Flash Report: Amended Whistleblower Protection Act Enacted—Background, Key Amendments, and Corporate Impact

Overview of the Amended Whistleblower Protection Act

On 4 June 2025, the “Bill to Partially Amend the Whistleblower Protection Act” was passed and enacted by the National Diet of Japan. The Whistleblower Protection Act, Japan’s primary statute governing internal reporting systems, was originally enacted in 2004 and underwent a major overhaul in June 2020, which came into force in June 2022. However, even after the 2022 enforcement, challenges remained in practice. For example, a number of non-listed businesses that were legally required to appoint a Designated Whistleblower Response Officer under the Act were found to be neglecting this obligation, despite being aware of it. More broadly, some companies lacked sufficient awareness of their legal responsibilities, and the practical effectiveness of internal reporting systems remained limited.

Typical issues included:

• Employees recognizing legal violations but choosing not to report them internally;
• Companies failing to conduct proper investigations despite receiving valuable reports; and
• Retaliatory or disadvantageous treatment of whistleblowers.

In fact, investigative reports by third-party committees regarding corporate scandals revealed persistent problems, such as low employee awareness of the internal whistleblowing channel and a low number of reports filed, both of which undermined the system’s effectiveness.

In response to these domestic challenges and in light of global trends, particularly in Europe and the United States, toward stronger whistleblower protections, a panel of experts was convened in 2024 to reassess the framework. Based on the panel’s recommendations, the newly enacted amendments aim to enhance the practical functionality of the system. While these reforms are intended to reinforce the Act’s core purpose, “protecting the lives, bodies, property, and other interests of the public”, by strengthening corporate compliance, they will also have a significant impact on corporate operations, as they help ensure the early detection of misconduct or other compliance risks, which is the fundamental objective of any internal reporting regime.

Key Points of the 2025 Amendments

The revisions can be grouped into four main pillars:

1. Establishing and Strengthening Internal Reporting Systems – Ensuring robust mechanisms and raising their effectiveness
2. Expanding the Scope of Protected Whistleblowers – Broadening who is covered
3. Addressing Conduct that Obstructs Reporting – Introducing measures to deter interference
4. Deterring and Remedying Retaliation – Enhancing preventive and remedial provisions against disadvantageous treatment

These points merit particular attention from corporate legal and compliance departments. Further details will follow in subsequent sections of this alert.

Reinforcement of Internal Reporting Framework – Enhanced Sanctions for Failure to Designate Responsible Staff

The amended Act dramatically strengthens administrative powers to ensure that businesses with more than 300 employees establish an effective internal reporting framework. Each such business must appoint a Designated Whistleblower Response Officer (“koueki tsuhou taiou jujisha”) responsible for handling whistleblower reports. A new provision (Art. 15‑2) empowers the Commissioner of the Consumer Affairs Agency to issue a corrective order to any enterprise that fails to make the required designation. Non‑compliance with the order exposes both the entity and the individual decision‑maker to a criminal fine of up to JPY 300,000.

In addition, the Agency now has explicit authority to demand reports and conduct on‑site inspections (Art. 16). Refusal to submit information, submission of false information, or obstruction of an inspection is likewise punishable by a fine of up to JPY 300,000, with dual liability for both the corporation and the responsible individual. The statute also makes it a legal duty to publicize the whistleblowing system internally (Art. 11.2); although no direct penalty is attached, failure to do so may be treated as a breach of the broader obligation to maintain an effective system.

Expansion of the Definition of “Whistleblower” – Protection Extended to Freelancers

The circle of protected whistleblowers has been widened. In addition to employees, temporary workers, officers, and former employees within one year of leaving, the amended Act now expressly covers freelancers (i.e., self‑employed sole proprietors) who perform work for a business under a service contract, as well as freelancers within one year after such a contract ends (Art. 2.1.4). Borrowing the definition introduced in the 2023 Freelance Transaction Fairness Act, this change obliges companies to afford freelancers the same protections as regular employees. For example, a company may not unilaterally terminate a freelance services agreement or suspend payment merely because the freelancer made a whistleblower report.

Prohibition of Conduct that Impedes Reporting – Codification of the Ban on Obstruction and “Whistleblower Hunting”

Recognizing that a hostile environment can stifle internal reporting, the amendment introduces explicit prohibitions on acts that deter or obstruct whistleblowing. Any agreement or rule that prevents a worker from reporting externally, such as requiring a promise “not to report outside the company”, is void as an act of obstruction (new Art. 11‑2). Even a confidentiality agreement is unenforceable to the extent it blocks a lawful whistleblower report.

Moreover, companies are now forbidden, absent legitimate grounds, to investigate in order to discover the identity of a whistleblower (new Art. 11‑3). The long‑standing guidance against “whistleblower hunting” is thus elevated to a statutory obligation. Although the Act does not attach criminal sanctions to these prohibitions, violations may trigger corrective guidance or recommendations from regulators and represent a serious compliance risk.

Stronger Deterrence and Remedies Against Retaliation

The amendment fortifies both civil and criminal protections against retaliatory measures such as dismissal or disciplinary action. Civilly, any dismissal or disciplinary sanction imposed within one year of a whistleblower report (or within one year of the company learning of an external report) is presumed by law to be motivated by the report (Art. 3.3). The burden therefore shifts to the employer to prove the action was unrelated, significantly increasing litigation risk.

Criminally, a new direct penalty provision makes it an offence to dismiss or discipline an employee because of a whistleblower report. The responsible individual faces imprisonment of up to six months or a fine of up to JPY 300,000, while the corporation itself is subject to a fine of up to JPY 30 million (Art. 21.1 and 23). Because these penalties are imposed without the need for prior administrative proceedings, they represent a powerful deterrent. Comparable rules apply to ordinary civil servants, signaling a whole‑of‑society commitment to safeguarding whistleblowers.

Corporate Action Items and Practical Considerations

The amended Whistleblower Protection Act will enter into force within 18 months of its promulgation on 11 June 2025, meaning that the new rules will begin to apply no later than the end of 2026. Legal and compliance teams should use this lead time to conduct a comprehensive review of their internal reporting systems and implement any necessary measures. Key action points are set out below.

Review and Enhancement of Internal Reporting Systems

Re‑examine your company’s internal whistleblowing rules and workflows to ensure they satisfy the requirements of the statutory Guidelines. Enterprises with more than 300 employees must confirm that a Designated Whistleblower Response Officer has been duly appointed and that the officer’s name and contact information are clearly communicated both inside and outside the organization. Although businesses with 300 or fewer employees are subject only to a “best‑efforts” obligation, establishing a reliable reporting channel is essential risk management. Verify that the reporting framework functions effectively from receipt through investigation and remediation—and reinforce any weak points promptly.

Audit of Work Rules and Contract Templates

Conduct a top‑to‑bottom review of work rules, confidentiality undertakings, employment contracts, and service agreements to confirm compliance with the amendments. Pay particular attention to clauses that could restrict or chill whistleblowing; any such provisions will be unenforceable once the Act takes effect. Reassess contract terms with freelance suppliers as well, ensuring that termination or payment clauses cannot be construed as retaliatory. Where necessary, update template agreements and expressly reference the internal reporting system in work rules.

Training and Awareness for Employees and Stakeholders

Provide refreshed training and notices to executives, managers, and all employees explaining the purpose of the whistleblowing system and the new rules. Managers must understand that retaliatory treatment is prohibited and carries criminal risk, and they should be instructed to avoid disadvantaging whistleblowers in performance evaluations or other personnel actions. Regularly inform new hires and existing staff about the reporting channel, how to use it, and the protections available, in order to foster a psychologically safe workplace. Where appropriate, extend access to the reporting channel to freelancers and other external collaborators, and supply explanatory materials at the contracting stage.

Preparation for Regulatory Interaction

After the amendments take effect, the Consumer Affairs Agency may exercise its powers to demand reports or conduct on‑site inspections. Maintain organized records of whistleblower reports and response measures so that you can react swiftly to any inquiry. Whistleblower Response Officers and compliance managers should establish procedures for addressing administrative guidance or corrective orders in advance. If the Agency issues a recommendation, respond promptly with a remediation plan to minimize criminal exposure. Ongoing self‑audits are the best defense against regulatory action.

Implementation Timeline Management

Ahead of the enforcement date, the Consumer Affairs Agency intends to update the statutory Guidelines, following consultations with economic organizations and a public comment process. Although sweeping revisions are not anticipated, the updated Guidelines are expected to clarify practical points such as specific examples of the publicity obligation and considerations for the ban on retaliatory treatment. Monitor these developments closely and work backwards from the 2026 deadline to complete a fully compliant system on schedule.

Consult an Expert for the Operation of Your Internal Reporting System

The amended Whistleblower Protection Act raises the legal bar for internal reporting systems in Japan. While this presents challenges, it is also an opportunity to strengthen compliance management. Creating an environment in which employees, contractors, and other stakeholders can speak up without fear is essential for the prompt correction of wrongdoing and legal violations.

By taking a proactive view of the amendments and reassessing how whistleblowing frameworks are built and operated, companies can not only ensure legal compliance but also enhance their credibility. Use the run‑up to enforcement to reinforce internal structures and drive the necessary mindset changes so as to foster a corporate culture in which “no violation goes unnoticed.” After the Act takes effect, continue to monitor system performance and, where appropriate, seek expert advice to keep raising your organization’s compliance standards. Proper implementation of the new rules should help create a safer, healthier workplace for both companies and their people.

ZeLo also serves as an external point of contact for internal reporting systems, providing end-to-end support from receiving whistleblower reports to conducting fact-finding investigations. In addition, ZeLo offers pre-implementation consultations and conducts internal training sessions.

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Reference Materials

• Consumer Affairs Agency, “Outline of the Bill to Partially Amend the Whistleblower Protection Act” (Japanese)
  https://www.caa.go.jp/policies/policy/consumer_partnerships/whisleblower_protection_system/overview/assets/consumer_partnerships_cms205_250611_01.pdf
• Consumer Affairs Agency, “Key Points of the Bill to Partially Amend the Whistleblower Protection Act” (Japanese)
  https://www.caa.go.jp/policies/policy/consumer_partnerships/whisleblower_protection_system/overview/assets/consumer_partnerships_cms205_250611_02.pdf
• “Report of the Expert Committee on the Whistleblower Protection System,” 27 December 2024 (Japanese)
  https://www.caa.go.jp/policies/policy/consumer_partnerships/meeting_materials/review_meeting_004/assets/consumer_partnerships_cms205_250109_01.pdf