Japan's Subcontract Act became the "Toritekiho" in January 2026

The short answer

On 1 January 2026 Japan's Act against Delay in Payment of Subcontract Proceeds — the Subcontract Act — became the Toritekiho. This is not only a change of name. Headcount joins capital as a test of who is covered, so companies that used to be outside the law are now inside it. Paying by promissory note is prohibited, and so is setting a price without engaging in the discussion the other side asked for. If you place orders and have not yet reviewed them, check three things soon: your order form, how you pay, and how you handle a request to talk about price.

The name and the words change

The formal title is long; the short name everyone uses is Toritekiho. The parties are renamed as well.

Wherever your templates and internal guides say "subcontract", they now need different wording. The related promotion act is renamed too.

Whether your company is covered

Coverage depends on two things: the kind of transaction, and capital or headcount. The Fair Trade Commission's leaflet sets out the pairs below; meeting any one pair brings the transaction inside the law.

For manufacturing, repair, specified transport, and for commissions to write programs, to transport, to store goods in a warehouse or to process information:

For other commissions to create information-based deliverables or to provide services, 300 million yen becomes 50 million yen and 300 employees becomes 100.

What the headcount test changes

Until now only capital mattered. Take a company with 10 million yen of capital and 150 staff that commissions service work from a company with 10 million yen of capital and 80 staff. The capital figures are identical, so no capital pair applied and the transaction fell outside the law. Since January the headcount pair — more than 100 on the ordering side, 100 or fewer on the supplying side — brings it inside. The firms most affected are the ones that grew their staff without ever raising their capital.

The Commission's Q&A says part-timers and casual staff count, and that the number is judged as the regular workforce at the time the work was commissioned.

Four duties for the side that orders

The reform also drops the requirement to obtain the other side's consent before sending order details by email. Paper is no longer the default. However, if the other side asks for a paper copy after receiving the details electronically, a paper copy must in principle be provided. What has not changed is the need for the sending to leave a record.

Eleven things you may not do

Refusing receipt; paying late; reducing the agreed amount; returning goods; setting an unreasonably low price; forcing purchases or use; retaliating; demanding early settlement for materials you supplied; demanding money or services for your own benefit; changing or redoing the work unfairly; and deciding the price without the discussion that was asked for. The last one is new.

The ban on promissory notes

Late payment now includes using a promissory note as the means of payment. Electronic monetary claims and similar instruments are caught too, where they make it hard to receive the full amount by the payment date. Where a long payment cycle has been held together by notes, the method itself has to change.

Price talks you cannot refuse

When materials or labour cost more, and the supplier asks to discuss the price, refusing to engage — or deciding the amount without giving the explanation asked for — is prohibited. The Commission's Q&A says what matters is whether a genuine discussion took place. Answering "hold the current price, please" and closing the matter no longer reads well in a record.

Where to start

If you place orders, work through this in order.

1. List the capital and headcount of your company and of each supplier, and mark which transactions are covered
2. Check that your order form carries the deliverable, the amount, the payment date and the payment method
3. Check that payment falls within 60 days of receipt, and that no promissory notes or similar instruments are in use
4. Decide who receives a price request, by when they reply, and what they explain
5. Keep every order-to-payment record retrievable for two years

If you take orders, check the first two points from your side, and prepare to bring evidence — the change in your own costs — when you ask to discuss price. What you asked for and what came back is the record that counts.

Point 5 is really about being able to find a document. Can you pull up an order, a delivery note or an invoice by supplier and date? It is the same ground as keeping electronic transaction records, and e-file is built for it, though it is still in preparation.

Commissioning an individual is a different law

Work given to individuals falls under the Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators, in force since 1 November 2024. It draws no line by capital or headcount: what matters is that the other side is an individual working without employees. Some transactions may fall under both laws; check the Fair Trade Commission's materials for how they apply in that case. "We are not covered by the Subcontract Act" is not the end of the question.

In short

Since 1 January 2026 the Subcontract Act has been the Toritekiho. The names change, headcount joins the coverage test, promissory notes are out, and prices set without discussion are prohibited. If you order: review the order form, the payment method and the price-discussion procedure, soon if you have not yet. If you supply: check whether you are covered, and get ready to ask. Either way, the thing that pays off most is being able to produce the record of what was agreed.