Differences between Compulsory Regulations and Cooperation Regulations:
Hierarchy of Legal Validity.
What is an employment contract?
Unfair Labor Practices
The Binding Power of Employment Rules
Cutting Wages and Pensions
Scope of Working Hours
Rest Days, Work Outside Regular Hours and Night Shift Work
Exclusion of Management Personnel
Training & Education
Labor Accidents and the Labor Safety & Sanitation Law
Social Insurance System
What is dismissal?
The Employee's Consent
Activities Qualifying for Punitive Dismissal
Protection of Working Minors
Sex Discrimination is not Going to Disappear
Prohibition of Discrimination based on Nationality or Belief
Appropriate Management of Temp Staff
Employee Convenience Flexitime
"Deemed" Work Time System
Discretionary Work Time System
Violation of Employment Contracts
Inappropriate Accounting Dispositions
Criminal Activity for Private Profit
Liability of the Perpetrator
Liability of Management
Example of Superiors

Many people attribute much of Japan's remarkable post-war economic growth to its labor customs, such as lifetim based seniority. As Japan entered the 1990s and faced the unfamiliar territory of stagnation or limited growth at best, cost-cutting even became critical to the survival of many companies. In such environment, greater attention has been given to Western concepts of labor efficiency, such as pay based on results. Nevertheless, the conflict with long traditions have been giving rise to misunderstandings, increasing the need for getting things clarified in writing.

Another sociological factor to remember is that much of Japan's labor laws under went major revisions after WWII. Prior to that labor unions were greatly repressed by military governments fearing Communists, and not wanting any trouble over war supplies. Another trend that has developed in Japan, differering from the West is that labor unions are concentrated on the company, not on the industry.

Specifically, the post-war Constitution of Japan, in Article 28 gave protection  to the formation of unions, their right to negotiate and labor union activities. Based on that constitutional provision a number of Japanese labor laws developed.

Article 27 of the Constitution of Japan gives the people the right to work. It also provides that legislation shall set out labor conditions such as wages, working hours, rest times, etc. while prohibiting the employment of children.

Labor Condition Laws:
The Labor Standards Law, Labor Safety & Sanitation Law, the Minimum Wage Law, the Part-Time Workers Law, the Male-Female Employment Opportunity Equalization Law, Childcare & Caregiver Leave Law

Employment Policy Laws:
Employment Countermeasures Law, Employment Stabilization Law, Laborers Dispatch Law, Seniors Employment Stabilization Law, Handicapped Employment Promotion Law,  Employment Skills Development & Promotion Law.

Labor-Management Laws:
Labor Union Law, Labor Relations Adjustment Law

Insurance Related Laws:
Employment Insurance Law, Workers Accident Compensation Insurance Law (workmen's compensation law)

Welfare Benefits Laws:
Workers Asset Formation Promotion Law, Small & Medium Enterprise Retirement Pension Mutual Aid Law.

The Labor Union Law provides that individual contracts can be invalidated when they violated labor agreements between management and the union relating to working conditions and other treatment. Labor agreements are valid for 3 years and contain important rules.

Differences between Compulsory Regulations and Cooperation Regulations:

The Labor Standards Law sets out minimum labor conditions that should be maintained in order protect the lifestyle of workers. Management must absolutely follow these. The provisions of law related to the maintenance of public order are compulsory regulations. It is not possible for parties to agree to exclude the application of these regulations. and contracts or dispositions in violation of them become invalid. Under the Labor Standards Law, violators of most of the obligations of the employers can be criminally sanctioned. Not only the individual perpetrator, but the company can also be held criminally liable. The criminal sanctions vary depending on the seriousness of the violation, but in serious cases can even involve prison terms of 1-10 years.

On the other hand, for laws related to personnel or work, for compulsory provisions which have no criminal sanction provisions, or provisions which have only an obligation for cooperation, then the standards for violations are often unclear and with no penalties provided for violators.

Usually the wording of the law itself provides the key as to whether the provisions are compulsory or merely cooperative. If it says "must..." or "must not..." then it is compulsory, but if it says "must endeavor to..." then it is merely an obligation to cooperate.

Hierarchy of Legal Validity.

In laws in general, the Constitution tops everything off, followed by treaties, national government statutes, cabinet orders, ministerial orders and then local government ordinances. Court cases also become a part of the picture in interpreting the laws and regulations and thus, in a way, making their own rules.
Then in labor law you also have a heirarchy. At the top sits the labor agreement between the company and the union, then the company's employment rules. The employment rules may not violate the labor agreement. Finally there is the individual employment contract with the worker. The employment contract may not violate the labor agreement or employment rules.

What is an employment contract?

An employment contract is a contract between the worker and the company. As this relationship is not that of equals it enjoys some protections under the Labor Standards Law. Generally they are made when the employee enters the company and it is meant to end upon retirement. It is generally rather simple, incorporating the terms of the labor agreement and the employment rules, and some provisions for the particular needs. When the contract is concluded, while the company then acquires the obligation to pay the worker his salary, it also acquires the right to use the labor of the employee, the right to determine the position and treatment of the employee  and the right to maintain corporate order through sanctions. Simultaneously, the employee is burdened with the obligation to work sincerely in accord with the instructions of the company, and the right to receive his salary.

In making the employment contract, the employee assumes the obligation of dutiful attention to his work and the obligation to work sincerely. The employment contract is the basis for the relationship of trust. This does not stop at the mere mechanical provision of labor, but means sincere effort in consideration of the interests of the company. Thus there are supplemental obligations to the employment contract, such as nondisclosure of company secrets, obligations not to engage in activities that remarkably damage the interests of the company, as well as not endangering the assets or reputation of the company. This includes activities outside of work, even in private life. Courts have ruled that employees that spread scandalous rumors sheets about the company or organize boycotts of the company's products, can be punished.

Likewise the company also has obligations to take care of the health and safety of the employees, and try to avoid unnecessary dismissals.

Unfair Labor Practices
The Labor Union Law sets out four kinds of "unfair labor practices,"  which are obviously prohibited:
1. Blocking the exercise of the right of association
2. Refusal to negotiate with the union
3. Intervening in the labor union
4. Blocking petitions to the Labor Commission.

The Labor Commission is a special government organization which issues orders assisting workers.


Companies shall prepare labor agreements and employment rules which are in compliance with relevant laws, such as the Labor Standards Law. And they shall manage their labor in accord with such clear standards.

Moreover, at the work place, it is important that  management and labor shall make  labor agreements and employment rules as uniform rules while making adjustments in terms of mutual benefit and convenience.

In this way, in the reality of a company, labor agreements and employment rules shall become the key to worker and employer compliance.

First of all, on that point, in understanding rules in relation or employment rules, we shall examine work conditions such as work hours and rest time.

We shall also examine worker safety and social welfare.


The Preparation and Registration of Employment Rules

The Labor Standards Law requires that any company which has 10 or more workers, must, upon listening to the views of the worker's union or the labor representative, prepare employment rules in which are included matters as provided for in the Labor Standards Law, and file it with the Labor Standards Inspection Office, attaching to the rules the written opinion of the labor union or the labor representative.

Also, when changes are made to the employment rules, upon again hearing the views of the labor union or labor representative, the changes must be filed with the Labor Standards Inspection Office, again attaching there the wriitten opinion of the labor union or the labor representative.

Matters which are required to be included in the employment rules by the Laobr Standards Law are labor conditions such as work hours, rest times, vacations and wages as well as service regulations which employees must obey during their employment. In addition, for each of these, it should be understood if matters are included in the employment rules, they have binding effect.

These employment rules must be prepared such that they do not violate or contradict laws or labor agreements. Moreover, if there is an individual labor contract, any portions violating the employment rules, are invalid.

The Binding Power of Employment Rules

Matters included in employment rules:

---Time of start of work and end of work
---Rest Periods
---Days off, holidays and holidays
---Labor shift details
---Method of payment of wages
---Method of calculation of wages
---Matters involving salary increases
---Matters involving retirement

Employment rules serve as a uniform and standard determinations for working conditions. Employment rules are giving binding effect within the scope set out by law and regardless of whether an employee is informed of their existence or content, they are binding, even if the employee has given no consent to them.

In addition, where there have been revisions to the employment rules that are disadvantageous to the employeee, such as a lengthening of the working hours, a reduction in days off, a reduction in wages, abolishment of benefits or reduction in pensions, such changes are in general recognized so long as their is a rational reason for the changes, the procedures have been followed, as in filing the changes with the Labor Standards Inspection Office, listening to the opinion of the labor union or the labor representative, and attaching a written copy of such opinions to the filing with the Labor Standards Inspection Office.

Cutting Wages and Pensions

One company abolished its pensions from a certain date. Employment after that date would not be paid any pension. It unilaterally informed the employees of the decision. It was taken to court and the company lost.

Nevertheless, in view of severe economic conditions in Japan in recent years, there has been an increase in the number companies changing salary levels and lowering wages. In the end, it is the company that has the right to make the final decision on wages. Such conditions are included in the work rules and included in the employees individual employment contracts. Thus it is clear that while wages and pensions are included in the employment rules, if the company follows set procedures, it is possible for the company to change the employment rules and change the wage structure.

Nevertheless, the courts have spoken and they have noted that wages and pensions are of particular importance to employees. Accordingly making changes to those particular conditions should require a greater level of necessity. Thus in making determinations of the rationality of the move, courts give great consideration to the following factors:
---The suitability of the changes
---The necessity of the changes for operations
---The specifics of the disadvantage conditions to the employee caused by the changes, and the severity thereof
---Compensatory measures taken and ways of improving conditions such as increasing days off or reducing work hours
---Degree of negotiations with the workers or the labor union


Scope of Working Hours

In the Labor Standards Law a work day is defined as 8 hours and a work week as 40 hours. Working more than that is overtime.

The Labor Standards Law requires a 45 minute break when a worker works more than 6 hours and one hour if the work day exceeds 8 hours.

In general, when an employee is under the instructions of their employer, that is regarded as work time. Included in this is preparation periods before the start of business and adjustment time after the close of business. Even when the worker has nothing to do, but is still under the control of the employer, it is still work time. One court  even found that time to change work clothes as qualifying for overtime and that it was impermissible to cut pay workers for late because they were changing their work clothes. This does not mean that all time for changing clothes is work time. The court particularly noted that in this case involving a ship building company special work clothes and safety clothes were involved and involved the relocation of equipment to distant places. All these factors were taken into consideration and are certainly not applicable in all cases.

Rest Days, Work Outside Regular Hours and Night Shift Work

Does an employee have an obligation to work overtime or outside regular hours. Workers are to have one day off for every week of work, as for example 4 days off for 4 weeks of work. Night shift work means working 10 pm until 5 am.

Where a company wants to be able to make employees work overtime or work on days off, it must conclude a labor agreement based on Article 36 of the Labor Standards Law, which has been concluded between the employer and the labor union or a majority of labor representatives. These are generally called "Article 36 agreements." Such agreements are not required for workers to work on night shifts.

Companies must pay workers 25% more than regular wages for working overtime. They also must pay 25% more for working night shifts. Working on days off requires a 35% increase. Overtime for workers on night shifts is 50% more than regular pay.

If there is one of these Article 36 agreements, a labor agreement, or employment rules that permit overtime pay or working on days off,  the employer can order an employee to work overtime or work on days off, absent extraordinary conditions. Of course the company must pay the required higher wages.

Of course, companies are pemitted to establish shorter working periods and more generous rates for overtime work.


The Labor Standards Law requires that one day off be given for every week of work, or in the alternative, 4 days off for 4 weeks of work. There is no particular law establishing certain days of the week as days off or making national holidays days off. This is generally determined by the company and set out in the employment rules. If the company sets out its rights to discretion on this point in the employment rules, it can change the days off on an individual person basis or applicable to all work places. However, when the company reserves such discretion for itself, it should set out in the employment rules the reasons that will be used as a basis for such changes. The Labor Standards Law also gives a paid annual vacation to employees who have been employed more than six months and showed up for work more than 80% of the time. The employee is given 10-20 days of annual paid vacation, depending on how long they have worked. In this paid vacation system the employee has a right to take it during his preferred time frame, but when such determinations hinder the ordinary operations of the company, the management can change that schedule. In making such determinations the company must consider how busy the company is, the position of the employee, and the availability of substitute personnel.

Exclusion of Management Personnel

The provisions of the Labor Standards Law relating to work time, rest periods and rest days do not apply to management personnel. The night shift provisions of the law do apply and management working such shifts are entitled to the increased pay.

Training & Education

It is important for most companies to develop and increase the skills of their employees. Thus many companies give training to their employees. In such cases, where the company has ordered or instructed an employee to attend training, it is treated as regular working hours and the employee must be paid for that period and if it becomes overtime work or work on days off, the company must pay the increased salaries. If the training is for a fee, and the employee has been ordered to attend, the company must bear such expenses. In selecting which employees are to attend training it is also of importance that rational standards are established in advance. Article 6 of the Male - Female Equal Employment Opportunity Law prohibits using a person's sex as a basis for the standard of selction for such training and if the position is the same, both males and females must be given equal opportunity. (Of course the penalties under this law are notoriously lax).


Disciplinary sanctions take place when an employee causes disruption at the company or at the workplace or damages the earnings of the company. Then the company can imposes sanctions on the perpetrator.

There are several levels of such disciplinary sanctions, starting with warnings, salary cuts, work suspension and summary dismissal.

Warnings are the lightest of the sanctions and guides the employee to take care and reflect on his actions. Salary reductions involves cutting the basic salary by a certain amount for a fixed period of time. The Labor Standards Law limits the cut to less than one-half day's salary and no more than 10% of salary during the pay period. Work suspension involves keeping the employee from work for a set period without pay. Summary dismissal is the most severe form of discipline. The employee is immediately dismissed and lose their pension. There are lesser cases where the pension can be applied for.

Generally, in the labor contract the company has the right to discipline an employee. It is advisable in the taking of such disciplinary sanctions certain conditions should be met.
a. The reasons for the sanctions and the details of the sanction should be laid out clearly in employment rules.
b. Disciplinary rules should be notified to employees in advance.
c. The execution of the sanctions should be carried out fairly in accord with the disciplinary rules.
d. At the time of the discipline, there should be no inappropriate measures such as prejudice or retaliation.
e. The sanctions should be appropriate from an objective viewpoint.


Labor Accidents and the Labor Safety & Sanitation Law

The Labor Safety & Sanitation Law is meant to secure a safe workplace for workers. There are severe penalties for violators both for the company and the individual perpetrators of the violation.  The same law requires that the company give all employees training in safety and sanitation.

The Labor Safety & Sanitation Law requires the designation of a Safety & Sanitation Overseer, as well as a Safety Manager,  a Sanitation Manager, and a Safety & Sanitation Promoter. The Safety & Sanitation Overseer is a high level position whose responsibilities include preventing dangerous situations on company locations, preventing dangerous health situations, conducting safety education, conducting health examinations, investigating the causes of accidents and devising measures to prevent their recurrence. The Safety Manager is to prevent machinery danger, make equipment safety inspections, conduct safety training, investigate the causes of accidents and devise measures to prevent their recurrence. The Sanitation Manager is to be either a licensed doctor or licensed sanitation manager. The Sanitation Manager is to detect injured parties and take measures for them, improve the operations environment, provide sanitation training and health consultations.

In this respect, companies with more than 50 employees are to designate one doctor as their industrial doctor. Companies with more than 1000 employees are to have a doctor as an industrial doctor exclusively. Once a year the companies are to conduct health inspection of designated matters. The same law requires the employees to submit themselves to these medical examinations.

The law also requires the establishment of a Safety Committee and a Sanitation Committee. The Safety Committee is to establish measures to prevent dangers, prepare safety regulations, devise safety training, adopt safety measures for new facilities, investigate the causes of accidents and devise measures to prevent their recurrence.


In recent years a new terminology has entered the Japanese language, "karoshi" which basically means death from overwork. There have been a number of court cases involving this problem. With bleak economic conditions, the difficulty in transferring positions to another company, many employees, particularly men, have put in incredible work hours with usually no extra pay. This was not necessarily required by the company, just worried employees trying their best. As a result, in February, 2002, the Ministry of Health & Welfare announced its "Measures which Businesses should Devise to Prevent Danger to the Health from Overwork." It requested that businesses adopt suitable measures such as limiting overtime to 45 hours per month. One of the problems was that workers were not even reporting their overtime officially to the company. This was also a measure the ministry wanted improved either through mechanical time clocks or some organization controls. On the other hand, there were indeed some deadbeat companies that were not even paying basic wages, let alone overtime. As a result the ministry announced it would be stepping up criminal prosecutions.

Social Insurance System

Japan has a rather sophisticated system of social benefits. There is a kind of workmen's compensation insurance that provides for medical treatment, pension and temporary benefits for employees taking ill, being injured to dying on the job. The benefits are paid to both regular workers and part time workers. Businesses are required to join the Workmen's Compensation Insurance System and to pay insurance premiums. There are also a number of other social insurance schemes in Japan for which the company, the employees as well as the Japanese national treasury all contribute. These include unemployment insurance, employment promotion benefits, benefits to promote the employment of older workers, caretaker benefits and child care benefits.

Retirement is to be taken care of by a national pension scheme and a private pension scheme. The national pension scheme is for the public as a whole. The private sector scheme, the Welfare Pension Insurance, covers the employees of companies. This is separate from the national pension scheme. Both employees and the company contribute to the scheme during the time the employee is employed at the company. Almost all public/private pension schemes are in severe financial straits, and future prospects look even worse due to the rapidly aging Japanese population.


In recent years in Japan, the severe economic situation has left many companies with no choice but to dismiss employees.

What is dismissal?

There are several kinds of dismissal in Japan. There is ordinary dismissal, summary disciplinary dismissal and adjustment dismissal.

Ordinary dismissal involves an employee whose work attitude is negative, whose work skills are deficient or otherwise inadequate in their work skills. In this case the company must give the employee 30 days advance notice or the equivalent of 30 days average pay as well as obtaining the approval of the Labor Standards Inspection Office. The employee is still entitled to his retirement benefits.

Summary disciplinary dismissal occurs when there is a disruption to the eompany or a violation of workplace rules and carried out as a form of discipline. In this case the dismissal is immediate, and there is no need for either 30 days notice or 30 days pay. Likewise, he may even lose his retirement benefits, and in fact often does.

Adjustment dismissal is due to the downsizing of the company, and is due to actions taken by the employer, not the employee. As this is not due to the actions of the employee, being a unilateral action by the company, standards for the company are stricter. A company conducting layoffs due to a merger, while arguably in the company's interest, is not in the interest of the dismissed employees who have done nothing wrong. According to a range of court decisions the following factors are given importance in cases involving such dismissals.

---Was the personnel adjustment a necessary objectively determined crisis in operations?
----Did the company exhaust other options prior to the dismissals such as limiting new hires, seeking voluntary retirements, relocating workers or seconding them to other firms?
---Was the standards for selecting the workers to be dismissed rational and were the actual selections made in a fair manner?
---Did the company make every effort to obtain the understanding of the employees?

Remember. Japanese labor laws and attitudes on labor more closely run with European ways than with the hard cold capitalism in the US.  Many, including myself, believe that the US system in fact promotes a healthier economy and employment environment for the workers, permitting a more rapid recovery, as illustrated with Japan's sclerotic economic growth rate in the 1990s, just as in Europe.


Japan has a class of workers, including part-time workers that have contracts specifying the length of their employment. Under 2003 revisions to the Labor Standards Law, ordinarily contracts for this class of worker can not exceed 3 years while contracts for specialists or those over 60 years of age can not exceed 5 years. It is permissible however, after the expiration of the contract for the parties to renew upon mutual agreement. As it is clear that these contracts are renewable upon mutual agreement, as a matter of course a company can fail to renew such a contract if it so desires. Nevertheless, in order to protect the interests of workers, a series of court decisions have set out certain rules when corporations fail to renew these kinds of contracts. Firstly, if this kind of contract has been repeatedly renewed and where the employment conditions are substantially the same as regular employees, the same rules that apply for dismissal of a regular employee shall apply to these contract workers. It is thus required that there be rationality and suitability in the reasons for the termination. Secondly, in the alternative, where the employment conditions do not really reach the level of a regular employee but where the employee has a rational basis for believing that the employment will be continued, the same standards shall also apply. In other words, when there were there were words and actions leading one to expect long term employment at the time of employment and when most of the workers are repeatedly renewed, then the rules for regular workers are considered applicable.

In line with this thinking, in 2003 the Ministry of Health and Labor announced new guidelines (Guidelines for the Conclusion of and Renewal of Labor Contracts of Limited Term). The highlights of these guidelines include
a. The employer must make clear at the time of the conclusion of the contract of limited term the standards upon which the contract will be renewed.
b. Where the employer decides not to renew a worker who has a contract of limited term which is longer than one year, the employee must be given one month advance notice.
c. When an employee of a limited term contract who has not been renewed requests the reasons for such non-renewal, the employer shall make a written explanation, without delay.

Thus clear standards are of significant importance.


The Employee's Consent.

Based on basic employment in a labor contract, within the scope of labor agreements or employment rules, it is possible for the company to order the relocation or transfer of an employee and the employee has an obligation to obey. In most cases, new employees entering a company, aware of the employment rules, promise to transfer  or relocate due to business necessity. This is generally interpreted as part of the comprehensive agreement at the time of employment. Nevertheless, when, at the time of employment, there has been a clear agreement on the location of the work or the type of work involved, those provisions control and any orders to the contrary from the company requires the consent of the employee. The courts basically hold that so long there is a comprehensive agreement on relocation and transfer, unless there is a specific agreement at the time of employment, a company's punitive dismissal of an employee for violating such an order is valid. Even if that is the case, it is necessary that such decisions on relocation and transfers be fair and convincing in view of the necessity of the the relocation or transfer, the rationality of the standards of selection of personnel for such moves, the suitability of the personnel, adequate explanation to the personnel and a balancing of the company's interests versus the hardship on the personnel and their familities. There have been cases where courts found invalid a transfer order when the company's efforts on these poinst have been inadequate. The Tokyo High Court held that a college graduate with a degree in chemistry who had been working on analyzing the composition of LPG and who refused a transfer to be an LPG sales engineer, a  change in position,  had an obligation to accept the transfer when employment rules gave the company the right for such transfers.

There are situations where, other than where such seconding of workers in the labor agreement for all workers is part of a comprehensive agreement, there has been an obligation for a company to receive the consent of the worker.

When an employee is seconded to another company, he must obey the employment rules at the company to which he is seconded. There are cases both ways on the payment of the employee's wages. In some cases he is paid by his home company, and there are other cases where is paid by the company to which he is seconded. The seconded employee shall maintain the salary within the scope of his labor contract with his home company. Where he is paid by the company to which he is seconded, an adjustment is generally made on salary differentials.

In contrast, in the cases of outplacement of employees, the contract with the home company is cancelled and a new contract is made with the new company at which he becomes employed. A unilateral order by the home company is not enough. Other than where this is part of the comprehensive agreement at the time of employment, in principle, the consent of the employee is required.

In the special case of the breakup of an existing company, in accord with the provisions of the Commercial Code, based on the terms of the Labor Continuity Law, even without the consent of the individual employees the labor agreement with the surviving company continues. In some situations the employee has a right to make a written protest.


Among the punishments for employees punished for causing disorder or discord in the workplace, punitive dismissal is the most severe.

The difference between ordinary dismissal and punitive dismissal is that when it is a punitive dismissal there is no need for the 30 day advance notice or 30 days equivalent pay and the authorization of the Labor Standards Inspection Office in the case of a punitive dismissal. In addition retirement pensions may be voided in part or in toto. This is because in the case of punitive dismissal it is punishment for the employee and measures to help the company recover from the damage.

Likewise, avoid dispositions due to such reasons as,  not desiring to expose company internal information, or fear of questioning management responsibility, etc, or  hiding facts constitutes shirking of responsibility or professional neglect. Such activities in and of themselves also become the subject of punishment.

Activities Qualifying for Punitive Dismissal.

In the ordinary case, punitive dismissal is provided for in the terms of the employment rules or supplements thereto. The following activities can be regarded as such serious infractions that punitive dismissal is permitted. Nevertheless, as punitive dismissal has such a devastating effect on the employees, the infraction should be very serious in nature with remarkable negative effects. Thus they should be carried out where, as for example, infractions continue despite 3 warnings and the condition seems incorrigible.
A. Unexcused absences
B. Where the employee ignores company orders on overtime, work on holidays, and transfers.
C. Repeatedly violating workplace regulations or causing disorder in the company.
D. Damaging the company through criminal activities such as embezzlement, corruption, leaking information, damaging or losing company property
E. Losing the company's trust through such measures as seriously false resumes and other employment records or conflicts of interest.
F. Such other activity which damages the relationship of trust necessary for maintaining the labor contract.

Even in the case of private life, care must be taken. Although a company can not unnecessarily interfere in the employee's private life, where the employee's illegal activity or misconduct affects the company and causes serious damage to the company, it can be used as a reason for punitive dismissal.

Protection of Working Minors

Here a minor is defined by the Labor Standards Law as one under 18 years of age. Minors also have a protected right to work and discrimination based on age is not permissible. Nevertheless, it can not be denied that they are still at tender ages and must be protected from many types of working conditions. The Labor Standards Law provides special protections for such minor workers. Minors are not permitted to work overtine nor work on days off, or on the late night shift. In principle, flex-time work scheduling for minors is also not permitted. Minors are also not permitted to engage in dangerous employment. Dangerous employment includes driving vehicles, power machinery or work with dangerous substances. Working in physically stressful environments like mines is also restricted. Moreover, younger children are in principal banned from employment until the first March 31 after their 15th birthday.


Sex Discrimination is not Going to Disappear

One company that promoted all its male employees who had worked for the company for more than 10 years in an agreement with the company's labor union. As female employees received no similar treatment, they filed a sex discrimination suit. The company lost. The court ordered the company to pay its female employees the same increases in salary granted to the male employees. In fact the Labor Standards Law prohibits wage discrimination based on sex. The Male-Female Employment Equilization Law prohibits discrimination based on sex in all employment conditions, such as recruitment, hiring, location, promotion, training, welfare benefits, retirement, dismissal and pensions, etc.

Thus from what viewpoint should it be decided whether there has been sex discrimination or not? When there are differences in the treatment between men and women which can not be explained based on ability, work attitude and results etc with respect to the same kind of job, then there is a great level of concern that discriminatory conditions are present.

Prohibition of Discrimination based on Nationality or Belief

The Labor Standards Law prohibits discrimination in terms of wages or labor conditions due to nationality, belief or social position. Thus dismissal based on a person's belief is invalid. Nevertheless, if based on those beliefs that the employee holds, business is hindered or there is disruption in the work place, suitable punishment is permissible within the scope of the employment rules.

In the case of the employment of foreign employees, separate from the basic prohibition against discrimination on the basis of nationality, there is a necessity of the foreigner to obtain residency status such that they can work in Japan based on the Immigration Control Law. The Immigration Law does not of course apply to Japanese citizens.


 Traditional (at least Post WWII) employment customs in Japan, such as life time employment and promotion based on seniority have been weakened and battered in Japan during the economically stressed 1990s. More westernized trends, such as rewarding ability and results based promotions are being steadily introduced into corporate Japan. On top of that, trends even new in the West, such as temp workers, flextime and outsourcing are also taking hold in Japan as well. Thus attention should also be given to problems arising out of these trends.

Appropriate Management of Temp Staff

At the present time in Japan, Temp workers as well as part-time workers now make up more than 10% of the Japanese work force.

Temp staff workers, although concluding an employment contract with temp staff firm, work at another company and are under the work instructions control of that firm. The Workers Dispatch Business Law (let's call it the Temp Staff Law) strives to provide temp staff workers with some kind of stability. That law requires a number of measures to be strictly observed by the temp stsff firm and the firm receiving the workers. Thus it is of great importance that a company receiving temp staff workers comply strictly with the terms of the Temp Staff Law. For example, it is not permissible for the company receiving the workers to engage in work type, work hours or work locations not spelled out  in the contract the company makes with the temp staff firm. A manager in charge of the temp staff workers must be appointed and a management record book of the temp staff workers must be prepared and employment conditions must be recorded. Such records are required to be stored.

When a temp staff worker has a complaint the company receiving the worker must swiftly handle complaint in close collaberation with the temp staff firm. The following industries are not permitted to have temp staff workers:
Harbor transport
Security services
Medical treatment

The 2003 amendment to the Temp Staff Law raised the maximum contract term for most work under temp staff contracts from 1 year to 3 years. In addition, when such temp staff workers do get contracts of more than one year, it is not permissible for it to have an adverse impact on the regular workers at the company receiving the workers and the company is required to consult with the labor union or workers representative representing half or more of the regular employees of the company.

In one way of looking at things, when a company concludes a subcontracting   contract with another firm, it is in many ways similar to the usage of temp staff workers. But temp staff workers, as noted above, are subject to a number of legal restrictions. In the case of subcontracting, the company is also using outside labor sources in its business. Thus the Ministry of Health and Welfare has provided guidelines. Thus subcontracts not meeting all of  the following conditions are deemed to be strategies to avoid the Temp Staff Law or the Employment Stabilitization Law and should receive guidance from the minstry or there will be concerns of abuse.
---Instructions given to the one in charge of execution of the business and evaluation thereof, come from the subcontractor not the one making the order.
---Employment instructions, administration of work, guidance on work hours, and division of work, etc are made by the subcontractor, not the one making the order.
---The subcontractor raises the funds and undertakes the legal obligations of a business owner
---The subcontractor handles the business of procuring and preparing machinery, parts, materials and planning and specialist skills.

Special attention must be given to cases where the employees of the subcontractor work on the premises of the company making the order.


Other trends in modern civilization include the introduction of flextime, or  more flexible working hours than the traditional Monday-Friday 9-5 daily routine. Modern consumers have 24 hour desires and the customer is king. But there are two sides to this flextime. One is convenience from the viewpoint of the employer and the other is convenience from the viewpoint of the employee. Thus there are systems permitting flexibility in the works but still based on the basic concept that 40 hours constitutes a workweek and 8 hours constitutes a workday. Under this system one can average out the work hours over a longer period so long as the overall average holds. Thus if in a workweek 40 hours is worked with an average of 8 hours a day it is permissible. From the employer needs viewpoint, a weekly system  averaging the 8 hours per day over the work week in Japan is permitted only for retailers, hotels, restaurants and drinking establishments with fewer than 30 employees. Businesses seeking this kind of system must get the written agreement of the their union or a representative representing over half the workers. It is permissible to put into the employment rules monthly systems whereby it is permissible to adjust working hours over a month, so long as the average still comes out at 40 hours per week. Due to the complexity of these systems serving the company's needs, and the risk that it can easily turn into expensive overtime, it is advisable that employees well understand the system and a manual be prepared.

Employee Convenience Flexitime.

Under this system, the employee can set his own starting and finishing times. When a company agrees to this system it must conclude a labor agreement spelling out the scope of the employees covered by the system, settlement of accounts timing, working time, daily standard hours, core time and flexible time.

Of course, if a company's workers work at any convenient time, it can cause confusion in company operations. Thus a company can set a time such as 10:30 to 3:30 during which all workers shall be working, and this can be called the core work time. This kind of core time is not particularly required by law, but if it is established, it should be made clear in the labor agreement.

When a flextime system is established, the settlement of accounts for the workers shall be within one month. Work in excess of the ordinary work time  constitutes overtime and requires increased compensation.

However, work on legal holidays in the flextime system can not be included in the calculaton of work time. Such work is calculated under a separate framework at higher rates. On the other hand, work on days off other than holidays are included in the calculation of work time under the flextime system and overtime pay is not specially required.

On top of this, in the execution of this kind of system, there are several regulations. Atlhough the flex time system is convenient in the sense of the employee being able to balance work time and his private life, it does create differing levels of benefits to each of the employees, based on the characteristics of each job, it can create feelings of unfairness among the employees. Thus it is important to both the employer and the employees to take a cooperative stance in the appropriate operations of such a system.

"Deemed" Work Time System.

There has been an increase in companies where an employee goes directly from his home to visit customers without going to the office, or where an employee is out on the job and at the end of work time goes directly home without returning to the office. This is of course more efficient in terms of time and savings in expenses.

Jobs where most of the work is done outside of the office as in some kinds of sales, or newspaper reporting make it difficult for management to calculate working time. In these cases the Labor Standards Law classifies work by such kinds of workers in part or in toto as out of office work. In the calculation of this kind of work time the law permits a system deeming it as prescribed work time (where it is usually necessary to work more than the prescribed work time, then the amount of time ordinarily necessary for the accomplishment of the duties).

This kind of work out of the office is generally called "deemed" work time system.

When a company adopts a deemed work time system, it is necessary that there is an agreement in writing with the company's labor union or a labor represenative representing over half of the company's workers. The time set out in the labor agreement is deemed "the time ordinarily necessary to carry out those duties"

Even when the deemed work time system is used, working beyond the legally prescribed worktime becomes overtime and it is necessary to pay increased pay.

Discretionary Work Time System

For work where it is difficult for the employer to give exact instructions with respect to the method of work or the distribution of time, based on certain requirements there is the "Discretionary Work Time System" which deems a fixed time as worked, as set out in the labor agreement or a resolution of the employer-workers committee,

There are two types. There is the "specialists discretionary work time system" for researchers, analysts or designers of data processing systems, newspaper reporters and editors, designers, producers and directors. There is also the "Planner discretionary work time" for employees engaged in planning and inspections. In either case, as there are changes in the economic society or changes in the work conciousness of workers progress, it is a system which seeks to create an environment for workers to adequately show their creative ability.

Again, deemed work time based on the discretionary work time system that exceeds the legally prescribed work time constitutes overtime and higher wages are to be paid.


Violation of Employment Contracts.

An employee who is frequently absent, late for work, or does not work without the permission of management, or refuses or ignores the instructions of management, or engages in acts violating the regulations of the work place is in violation of his employment contract with his company.

In addition the obligation to work in good faith demands a high level of faithful relations for the employee, such that a fraudulent employment application, fake registrations in work, or engaging in activities contrary to the  interests of the company also constitutes violation of the employment contract.

Such violations can be punished by the company and when such activities cause serious damage it may even reach criminal violations.

Inappropriate Accounting Dispositions

As a company takes money from its investors in order to engage in business, it must accurately and rapidly report the results of its activities. In addition to some of the accounting requirements set out by law in the Commercial Code, there are also corporate accounting standards that are established as public standards.

First of all, accounting dispositions that are different from the facts may or may not have an effect on corporate results and such acts in and of themselves become problems.

Inappropriate accounting dispositions often surface in criminal activity such as bribery and corruption. Since criminal cases will naturally bring unfavorable attention to the company, it must become  a basic principle of the company to thoroughly root out accounting dispositions differing from the facts.

Next, when in reality there were no profits, but in order to preserve the credibility of the company and in order to show that operations and results of the company are stable, false accounting as in window dressing are engaged in, there is a violation of the Commercial Code and the Securities Exchange Law, resulting in criminal liability for the related parties as well as severe civil liabilities.

In addition when a company in a business year under-reports its taxable income in order to pay a lower corporate tax, this becomes a violation of the Corporate Tax Law and can result in supplemental tax penalties.

This kind of inappropriate accounting dispositions is  carried out contrary to the facts with respect to details such as assets, liabilities, sales, expenses, etc. or with respect to the appropriate timing. Thus it is necessary to make a work environment where everyone is concious of accuracy and a system of double checks is implemented to prevent inaccuracies. Naturally violators of such a policy must be punished. Obviously this applies to intentional manipulations, but heed must also be given to inattentive or negligent dispositions.

Criminal Activity for Private Profit

Actions where an employee plots for his own private profit or to intentionally damage his company constitutes not only violations of the employment contract, or accounting rules, but has in many cases resulted in criminal prosecutions with serious penalties.

For example, when an employee steals his company's money or property, or makes false expense reports and thus fraudulently receives compensation for his own profit, or makes fakes of company documents or seals, or deliberately damages company facilities or other assets he is violating criminal law and will be accordingly punished. Likewise, under the Unfair Competition Prevention Law, an employee leaking secret corporate information is also violating criminal law which sometimes results in severe penalties.


Liability of the Perpetrator

For example, when an employee receives compensation from the company for transactions that never happened. Such money obtained from the company on such false pretenses must be refunded to the company with interest. If the perpetrator can not immediately make compensation, he must arrange repayment based on installment payments and sometimes with a guarantor.

If as a result of such transactions a third party also received funds from the company due to such false pretenses, compensation must also be paid to the company for those damages as well. In addition, the perpetrator can be punished for the infraction. From the companies viewpoint, the most serious penalty it can impose is punitive dismissal and even in some cases cancel retirement payments in part or in toto. These are just the penalties under civil actions. On top of that, if the act constitutes a criminal violation, and the company can seek criminal prosecution with the ensuring incarceration or fines.

Liability of Management

When an employee has committed an inappropriate act, there are cases when his manager is also punished. Why should the manager be punished?

An employee in a managerical position has an obligation of due care based on the employment contract. This obligation of due care, in order that inappropriate acts do not occur, includes frequent training and thorough supervision. Moreover, when there is a suspicion that there has been an inappropriate act immediate and appropriate measures shall be taken to so that the impact will be at the minimum degree possible.

Accordingly, when the training has not been frequent, or supervision inadequate, or when there has been inadequate response to suspected inappropriate acts, a punishment may be applied, based on violating the employment contract.

Example of Superiors

It is said that inappropriate acts in work or procedures easily occur where the employment controls or employment checks are lax or where the violators have certain rights.

Supposing, for example, an employee in a superior position having certain rights mixes his public and private activities. Then employees may also get the idea that anyone else can also go to that extent. creating the danger that with one one fell swope organizational regluations are weakened.

For example taking trips, going on dates, using facilities and benefits, ex-company relationships and laziness when engaged in by someone in a superior position, becomes a kind of standard in the work place.

Thus employees in superior positions in the company must bear in mind that their activities become a yardstick for other employees.