Gaba teachers challenge ‘contractor’ status

Union fears employment model could mark first step on slippery slope for eikawa firms

Long accustomed to being ignored, being forgotten proved too much to take for unionized teachers at Gaba language school. On Oct. 4, the General Union registered an official complaint and request for an investigation with the Ministry of Finance’s Securities and Exchange Surveillance Commission (SESC).

The union accuses Gaba Corp. of lying in its 2009 financial report filed in March with the Tokyo Stock Exchange, which states that there is no union at Gaba and that labor-management relations were “smooth and harmonious.”

The G.U. argues it has an established Gaba Branch. Its complaint also points out that the Osaka Labor Commission ruled in December 2009 that it considered earlier negotiations held between the union and Gaba to represent collective bargaining.

The union also charges that the financial statement’s description of Gaba instructors as independent contractors rather than employees is disingenuous. The complaint points out that the Osaka commission also acknowledged Gaba’s instructors as employees under trade union law last December, and that the firm’s failure to mention that fact was misleading.

The SESC complaint is tied to a larger struggle for union recognition and employee rights at Gaba.

Instructors first formed a union in September 2007 and, according to union members, met with company representatives for talks. However, managers always refused to enter into serious negotiations, arguing the instructors were not employees and, as itaku — independent contractors — weren’t covered by Japanese labor laws.

Determining who qualifies as an employee and who can be classed as an independent contractor isn’t always clear. However, the method in which workers are scheduled and their place of work are important considerations.

“The company must be very careful it’s not treating them as employees,” says [Christopher] Gunson [an international transaction attorney]. “Even having someone in an office and working with an employee is risky.”

Gaba instructors are not alone in their fight for recognition as regular employees. According to journalist Naoki Kazama’s book “Koyo Yukai” (“Employment Meltdown”), there are no official statistics for the number of independent contractors working in Japan, but estimates range from 500,000 to 2 million workers.

Japan’s Statistics Bureau’s annual Labor Force Survey shows the number of nonregular workers has increased steadily since 1999, after the Japanese government started relaxing regulations to make it easier for companies to hire workers outside their regular employment system. In 1999, 25.6 percent of Japan’s labor force was classified as nonregular. By 2009 the figure had increased to 33.7 percent.

Employing instructors as independent contractors allows Gaba to reduce labor costs.

Instructors receive no paid sick days or vacation, no pay for training, no overtime pay, and there’s no limit on the number of unpaid overtime hours that can be worked. The company also avoids enrolling its instructors in unemployment insurance, the national health insurance and pension schemes, and workers’ compensation. It also fails to pay a commuting allowance to instructors.

The instructors, working on six-month contracts, also lack job security. Employment as independent contractors means Gaba can dismiss any teacher, with or without cause, simply by not renewing their contract.