Learning from the Case of Illegal Employment of Indian Nationals: The Critical Importance of Immigration Status Compliance for Companies Employing Foreign Workers

Introduction: Overview of the Illegal Employment Case Involving a Vegetable Processing Company in Saitama

In February 2026, a vegetable processing company located in Fukaya City, Saitama Prefecture, was reportedly raided by the Tokyo Metropolitan Police Department, and media reports indicate that the company president and the HR director were arrested.

Case Overview:

• Four Indian employees who entered Japan under the “Engineer/Specialist in Humanities/International Services” (ESHIIS; commonly known as “Gijinkoku” or 技人国) status of residence were reportedly arrested on suspicion of violations related to alleged fraudulent immigration applications
• They allegedly obtained their status of residence through fraudulent applications claiming they would “work for IT companies in Tokyo”
• In reality, they were reportedly engaged in manual labor at a vegetable processing plant
• Illegal employment may have been ongoing for over five years
• Approximately 100 employees reportedly resigned following the police action

This case contains extremely important lessons for companies employing foreign nationals. This article, from the perspective of an administrative scrivener (gyoseishoshi), provides a detailed analysis of the problems highlighted by this case and the measures companies should implement.

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1. Fundamentals of the Status of Residence System: What is ESHIIS?

Definition of Engineer/Specialist in Humanities/International Services (ESHIIS)

The “Engineer/Specialist in Humanities/International Services” status, commonly abbreviated as ESHIIS or referred to as “Gijinkoku” in Japanese, is one of the most common work-authorized statuses of residence for foreigners working in Japan.

Permitted Activities under ESHIIS:

Engineering Field

• Work requiring technical knowledge in natural sciences such as physics and engineering
• Systems engineer, programmer
• Mechanical design, electrical design
• Quality control (requiring specialized knowledge)

Humanities Field

• Work requiring knowledge in humanities and social sciences such as law, economics, and sociology
• Planning, sales, marketing
• Accounting, finance
• Legal affairs, human resources (specialized duties)

International Services Field

• Work requiring thought processes and sensibilities rooted in foreign culture
• Interpretation, translation
• Language instruction
• Design, international trade operations

Activities NOT Permitted under ESHIIS

Conversely, the following types of work are NOT permitted under the ESHIIS status of residence:

• Assembly line work at factories, manual labor in manufacturing settings
• Cleaning, security, construction site work
• Restaurant customer service, kitchen assistance
• Warehouse sorting, cargo transportation
• Cash register operations at convenience stores and supermarkets

Critical Point:

Status of residence eligibility is determined by the combination of “educational background” and “job duties.” Even university graduates cannot engage in manual labor.

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2. What Were the Problems in This Case?

Problem ①: Mismatch Between Status of Residence and Job Duties

The most fundamental issue was that Indian nationals who entered Japan under the ESHIIS status were reportedly engaged in manual labor at a vegetable processing plant.

Tasks such as vegetable cutting, packaging, boxing, and transportation do not require specialized knowledge or skills and therefore are not permitted under the ESHIIS status of residence.

Problem ②: Obtaining Status of Residence Through Allegedly Fraudulent Applications

The four employees allegedly obtained their status of residence through fraudulent applications claiming they would “work for IT companies in Tokyo.” If proven, this may constitute a violation of the Immigration Control and Refugee Recognition Act (ICRRA) and may carry criminal penalties.

Problem ③: Systematic and Habitual Structure of Illegal Employment

What is particularly serious about this case is that illegal employment may have been ongoing for over five years.

• Brokers in India allegedly received payments and assisted with fraudulent applications
• The Indian community in Japan (particularly those from Tamil Nadu state) reportedly shared information
• After arriving in Japan, individuals were allegedly directed to the company through acquaintance referrals
• This pathway became established, with numerous foreigners reportedly entering employment through the same route

This suggests not an isolated mistake, but rather that it had become a breeding ground for systematic illegal employment.

Problem ④: Lack of Corporate Management Systems

A company director reportedly explained that “it was left to the HR manager. I didn’t know about the illegal employment,” but this does not constitute legal grounds for exemption from liability.

Corporate officers and employers are generally expected to implement appropriate procedures to ensure immigration status compliance for foreign employees.

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3. What is the Crime of Promoting Illegal Employment? Legal Responsibilities of Companies

Immigration Control and Refugee Recognition Act (ICRRA) Article 73-2: Crime of Promoting Illegal Employment

Article 73-2 of the ICRRA provides for criminal penalties for those who promote illegal employment.

Conduct That May Constitute “Promoting Illegal Employment” (General Overview):

In general terms, liability may arise where a business knowingly causes, controls, or arranges for a foreign national to engage in unauthorized work. Specifically:

1. Those who, in connection with business activities, cause foreigners to engage in illegal employment activities
2. Those who place foreigners under their control for the purpose of having them engage in illegal employment activities
3. Those who, as a business, arrange for foreigners to engage in illegal employment activities or the acts described in item 2 above

Penalties:

• Imprisonment for not more than three years or a fine of not more than 3 million yen (or both)

Dual Punishment Provision (Corporate Vicarious Liability):

When a representative or employee of a corporation commits a violation, not only the perpetrator but also the corporation itself may be subject to a fine. This is known as the “dual punishment provision,” under which both individual and corporate liability may be imposed.

“I Didn’t Know” Is Not a Valid Defense

Under the ICRRA, whether the employer exercised appropriate due diligence is often a key issue in determining liability.

Cases Subject to Exemption (ICRRA Article 73-2, Paragraph 2):

Exemption from the crime of promoting illegal employment applies only when “due care” has been exercised to verify the foreigner’s status of residence.

What Constitutes “Due Care”:

• Verification of the residence card (front and back)
• Verification of the residence card’s expiration date
• Verification of the presence or absence of employment restrictions
• Checking for forgery or alteration of the residence card using official verification tools and/or IC chip reading methods where available

In other words, merely saying “I didn’t know” does not provide exemption; the question is whether appropriate verification procedures were conducted.

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4. Verifying Status of Residence: Practical Duties for Companies

Companies employing foreign nationals must thoroughly implement the following verification procedures.

Verification Items at the Time of Hiring

① Residence Card Verification

Front Side Verification Items:

• Name, date of birth, nationality/region
• Type of status of residence
• Period of stay, expiration date
• Presence or absence of employment restrictions

Back Side Verification Items:

• Presence or absence of permission to engage in activity other than that permitted
• Residence card number
• Date of issuance

② Verification of Employment Restrictions

Verify the “Presence or Absence of Employment Restrictions” field on the front of the residence card:

• “No employment restrictions” → Any type of work is permitted (Permanent Resident, Long-Term Resident, etc.)
• “No employment permitted” → Employment is not permitted in principle (Student, Dependent, etc. However, with permission for activities outside status of qualification, up to 28 hours per week is permitted)
• “Employment only permitted under status of residence” → Only work within the scope permitted by that status of residence is allowed (ESHIIS, Skilled Labor, etc.)
• “Only individually designated employment content permitted” → Only the specified content is permitted (Designated Activities, etc.)

③ Authenticity Verification of Residence Card

Because counterfeit residence cards have been circulating in recent years, verify using the following methods:

• Check on the Immigration Services Agency’s “Residence Card Number Invalidation Information Inquiry” website
• Use official verification tools and/or IC chip reading methods where available
• Visual inspection of anti-counterfeiting technology on the card surface (hologram, micro-printing, etc.)

Regular Verification During Employment

Regular verification is necessary not only at the time of hiring but also during employment.

① Verification of Period of Stay Renewal

Verify that employees are undergoing procedures to renew their period of stay before the expiration date.

• Renewal applications are possible from three months before the expiration date
• During a grace period while a renewal application is pending (subject to applicable rules), legal residence and employment may continue even beyond the original expiration date
• However, if renewal is denied, employment immediately becomes impermissible

② Verification When Changing Job Duties

When changing an employee’s job duties, verification is necessary to ensure that the duties are permitted under their status of residence.

Examples:

• Transferring an employee hired for sales under ESHIIS to factory line work → Not permitted
• Transferring an employee hired as an interpreter under ESHIIS to accounting duties → Permitted depending on conditions (depends on educational background and work history)

③ Utilization of Certificate of Authorized Employment

The “Certificate of Authorized Employment” is a system that allows pre-verification, through application to immigration authorities, of whether a foreigner can engage in specific duties.

Benefits:

• Immigration authorities conduct advance review of whether job duties conform to the status of residence
• Serves as evidence of the company’s compliance framework
• Facilitates smoother review when renewing the period of stay

Application Timing:

• At the time of hiring
• When changing job duties
• When changing status of residence

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5. Options for Employing Foreign Nationals in Manufacturing

As in this case, when companies in manufacturing wish to employ foreign nationals, they need to consider statuses of residence other than ESHIIS.

① Specified Skilled Worker

A status of residence created in 2019 that permits manual labor in fields experiencing severe labor shortages.

Specified Skilled Worker (i) (Manufacturing-Related):

• Manufacturing of materials, industrial machinery, electric and electronic information-related products
• Food and beverage manufacturing

Requirements:

• Passing skills test and Japanese language test
• Or successful completion of Technical Intern Training (ii)

Characteristics:

• Period of stay: Up to five years in total
• Family accompaniment: Not permitted

② Technical Intern Training

A system aimed at transferring skills to developing countries.

Occupations:

• Food manufacturing (canned food production, poultry processing, etc.)
• Numerous other manufacturing occupations

Characteristics:

• Maximum five years (Category (i): 1 year, Category (ii): 2 years, Category (iii): 2 years)
• Acceptance typically through supervising organizations
• Limited to occupations and tasks based on the training plan

③ Status-Based Categories with No Work Restrictions

Foreign nationals with the following statuses of residence have no employment restrictions and can engage in any type of work:

• Permanent Resident
• Spouse or Child of Japanese National
• Spouse or Child of Permanent Resident
• Long-Term Resident

Important Note: Even when employing foreign nationals with status-based categories, residence card verification is mandatory. Do not forget to manage expiration dates.

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6. Risks of Employment Through Brokers

In this case, brokers in India were allegedly involved. Here are important considerations when using recruitment agencies or brokers.

Characteristics of Unscrupulous Brokers

• Provide false explanations such as “can work in any industry”
• Do not verify consistency between status of residence type and job duties
• Collect high fees from foreign nationals before their arrival in Japan
• Instruct on fraudulent applications

How to Identify Proper Recruitment Agencies

• Possess a license number for fee-charging employment placement services
• Have accurate knowledge about statuses of residence
• Provide support for creating employment contracts and notification of working conditions
• Conduct application procedures to immigration in cooperation with administrative scriveners

What Companies Should Verify

Even when using recruitment agencies or brokers, the ultimate responsibility rests with the employing company.

• Always verify the residence cards of referred foreign nationals in-house
• Make independent judgments about whether job duties and status of residence match
• If uncertain, consult with specialists such as administrative scriveners

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7. Foreign Communities and Information-Sharing Mechanisms

In this case, it is reported that Indians from Tamil Nadu state shared information through local connections and gathered at the company.

Role of Foreign Communities

Foreign nationals living in Japan form communities with people of the same nationality and regional origin and share information. This is a natural phenomenon and in most cases stems from a spirit of mutual assistance.

However, it can also become a breeding ground for illegal employment:

• Incorrect information spreads, such as “this company doesn’t care about status of residence”
• Brokers operate covertly within communities
• Know-how for fraudulent applications is shared

Measures Companies Should Take

• Promote correct understanding of the status of residence system among foreign employees
• Conduct regular training sessions and briefings
• Distribute pamphlets and explanatory materials in native languages
• Establish consultation services

When employees themselves understand that their company practices proper employment, it prevents the spread of inaccurate information.

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8. Impact on Companies Following Enforcement Action

In this case, approximately 100 employees reportedly resigned following the enforcement action. What kind of impact does a company face when illegal employment is discovered?

① Criminal Liability

• Arrest and prosecution of management and HR personnel
• Imprisonment or fines
• Fines imposed on the corporation

② Administrative Sanctions

• Guidance and warnings from immigration authorities
• Future visa applications become more difficult to approve
• Negative impact on period of stay renewals for existing foreign employees

③ Social Impact

• Public disclosure of company name, media coverage
• Loss of credibility with business partners, contract cancellations
• Negative impact on new recruitment
• Mass employee resignations

④ Business Impact

• Suspension or reduction of operations
• Decreased sales
• Difficulty securing human resources
• Risk of damage compensation claims

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9. Measures to Begin Immediately: Establishing a Compliance Framework

So what kind of framework should companies employing foreign nationals establish?

① Establishing a Status of Residence Management System

Clarification of Personnel Responsible:

• Clearly designate the person responsible for foreign employee management
• Involve not only the HR department but also executive management

Mechanism for Regular Verification:

• Conduct periodic checks (e.g., monthly or quarterly, depending on workforce size and risk level)
• List employees whose period of stay is approaching expiration
• Manage progress of renewal applications

Record Retention:

• Copies of residence cards
• Employment contracts, notification of working conditions
• Records of verification activities (when, who, what was verified)

② Implementation of In-House Training

Training for Executive Management:

• Basic knowledge of the ICRRA
• Risks of the crime of promoting illegal employment
• Corporate legal responsibilities

Training for HR Personnel:

• How to read residence cards
• Correspondence between types of status of residence and job duties
• Practical verification procedures

Training for On-Site Supervisors:

• How to give instructions to foreign employees
• Points to note when changing job duties

③ Utilization of Specialists

Administrative Scriveners:

• Status of residence eligibility assessment
• Agency application for Certificate of Authorized Employment
• Agency application for period of stay renewal and status of residence change
• Support for establishing in-house compliance frameworks

Attorneys:

• Review of employment contracts and work rules
• Response in the event of enforcement action

Labor and Social Security Attorneys:

• Proper management of working conditions and social insurance
• Labor management of foreign employees

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10. To Foreign Residents in Japan: Understand Your Status of Residence

An important message to foreign residents in Japan reading this article.

Check Your Status of Residence

Look at your residence card and verify the following:

• What type of status of residence do you have?
• When is your expiration date?
• What does the “Presence or Absence of Employment Restrictions” field say?

Jobs You Can Do, Jobs You Cannot Do

Depending on your status of residence, there are jobs you can do and jobs you cannot do.

In the case of ESHIIS (Gijinkoku):

• Office work, sales, interpretation, engineering, etc. → ✓ Permitted
• Factory line work, cleaning, manual labor → ✗ Not permitted

If your status of residence and actual job duties do not match, you yourself may be held liable.

Beware of Brokers

Do not be deceived by sweet words such as “visas are easy to get” or “you can do any kind of work.”

Consequences of fraudulent applications:

• Revocation of status of residence
• Deportation (unable to enter Japan for the next 5 or 10 years)
• Criminal penalties

Seek Consultation When in Trouble

• Immigration Services Agency consultation services
• Foreign Residents Support Center (FRESC)
• Administrative scriveners (visa specialists)
• Support organizations offering consultation in native languages

Do not suffer alone—always consult with specialists.

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11. Conclusion: Proper Employment of Foreign Nationals Protects Companies

This case involving the Saitama vegetable processing company clearly demonstrates that excuses such as “I didn’t know” or “I left it to others” do not hold in foreign employment matters.

What Corporate Management Should Know

• Matching status of residence with job duties is a legal obligation of companies
• The crime of promoting illegal employment is a criminal offense; management themselves may be arrested
• If subject to enforcement action, companies face serious damage affecting their survival
• Establishing regular verification systems is indispensable

What Foreign Residents in Japan Should Know

• Correctly understand what you can do under your status of residence
• Do not be deceived by brokers’ sweet words
• Consult specialists when in trouble

For Proper Employment of Foreign Nationals

Foreign talent is indispensable to the growth of Japanese companies. As labor shortages become more severe, relying on the capabilities of foreign talent will become increasingly important.

However, this presupposes “proper employment.”

By correctly understanding the status of residence system and establishing appropriate management frameworks, both foreign employees and companies are protected.

If you have any concerns whatsoever, please consult a specialist first.