[2024 Legislative Changes] Could Income for Sole Proprietors and Freelancers Plummet? An Explanation of Key Changes and Points to Note in the Occupational Safety and Health Act

In April 2024, amendments to the Industrial Safety and Health Act imposed a “duty of care equivalent to that for employees” on companies toward sole proprietors and freelancers.
At first glance, this may seem like a “good law that protects freelancers,” but in reality, it could have serious consequences, such as reduced income, contract terminations, and restrictions on working styles.

In this article, we will clearly explain the key points that freelancers absolutely must know.

Background of the Legal Amendment: The Increasing “Employee-ization” of Freelancers

Until now, the fundamental principle for freelancers has been “personal responsibility and self-management.”
However, in recent years, issues such as coercive relationships with large corporations, the imposition of excessive workloads, and an increase in mental health problems have become social concerns, leading the government to determine that freelancers should also be protected.
As a result, this legal amendment imposes the following obligations on companies.

Main Obligations Imposed on Companies by the Amendment

① Prohibition of Excessive Workloads

Just as with employees, companies are prohibited from assigning work that places an excessive burden on freelancers.

Example:

• Requests that assume work will be done late at night
• Projects with clearly unrealistic deadlines
• Unreasonable demands made in situations where it’s hard to say no

These actions could be deemed power harassment.

② Obligation to Provide Advance Explanations and Training for Hazardous Work

For work involving risks, such as on-site operations, companies are now required to explain the hazards to freelancers, instruct them on safety procedures, and provide necessary training.

③ Consideration for Mental Health

Starting in 2028, the requirement for stress checks will be expanded to include companies with fewer than 50 employees.
This may also affect relationships with freelancers.

Here’s where the problem lies: a conflict with tax regulations

Labor Affairs

“Treat freelancers the same as employees”

Tax Authorities

“Make a clear distinction between freelancers and employees”
These diametrically opposed demands are causing confusion for companies.
If a company provides freelancers with the same training, management systems, and work instructions as employees, there is a risk that the tax office will say,

“That is effectively an employee. We will tax this as salary, not as freelance compensation.”

In other words, a contradiction has arisen: companies cannot treat freelancers as employees, yet the law requires them to be treated on par with employees.

What will be the result? → Freelancers’ income may decrease

To avoid this risk, companies may begin taking the following actions:

① Reduce the volume of outsourced work

“If we assign too much work, it could be considered workplace harassment.”
“If we provide training, they’ll be treated as employees.”
→ As a result, more companies will refrain from placing orders.

② Late-night work and projects with tight deadlines will disappear

It will become difficult to request late-night work, same-day delivery, and high-paying urgent projects—which were key sources of income for freelancers.

③ Those who “want to earn more” will be at a disadvantage

Freelancers who want to “work a lot” or “earn money on tight deadlines” will be the most restricted by this legal revision.
Measures freelancers should take immediately

① Be sure to check your contract for services

• Scope of Services
• Scope of Responsibilities
• Delivery Schedule
• Contact Information
• Terms of Contract Termination

If these points are vague, you will be at a disadvantage if a dispute arises.
If necessary, you should have a lawyer or judicial scrivener review the documents.

② Avoid creating a “relationship where you can’t say no”

• Becoming dependent on low unit prices
• Being unable to refuse unreasonable requests
• Allowing the client to take the lead

This type of relationship is the most vulnerable under the recent legal revisions.

③ Do not ignore mental health issues

Since companies are now held accountable, pushing yourself to work despite mental health issues actually becomes a risk.

④ Diversify Your Income Streams

With these legal changes,
“freelancers working exclusively for a single company” are in the most precarious position.
By working with multiple clients, you can minimize the risk of contract termination and the impact of legal changes.

What Companies Need to Do: “Rebuild Relationships”

Ultimately, relationships matter more than contracts.

• Express gratitude
• Don’t make unreasonable demands
• Understand the other person’s situation
• Build an equal relationship

With this approach, disputes arising from companies using the law as a shield will become less likely.

Summary: The start of an era where legal reforms not only “protect” but also “restrict”

While the recent amendments to the Occupational Safety and Health Act are intended to protect freelancers, they also have the potential to limit freedom in how people work and cap their income.

Freelancers are protected

→ Unreasonable demands from companies will decrease

However

→ Companies will hold back on placing orders

→ Late-night and short-deadline projects will disappear

→ Income may decrease

We are entering an era where it is necessary to understand this duality and reevaluate contracts, work styles, and professional relationships.