When Toshiyuki Sakai was assigned to a desk in a windowless room at head office, with no outside telephone line and no work to do, he knew that his days with Sega Enterprises, the video-game maker, were numbered.

Workers were sent to this room - officially called the "persona room" but known to employees as the "company jail" - when Sega had no further need for them and wanted them to quit, according to Mr Sakai, a 35-year-old quality controller. A week or two idling in the room was enough to persuade most people to accept "voluntary" retirement.

However, Mr Sakai endured three months of "solitary" as he calls it, until Sega finally fired him in March for "insufficient work ability". He is suing the company for unfair dismissal.

Though news reports of these tactics surprised many Japanese, Mr Sakai's experience was hardly unique. Until a few years ago, most big Japanese companies shied away from making employees redundant. The so-called "jobs-for-life" system, rewarding loyalty with security, was sacrosanct. But the world's second largest economy is undergoing a quiet and painful social transformation. Recession, falling profits and the struggle to remain globally competitive are forcing corporate Japan to rethink the tradition of employment for life. More and more big companies are biting the bullet, "restructuring" and cutting payrolls, making Western investors happy but driving up unemployment. The latest unemployment figure of 4.9 per cent is a post-war record.

For the Japanese worker, being cast out of the company womb is traumatic, all the more so as there is little scope for changing jobs in mid-career and no provision for the long-term unemployed. The methods used to get workers to leave the company of their own accord often border on harassment. Typically, unwanted employees are deprived of job title, desk and dignity - and Japan's docile "house unions" accept such abuses.

Munehiro Umemura, a Sega spokesman, acknowledged that seven employees sent to the "persona rooms" - there are three in all - had quit, adding: "But most of them had already decided to leave anyway… The media has reported the rooms as if they were company jails. Sega has never done anything to drive those in the rooms to leave the company".

While others are hunting for a new job, Mr Sakai has taken Sega to court, bitter at the way he was treated by a company to which he devoted nine years of his life. "It was really like an isolation ward", he said. "When the personnel department ordered me to spend the whole day there, I was close to tears, thinking of all I'd done for the company."