What is a gyōmu itaku contract? It is basically an outsourcing contract: A company decides it cannot handle a certain job itself, so it outsources the work to another company — or an individual. Individuals on gyōmu itaku contracts are not considered rōdōsha (employees/workers) in the legal sense, and are thus not protected by the Labor Standards Law or most other labor laws. In that way, gyōmu itaku contracts differ greatly from employment or labor contracts (rōdō keiyaku).
So what are the differences between gyōmu itaku and rōdō contracts? Why do companies choose one over the other when they want work from an individual? The biggest reason they sign gyōmu itaku contracts with individuals is to avoid all the obligations employers have under the many labor laws that have been passed to protect workers.
In exploring the difference between the two types of contracts, let's start with how rōdōsha are defined in Article 9 of the Labor Standards Act: "In this Act, worker (rōdōsha) means one who is employed at an enterprise or office and receives wages therefrom, without regard to the kind of occupation."
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