp the scale of the population. According to estimates by the Cabinet Secretariat, the freelance population in Japan has reached 4.62 million. The total number of members of our association, which provides insurance and welfare benefits for freelancers, has also increased year by year, exceeding 140,000.

However, even though the outline is visible, it is ultimately a matter of work style and contract type, acting as an antonym to "company employee." Therefore, the industries and occupations are broad, and the breakdown is extremely diverse. Even when talking about the same topic of "freelance," conversations sometimes fail to align because the "image of a freelancer" people have in their minds differs.

Therefore, a pillar of our association's activities is to publish an annual fact-finding survey of members as the "Freelance White Paper" and make policy recommendations based on data while valuing visualized diversity. With the slogan "Turning small voices into a loud voice," we have achieved results such as correcting disadvantages in "ho-katsu" (activities to get children into nursery schools), sustainability grants and babysitter subsidies during the COVID-19 pandemic, burden reduction measures for the invoice system, the enactment of the Freelance Act (Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators), and the expansion of eligibility for special enrollment in workers' accident compensation insurance.

Furthermore, the "Specified Entrusted Business Operators" identified as targets for transaction optimization under the Freelance Act include not only sole proprietors but also single-person company presidents and side-job workers. With the reflection of this in the legal definition of freelance, the prefix "Professional & Parallel Career" has fulfilled its role, and we changed our name to the "Freelance Association Japan" last November.

The background to the enactment of the Freelance Act was the harsh reality of transactions that could be called a "lawless zone" in which freelancers had been placed for many years. Small and medium-sized enterprise clients were often outside the scope of the Subcontract Act, and freelancers in weak positions were forced to suffer in silence even when subjected to unreasonable treatment such as non-payment of rewards, unilateral reductions, or harassment. Also, depending on the industry, simply asking about guarantees or contract terms in advance or trying to put them in writing was often dismissed with comments like "Don't you trust us?" or "You're being difficult and tedious," leading to being avoided.

In a survey conducted by our association in 2019, 45.6% of respondents had experienced contract troubles with clients, and 45.5% of those answered that the contract type at that time was "verbal."

In response to these realities for freelancers, thanks to the efforts of many stakeholders, a new law was enacted that mandates the clear indication of transaction terms, payment of rewards within 60 days, and measures against harassment.

One year has passed since it came into effect, and positive impacts are beginning to appear on the ground. Reports of improved responses from companies with high compliance awareness have been received, such as "Clients have started notifying me of reward amounts and deadlines in advance" and "It has become easier to ask to decide on unit prices before starting work," as well as shortened payment cycles and guidance on harassment consultation desks. Furthermore, reactions from freelancers themselves include, "There is now room to negotiate based on the law when trouble occurs."

Reports of administrative crackdowns are helping the law permeate. In surveys before the law took effect, the most common request to the administration was for the "disclosure of illegal and crackdown cases." In response, the Fair Trade Commission has been actively issuing recommendations for violations and has disclosed the names of 9 companies (as of March 16) for fiscal year 2025. These case disclosures serve as a powerful warning to client companies.

However, challenges still remain. Even in the 2026 Freelance White Paper survey conducted one year after the law took effect, only about 20% of people said the Freelance Act came up in conversation with clients, and there were scattered voices from the contractor side saying it was difficult to mention. Furthermore, about 30% of people felt they had "experienced what seemed to be a violation," with reports of non-disclosure of transaction terms and payment delays due to the end client's circumstances. Malicious cases where contracts were terminated as a result of consulting about harassment are still observed. Laws are not finished once they are made; steady awareness-raising activities are needed until they truly function on the ground and compliance becomes established as a natural culture.

While the enactment of the Freelance Act has advanced transaction optimization and the improvement of the working environment, a major wall that remains untouched is the issue of social insurance. Since freelancers are business operators, most become independent knowing the business risks where stable income is not guaranteed. However, the current situation in Japan is that even the safety net for life risks that all humans carry equally—such as health, childbirth, nursing care, and pensions—is fragile.

Japan's social security system is based on a "mechanism that links companies and individuals" established during the period of high economic growth. Company employees can join health insurance associations and employees' pension insurance with premiums split between employer and employee, receiving generous protection for illness, injury, childbirth, and nursing care. On the other hand, sole proprietors, who make up the majority of freelancers, join National Health Insurance and the National Pension, but the current reality is that they pay higher premiums than company employees while receiving extremely thin protection. There are no injury and sickness allowances, maternity allowances, or childcare/nursing care leave benefits, and the amount of pension they can receive in the future is significantly lower than that of company employees. Eligibility requirements for survivor pensions and disability pensions are also stricter than for company employees.

It was clarified when the Freelance Act was enacted that even sole proprietors can be covered by social insurance if their labor status is recognized, and if they incorporate, they can join social insurance by paying both the employer and employee portions of the premiums themselves. However, the majority of sole proprietors who work autonomously fall through the safety net.

According to an awareness survey on social insurance conducted last year, 68.2% of freelancers feel anxious about the current system, while only 6.8% feel secure. The most common problem cited was "high social insurance premiums (80%)," followed by "low future pension amounts (60%)" and "no injury and sickness allowance in National Health Insurance (40%)." In open-ended responses, many poignant voices were received, such as "If I get sick, my income disappears immediately" and "I had to work until the very day of hospitalization for childbirth and return to work two weeks after giving birth."

Furthermore, the current system creates not only inequality between individuals but also inequality between companies. Because of the mechanism of splitting premiums between employer and employee, some companies seeking to avoid the burden of social insurance premiums create "disguised freelancers" who are formally under outsourcing contracts despite being workers under their direction and supervision. This creates unfair competition conditions with companies that seriously bear the burden of insurance premiums.

In the aforementioned survey, 96.6% of people answered that "it is necessary for social security to be provided regardless of differences in work styles," and about 50% of people expressed an intention that "it is okay for paid premiums to increase in order to enhance protection and benefits to a level equivalent to company employees."

In the future, there is a strong demand for an update to a social insurance system that is neutral to work styles, with no disparity between company employees and freelancers.

Our association, which holds the vision of "Toward a world where everyone can build an autonomous career," aims for a society where you can hold the reins of your own career.

As the working population rapidly decreases, the old "on and hoko" (favor and service) relationship—where one entrusts their entire career, including assignments and transfers, to HR in exchange for the guarantee of lifetime employment—is no longer sustainable, and it is becoming difficult for companies to hoard all the necessary and sufficient talented human resources. Furthermore, for solving unknown challenges and innovation, bringing in freelancers and side-job workers with professional expertise as members of the company's human capital makes it easier to produce results while ultimately saving time and cost.

These circumstances on the corporate side are also an opportunity for working talent to realize autonomous and flexible work styles. In the era of the 100-year life, the desired work style changes within a single person's life. For everyone, including women, the elderly, and people with disabilities, to continue working happily, it is important to be able to choose the optimal work style according to life events and life stages (without having to give up working). For people who want to "work at my own discretion," "have freedom in working time/place," or "make better use of my abilities/qualifications," freelance becomes an ideal work style.

However, to be able to choose the freelance work style with peace of mind, further environmental improvements are required, such as eliminating the disparity with company employees in the social insurance system. We will continue to carefully collect the diverse voices of freelancers and strive to update the system, aiming to connect the diversity of work styles to the strength of society.