The purpose of this study is to investigate:(1) to what extent the Japanese employment practices such as lifetime employment and seniority-based personnel management systems are practiced among small-and medium-sized enterprises (SMEs), and (2) how employment practices in SMEs will evolve faced with the present transitional period in the Japanese industrial society. The results, based on sample of 638 employees and 252 employers, revealed that at the present stage both SME employees and employers had the intention to maintain lifetime employment despite the high mobility labor market surrounding SMEs, while they did not give much support to the seniority systems as a whole. Moreover, the results also suggested that the different type of employment practices might be undertaken depending on the firm size, industry and business conditions among SMEs.