Many laud Article 8 of the brand new Part-time/Fixed-term Employment Act as Japan finally recognizing the principle of same-work-same-pay. But one word in that article gave me pause: unreasonable.
The Part-time/Fixed-term Employment Act (enacted in April 2020 for regular firms and small businesses a year later), prohibits unreasonable treatment of employees on regular and irregular/contingent contracts. Article 8 stipulates, “The employer must not create a disparity that could be deemed unreasonable between the base pay, bonus and other conditions of short-term/fixed-term employees and ordinary employees, with due consideration to what could be deemed appropriate in light of the nature and purpose of the compensation as well as the details of the operations the worker is involved, the degree of corresponding responsibility, the details of the work duties, the potential for job changes of the two groups of employees and other circumstances. (Emphasis mine.)”
Disparities between contingent and regular employees are forbidden if they are unreasonable. Does that mean that reasonable disparities are fine? Let’s see what the courts are up to on this front.
October 2020 was a busy month for same-work-same-pay verdicts from the Supreme Court, with the Osaka Medical University and Metro Commerce coming out on Oct. 13 and the Japan Post Service coming down two days later.
The sole point of contention in the Osaka Medical University (now Osaka Medical and Pharmaceutical University) case was bonus payment. A part-time secretary sued the university, claiming that not getting a bonus represented an unreasonable disparity with the regular employees who received them. The Supreme Court found for the university, concluding that not paying the bonus to the secretary was not unreasonable in light of the nature and purpose of the bonus, the harder work and greater potential for job or position changes; that the university used the bonus to attract people who could handle the regular employment work, which was much harder than the secretary’s part-time gig.
A subsidiary of Tokyo Metro, Metro Commerce runs the subway kiosks. Four women who work there are on fixed-term contracts sued, saying that the company’s refusal to pay the severance they pay regular staffers was an illegitimate disparity. The court concluded the disparity was legitimate. Whereas regular employees must make up missed days, have early and late shifts, and must handle multiple kiosks, the contract employees only have to handle kiosk sales. Whereas the regular employees face transfers, job or position changes, the contractor employees still do the same tasks even if they are sent to a different kiosk. This shows clear differences in the scale of work and transfers.
Contract workers at Japan Post Service did the same jobs as the regularized employees and sued over discrepancies in payment of allowances and other conditions. The Supreme Court concluded it was reasonable to create some of the disparities. The contract workers had only to do a specific job with no anticipation for promotion and an evaluation system different from regular employees. The regular workers had more job or position changes, justifying some disparities. Despite all these job differences, however, the court knocked down the following six disparities as unreasonable.
- Provider allowance: The purpose of this allowance was to ensure the livelihood and welfare of workers with dependents and induce them to stay around longer, particularly if they have dependents in the family. If contract workers too have dependent families and might stay longer, then paying this allowance is appropriate.
- Year-end work allowance: This allowance is remuneration for working during the post office’s busiest period (Dec. 29 through Jan. 3). It is paid regardless of the type of work or its difficulty, so not paying contract employees is unreasonable.
- Summer/Winter break: The purpose of this benefit is to refresh the mind and body, with no discrepancy of days granted based on years of service. Contract employees don’t work only during busy periods, so not granting this is unreasonable.
- Paid sick leave: The purpose of this benefit is to ensure the worker who cannot work due to illness or injury can make ends meet, focus on getting better and still keeping their job. Those on fixed-term contracts anticipate renewal and similar long-term employment. Whether or not a discrepancy in days granted is reasonable, it is unreasonable to only grant unpaid sick leave.
- Public holiday pay: This is paid for work at the start of the year. Paying regular employees a higher rate of pay for work on public holidays but not contract employees is unreasonable.
- Housing allowance: This is to help cover housing costs. Since contract employees likewise have housing costs, it is unreasonable not to pay it to them.
Over these three cases, workers are 1 for 3. The court seems reluctant to shoot down bonuses, severance pay or other big financial benefits. The post office case shows they are willing to reject refusal to grant leave, little allowances and other benefits with little financial impact. The verdicts might restrain corporations from feeling free to treat contingent workers any way they like. They will also teach employers to mark out clear differences between the two group of workers in terms of work duties, job or position changes.
Contingent workers now make up almost 40% of all workers in Japan and these verdicts do nothing to solve the problem of collapsing job security and conditions. The law stipulates that base pay, bonuses and other conditions cannot have unreasonable disparities. If courts are unwilling to touch these, then same-work-same-pay will remain an empty dream, or e-ni kaita mochi (rice cakes drawn in a painting).
Then Prime Minister Shinzo Abe rolled out same-work-same-pay as a key part of his vaunted hatarakikata kaikaku workplace reforms. In a 2018 speech, he said, “Finally, the time has come to realize same-work-same-pay, which had been debated for so many years. By prohibiting unreasonable disparity based on employment type, we will sweet the word hiseiki (irregular employment) from the nation.”
But it’s important to pay attention to the fact that he did not say, “Let’s eliminate irregular employment” or “Let’s eliminate the disparity between regular and irregular employment.” He only meant let’s not use the word hiseiki anymore. During his second tenure as prime minister (2012 to 2016), the number of workers on irregular contracts rose by 2.07 million, while the number of regular workers grew by only 220,000. This means that 90% of new jobs were irregular. The trend shows no sign of stopping under Prime Minister Yoshihide Suga and Prime Minister Fumiko Kishida.
The workers of Japan must come together and express their outrage at how politicians treat them like dirt.
This article was written by Hifumi Okunuki, and originally published by the Shingetsu News Agency (SNA).