Revised Labor Standards Law enacted

In previous issues, we have described how the outcome of the government -proposed revisions to the Labor Standards Law was drawing strong interest because of the big differences in the views taken by labor and management concerning the clear-cut stipulation of dismissal rules. A bill to revise this law was passed on June 27 at the plenary session of the Upper House, with the ruling and opposition parties--with the exception of the Social Democratic Party and the Communist Party--supporting the bill. Prior to this, the Lower House decided to delete the phrase included in the government's original draft, "Employers can dismiss workers…" and modified the rules on the maximum employment period of three years by approving, in the bylaw, the freedom of retiremen of workers who had concluded their labor contract more than 12 monthts previously.

There were three main revisions.
(1) Legislation of the doctrine on the abuse of the right of dismissal, and inclusion of "reason for dismissal" as an item that must be inserted in office regulations
(2) Extension of the duration of maximum terminable labor contract from one year to three years in principle
(3) Expansion of sites of business to which the discretionary labor system (the system of paying wages not by hours of work but in accordance with performance and/or professional duties) for planning/analysis/survey work applies, and simplification of the system's application procedure

By far the most important of all the revisions made is the stipulation (Article 18-2) that "if a company dismisses an employee without a specific objective and a rational reason, and if such dismissal is recognized to be inappropriate in light of socially accepted views and practices, the company shall be regarded as having abused its rights, and such dismissal shall be invalidated." The doctrine on the abuse of the right of dismissal--that had been established in actual court practice since the Supreme Court ruling in 1975--has therefore been written into law.

The labor side, including the Japanese Trade Union Confederation (Rengo) and the National Confederation of Trade Unions (Zenroren), hailed the revision as an important achievement, fundamentally revising the dismissal rules and the reasons for dismissing terminable contract employees, as well as giving concrete shape to judicial precedents. However, they criticized the extension of the maximum terminable contract period.

The Labour Lawyers Association of Japan also objected to the introduction of revisions, particularly with respect to terminable employment, discretionary labor system for planning/analysis/survey work, and temporary staffing work, explaining that they relaxed the regulations of the existing law and constituted a setback to worker protection.

The revised law is planned to be enforced by January 2004 at the latest. The new law, together with the revised Labor Dispatch Law enacted prior to this in June 2003, will most likely step up moves to diversify styles of employment and encourage labor mobility.

Needless to say, these moves to amend various laws began when the government's Council for Comprehensive Regulatory Reform made a proposal in December 2001 to "make diversified work styles possible."

Of course, it remains to be seen how these laws will influence Japanese people’s work and styles of work. One thing is certain, however: if realization of equal treatment is delayed, corporate managers are likely to find it difficult to resist the temptation to cut their full-time workers and hire non-regular workers as a cheaper labor force. If this happens, workers would inevitably be driven into an even more difficult situation than what they are now experiencing.