This article is written by a Japanese local.
When onboarding foreign employees, an issue that requires just as much vigilance as the initial “contracting” is the trouble that occurs during “cancellation” upon returning home or resigning. Particularly with mobile phone contracts, there is a never-ending stream of cases where employees suddenly return to their home countries leaving behind unpaid bills and massive cancellation fees.
While the Japanese telecommunications industry has improved due to legal reforms, opaque “de facto bindings” still exist for foreigners. HR managers must guide employees toward carrier selections that completely eliminate exit risks right at the point of entry. This article explains the objective criteria for selecting a telecom carrier to avoid leaving any financial risks behind.
1. The Trap of “De Facto Bindings” Remaining After Legal Reforms
[Summary] While massive cancellation penalties were largely abolished by law, “device installment payments (remaining balances)” act as a de facto lock-in for cancellations.
The notorious “2-year binding” (a system that charged a penalty of around 10,000 JPY if canceled outside the renewal month) once common in the Japanese market has generally been abolished or capped at around 1,000 JPY due to amendments to the Telecommunications Business Act.
However, when contracting at major carrier shops, customers are frequently persuaded to sign a “48-month (4-year) installment plan for the latest smartphone” bundled with their plan. Even if the communication plan itself can be canceled anytime for free, the remaining balance of the device installment will either be billed as a “lump sum” upon cancellation or must continue to be paid even after returning home. This heavily weighs on foreign employees as a “de facto binding (high move-out cost)” and becomes a source of trouble.
2. The “Three Absolute Criteria” for Selecting a Carrier for Foreigners
[Summary] Have employees secure their own devices and select an MVNO with no minimum contract periods that allows complete cancellation via “Web and English.”
To save HR the hassle of handling proxy procedures and to avoid unpaid risks upon return, establish internal guidelines restricting initial communication contracts to “MVNOs (Low-Cost SIMs)” that fully meet the following three criteria:
- Criterion 1: Contract a “SIM-only” plan, not a device bundle
To eliminate the risk of residual debt from device installments, have employees bring their own smartphones from their home countries or purchase them outright locally, and contract only the SIM card (communication plan) with the provider. - Criterion 2: “Absolute Zero” minimum usage periods and cancellation fees
Choose a plan that has no special clauses like “Cancellation within 1 year incurs a penalty of XX yen.” This allows for penalty-free cancellation even if an employee must suddenly return home after a short-term project of a few months. - Criterion 3: Same-day cancellation via a “Web-based My Page (Multilingual)”
Some major Japanese carriers require “phone retention tactics” or “visits to physical stores” to cancel. Navigating a phone call in Japanese during the hectic period just before returning home is impossible. Select a rational operator where cancellation is completed with a single button press from a personalized web page.
3. The “Final Defense” Provided by Credit Card Payments
[Summary] Selecting a carrier that accepts overseas credit cards reliably prevents the unpaid billing of the “final month” after returning home.
If telecom bills are paid via Japanese bank direct debit, and the employee closes their bank account in conjunction with their return home, the “cancellation month’s telecom bill”—which is billed one month late—cannot be deducted, resulting in an unpaid status.
To prevent this, it is crucial from the moment of entry to select an MVNO that accepts payments via “overseas-issued credit cards.” With credit card payments, even after the employee leaves Japan and closes their domestic bank account, the final month’s fee is reliably charged to their home country’s card account, completely shutting out the risk of leaving debt in Japan.
4. Practical Q&A (Cancellation Procedures HR Should Guide)
[Summary] Answers questions regarding the obligation to physically return SIM cards after cancellation and how to use data right up to the airport gate.
Q. What should be done with the physical SIM card after canceling the MVNO?
A. It varies by operator. Many MVNOs stipulate that “the SIM card is loaned property and must be returned by mail to a designated address after cancellation,” and failing to return it may incur a penalty of around 3,000 JPY. Practically, it is smoothest to advise them to drop it in an airport mailbox upon departure, or to select an operator that does not require returns (allowing the user to cut it with scissors and dispose of it). *Note: If using an eSIM, no physical return is necessary.*
Q. I want to use my data right up until I board the plane on the day I return home. Is this possible?
A. Yes, if you use an MVNO that allows immediate web cancellation. By connecting to Wi-Fi at the airport boarding gate and pressing the “Cancel” button on your My Page, you can maintain your communication environment until the very last minute before leaving the country. This operation is impossible with carriers that require in-store cancellations.
Conclusion: Eliminate “Exit Friction” at the Contract’s Entry Point
In mobile phone contracts for foreign employees, “saving a few hundred yen on monthly fees” or “getting a device discount” are not fundamental benefits. The greatest defense for both the individual and the company is the “lack of exit friction”—the ability to smoothly liquidate the contract with zero penalty entirely online when a sudden return or transfer occurs. HR managers must strictly guide the initial setup of communication environments based on these objective criteria.