The Labor Standards Act provides 6 exclusive causes for layoff (or termination of loar contract), including “suspension of business”, “transfer of business”, “operating losses”, “business contraction”, “temporary suspension of businesss due to majeures for more than a month”, and “change in business nature”. Court decisions have been setting up rules to narrow down these causes, and scholars have also built up some theories (such as the principle of ultima ratio). These rules or theories, though based on different premises, presented in different methodologies and reasoning, can be deducted into 4 elements, which are “necessity to reduce workforce”, “impossibility of transfer”,“fair selecting of the dismissed” and “due process of dismissal”. This thesis will also investigated the Janpanese case law ”SeiriKaikou Houri”, comparing it with the layoff regulation in Taiwan. Finally, this thesis will conclude the elements found and hints from Japanese law into 3 criterion to check the legality of layoff.