A promise of employment is binding, Supreme Court ruled in late 1970s case

The coming of spring brings with it the sight of young women and men clad in black or navy suits, all carrying the same type of bag and sporting the most austere, no-nonsense hairdo and makeup, scurrying down the streets of metropolises around Japan. From a distance you’d be forgiven for thinking these youths are wearing uniforms and that all individuality had been banned by decree. Where are they all heading, and for what?

One of Japan’s employment practices entails companies hiring large batches of fresh college graduates all in one go. Today, even college juniors begin their third, penultimate academic year by sending out feelers to prospective employers. They spend a preposterous number of hours in a back-breaking, shoulder-stiffening ritual called shū katsu, drafting application documents, undergoing interviews, pretending to smile — all hell-bent on leaving a good impression and winning a saiyō naitei promise of employment from a coveted corporation.

Rather than a one-way promise, saiyō naitei is more properly defined as a prior agreement between a college student and an employer that contains a future right and obligation to work. The period between the date of this agreement and the first day on the job is called the naitei kikan. Students with a saiyō naitei agreement feel confident they will be working at that company come the April following graduation.

Yet, there have been several instances in recent years of companies canceling the agreement during the naitei kikan. In one particularly egregious case, students who clinched saiyō naitei the previous summer were notified of its cancellation in March, a month before their promised start date. So how does labor law interpret the rights of the would-be employee during this naitei kikan period?

Labor laws say nothing clear about saiyō naitei, but case law does have something to say about it. The Supreme Court set the precedent on July 20, 1979, in the Dai Nippon Printing case.

Let’s take a look at the case. University student X took the company’s entrance exam and was informed of the saiyō naitei promise in July. X’s university had a firm policy obliging students to take the first offer from a prospective employer to which the college had sent a letter recommending the student.

So, after receiving the saiyō naitei, the student sent a promissory note to Dai Nippon Printing and had to withdraw applications they had made to any other companies. But in mid-February of the following year, two months before the slated day of entrance, the company sent X a notice that the saiyō naitei had been revoked. No reason was given.

So X sued Dai Nippon Printing for the job, alleging that the revocation lacked rational grounds and was therefore invalid. In court, the printing firm explained that they “felt the (student) had a gloomy character and left a bad impression during the hiring test.”

The court ruled that the application was effectively an request for a labor contract, while the company’s saiyō naitei notification was in fact an offer of employment. That offer combined with the student’s promissory note constituted a binding labor contract between the two parties with a starting period deferred until just after graduation.

The judge stated that revocation is possible only when some unforeseen circumstance made it objectively rational and appropriate according to social norms to cancel, and that “a gloomy impression” hardly sufficed to meet those conditions. The revocation was therefore invalid and the student was instated at the company.

The Supreme Court noted that each case must be judged separately, as the surrounding circumstances vary. Although courts may rule differently in other cases of revocation, at least companies can no longer dismiss such promises of employments as “merely saiyō naitei.”

Hifumi Okunuki teaches constitutional and labor law at Daito Bunka University and Jissen Women’s University, among others. She also serves as paralegal for Zenkoku Ippan Tokyo General Union.