JILPT Research Eye
Evidence-Based Debate on Dismissal Regulation

November 12, 2014
(Originally published on June 9th, 2014 in Japanese)



Research Director, Department of Industrial Relations

Between FY2009 and FY2011, the Department of Industrial Relations of the Japan Institute for Labour Policy and Training (JILPT) conducted “Analysis on the Content of Cases Processed in Individual Labour Disputes” as a project research. Specifically, cases of conciliation brought to Prefectural Labour Bureaus on individual labour disputes related to dismissal, bullying, and others were analyzed in detail and compiled in a report. One motivation for starting this research was my intellectual curiosity, wanting to know the content of unpublished conciliation cases. However, another important driving factor was a following statement in the “Three-Year Program for Promoting Regulatory Reform (2nd revision)” decided by the Cabinet in March 2009: “As it is one of the regulatory mechanisms surrounding Japan’s labour market, dismissal regulation will be analyzed as far as possible using methods that can withstand scholarly scrutiny, referring to empirical research, economic theory and others. The results will be fully disclosed to the public and reflected in the approach to dismissal regulation.” In response to this, the Labour Standards Bureau of the Ministry of Health, Labour and Welfare requested JILPT to conduct empirical research on the role played by dismissal regulation in the real world, “without bias towards economic theory but rooted in actual realities.” As a result, we started this research.

The research analyzed 1,144 cases of conciliation received by four Labour Bureaus in FY2008, which painted a realistic picture of individual labour disputes related to dismissal and other issues actually occurring in Japanese workplaces today through statistical and content analyses. The results have already been published as “Content Analysis of Individual Labour Dispute Resolution Cases: Termination, Bullying/Harassment, Lowering Working Conditions, and Tripartite Labour Relationships” (June 2010), “Content Analysis of Individual Labour Dispute Resolution Cases II: Quasi-dismissals, Mental Health Problems, Job Transfers, Probationary Periods, and Claims for Compensation against Workers” (March 2011), and “Termination of Employment in Japan” (March 2012).

In Japan today, as regards termination of employment in the form of dismissal, suggestion of termination and non-renewal of contracts, there were only an extremely small number of cases (recently about 1,600 cases per year) brought to courts of law, and the content of these cases remains unknown unless a judgment is made. Every year, 100,000 cases of consultation on termination of employment are taken to Labour Bureaus all over the country. By analyzing conciliation documents that record the details of these cases, it may be possible to approximate their realities to a certain extent. Beside, Labour tribunals held in courts exist as an intermediate system between these two (litigation and conciliation), and the results of a survey on these, conducted by the Institute of Social Science, the University of Tokyo, were published in 2011. In the following paragraphs, I will take a general review of the analysis of conciliation including a comparison with their survey results.

Firstly, classifying these 1,144 cases of conciliation by workers’ employment status, just over half (51%) involved regular employees, about 30% involved directly-hired non-regular employees, and slightly over 10% involved temporary agency workers. In the labour tribunal survey carried out by the above Institute of Social Science, by comparison, regular employees accounted for 60-70%, non-regular employees were in the 20% range, and temporary agency workers accounted for 1%. In terms of corporate scale, companies with fewer than 30 employees accounted for more than one third and companies with fewer than 100 employees account for more than one half. Moreover, considering the companies of unknown scale accounting for 20%, one can imagine that companies with fewer than 100 employees will reach more than two-thirds. Thus, in terms of both employment status and corporate scale, this system appears to be used by many workers in small-scale companies and in non-regular employment.

More than 80% of workers involved in labour tribunals used an attorney. In conciliation cases, however, attorneys or certified social insurance labour consultants were rarely used.  The worker was self-represented in the vast majority of cases, and many application forms for conciliation were handwritten and often difficult to read. Or, one can say it is an accessible system.  Most of the cases were either resolved or terminated unresolved, usually about one month after applying for conciliation.

In terms of the content of claims, a total of 66.1% or about two thirds of the cases were related to termination of employment including dismissal, suggestion of termination, non-renewal of contracts, while those related to bullying or harassment accounted for 22.7% or slightly more than one fifth.

As conciliation is basically a voluntary system, it is terminated if the employer (defendant) declares non-participation. More than 40% of cases ended up being finished before the conciliation itself starts. In the remainder, just under 60% of cases, the content of conciliation was heard in one form or another, but those that ultimately ended in an agreement only accounted for 30.2%. This is quite different from labour tribunals, where, unless an agreement is reached, it is taken straight to the courts.

Even if a settlement was reached, the amounts paid out in cases of conciliation that reached a resolution were quite low. The most common amounts ranged between 100,000 yen and 199,999 yen, accounting for 24.3% or about one quarter of all cases. These were followed by amounts of 50,000-99,999, those in the 200,000 yen range, and those in the 300,000 yen range, more or less equally, with around 13% of the total, respectively. The overall average was around 170,000 yen.

Conciliation Cases by Resolution Amounts (Japanese Yen)
1-49,999 50,000
33 (9.5%) 43 (12.4%) 84 (24.3%) 45 (13.0%) 47 (13.6%) 18 (5.2%)
or more
Unknown / Others Totals
29 (8.4%) 17 (4.9%) 1 (0.3%) 1 (0.3%) 28 (8.1%) 346 (100.0%)

Comparing this to labour tribunals, the average amount there is around 1.4 million yen, with a median value of 1 million yen, thus showing much higher figures than in cases of conciliation. Of course, this evaluation is in relative terms, considering that attorneys expressed their view that the resolution amounts (in cases of labour tribunals) were too low, when the Labour Tribunal Survey was reported at the 2012 meeting of the Japan Labour Law Association. Behind this may lie the weakness of the employment status and the corporate scale. But while the case is taken directly to court litigation if a settlement is refused in a labour tribunal, cases of conciliation can be terminated simply by a failure to agree, which may also explain an attitude that it would be at least better to have a resolution, even if there is dissatisfaction with the low amount.

Although some of the contents of individual cases are very interesting, they are not mentioned here due to lack of space. Readers are invited to take a look at our reports mentioned above, which should certainly convey the real picture of Japanese workplaces, completely different from what is imagined from judicial precedents in the casebook.