Vol.39-No.12 December 1, 2000
In September 2000 the Supreme Court handed down decisions in several cases concerning changes in work rules which were seen as being disadvantageous to employees.
When working conditions are modified to the detriment of employees by changing provisions in work rules, legal questions arise as to whether the changed work rule can have a binding effect as reasonable. Legal opinion in these cases is based on a comprehensive assessment of a number of factors which might affect the balance between (i) the necessity for firms to change their work rules (the highest degree of necessity is required in the case of changes involving important working conditions such as wages and working hours) and (ii) the disadvantage imposed on employees. The social appropriateness of the changed work rule is also considered, along with discussions which may have occurred between the labor union(s) involved and the employer and the processes which were followed in reaching the decision to change the working conditions. This approach to such matters has been established by and modeled on Supreme Court precedents in similar cases in the past.
All three of the recent cases involved financial firms which had found it necessary to reorganize their personnel management systems so they could remain competitive in their sector. The proposed changes involved wages, working hours and the adoption of the complete five-day workweek system required by recent revisions to the banking laws.
In the cases involving the Ugo Bank and the Hakodate Credit Bank the Supreme Court's decisions concerned changes to working hours. In both cases, the employees lost their cases in the District Court, won on an appeal in the High Court, then ended up losing in the Supreme Court. In the Ugo Bank case, the issue concerned whether it was reasonable to change work rules by adding on a 60-minute extension to working hours from the 25th to the end of every month. In the Hakodate Credit Bank case, the dispute was over a 25-minute extension to working hours every weekday. The Supreme Court ruled that the changes in work rules may have been unfavorable to the employees but that they were reasonable enough for several reasons.
First, although the extension of working hours would disadvantage employees, actual scheduled working hours per week, or per year, either decreased (in the Ugo Bank case) or remained roughly the same (in the Hakodate Credit Bank case). Moreover, employees benefited from an increase in holidays, so that all in all the actual disadvantage to employees was not seen as being unnecessarily large. Second, unless wages are adjusted, it is basically understandable that a company would seek an extension to working hours to make up for a reduction in total working hours due to the introduction of the complete five-day week system. Since both banks offered relatively shorter working hours, they needed to change work rules to maintain their competitiveness in the market. Third, the extensions to working hours were not seen as long by Japanese standards, or as compared with the situation in other banks. In other words, the extended working hours were considered to fall within a socially acceptable range. Fourth, although the minority labor unions, including the plaintiffs, strongly opposed the changed work rules, and there was insufficient discussion between labor and management, the court found that the changes in rules were reasonable enough.
The Supreme Court also ruled on the Michinoku Bank case concerning modifications to the bank's personnel system (which resulted in the transfer of employees aged 55 and over to “special” posts under a system of mandatory retirement at age 60 and subsequently in a large reduction in the wages and retirement allowances paid to such employees). In this case, the employees partially won in the District Court, lost in the High Court, then gained a favorable decision from the Supreme Court which returned the case to the High Court based on the following reasoning.
First, it ruled that, owing to the aging of its employees, its weak business management, and the need to compete with other banks, the appellee (who was the bank), had a strong need to change its work rules in order to reform its organization and to reduce wage costs. However, the reduction in the wage of the appellant and other employees involved would bring their wage level down to only 40-50 percent of the standard wage level they ought to receive. The bank's alternative offer to its employees was not enough to make up for the reduction in wages which was seen as most seriously disadvantaging the appellant. The wages of the appellant and others after the changes to work rules were implemented would not be considered to be exceptionally high if the age of the employees, the size of the company, and its overall wage system were taken into account. The change in the wage system would improve the working conditions of many employees, but it would also shift all of the burden for curbing wage costs to the elderly employees whose wages would be reduced. This shifted burden was seen as creating a substantial disadvantage for the employees in question. Although the firm may have taken measures to ease some of the disadvantage those workers faced, the effect was not seen as being sufficient. Accordingly, the court ruled that the alteration to work rules was not reasonable. Finally, although the labor union organizing some 73 percent of the bank's employees had agreed to the changes in work rules, the court ruled that it is not appropriate to regard the opinion of labor unions as a major factor when judging the reasonableness of changes in wage systems.
It would seem that the circumstances behind the changes in work rules in the Ugo Bank and the Hakodate Credit Bank cases made them relatively easy to justify. On the other hand, the Michinoku Bank case pointed to the need to consider carefully how changes might affect all employees before the change can be judged to be reasonable. The court's judgement in this case will draw wide attention, and will result in a more careful consideration of how elderly workers should be utilized and treated. For that reason it will be a significant ruling in terms of future employment policies and labor-management relations. In this sense, the Supreme Court's decision in the Michinoku Bank case can be expected to have a considerable effect on employers' decision-making and on government policies.
Since February 1999 Nikkeiren (Japan Federation of Employers' Associations) has, in cooperation with the Ministry of Labour, been involved in the Employment Stabilization Scheme for Disabled People. The scheme encourages disabled people to find employment by providing a period of workplace training before actual employment. Nikkeiren recently announced that the scheme has produced fairly good results.
The scheme, entrusted to Nikkeiren by the Ministry of Labour, was launched to give disabled people temporary and short-term job opportunities which could lead to full-time employment. Under the scheme, firms, chiefly large business establishments, accept disabled workers for a month to give them on-the-job training. The firms also employ those who have completed the training on a trial basis over a three-month period.
The scheme is intended for disabled people who have registered as job-seekers at the Public Employment Security Offices. Coordinators at the Nikkeiren Emergency Support Center for the Employment Promotion of the Disabled and at other institutes look for business employers who wish to join the scheme. Subsidies for on-the-job training are given: ¥23,900 per trainee per month to business establishments and ¥116,700 per month to the trainees. In addition, companies which have accepted disabled workers on a trial basis are subsidized up to ¥59,000 per worker per month.
As of September 18, 2000, 3,631 business establishments throughout the 47 administrative districts of the country have asked that 5,167 places be filled by trainees, and 4,025 workers have participated in on-the-job training; 3,622 trainees have completed their program. Of those completing the program, 2,896 have been taken up as employees on a trial basis, and 1,990 have already completed this trial employment. Disabled workers who have obtained actual employment contracts totalled 1,679. The figures show that 80 percent of participants in the trainee scheme have actually gone on to trial employment, while 84.4 percent of those who completed their trial employment have actually been employed. These figures indicate the extent to which the scheme has achieved the goals set.
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