The Special Dismissal Zone: where legal protections no longer apply

Strange bedfellows: Osaka Mayor Toru Hashimoto (right) chats to fellow co-leader of the Japan Restoration Party Shintaro Ishihara in Tokyo in June. Hashimoto announced last month that Osaka Prefecture and city will jointly submit a proposal to the Cabinet Office to set up a Special Challenge Zone where some labor protections would be relaxed or waived.
Strange bedfellows: Osaka Mayor Toru Hashimoto (right) chats to fellow co-leader of the Japan Restoration Party Shintaro Ishihara in Tokyo in June. Hashimoto announced last month that Osaka Prefecture and city will jointly submit a proposal to the Cabinet Office to set up a Special Challenge Zone where some labor protections would be relaxed or waived.

I couldn’t believe my ears when I heard about the government’s recent proposal to set up a Special Dismissal Zone on Japanese territory. “A what?” I hear you cry.

The Shinzo Abe government wants to make Japan “the most business-friendly climate in the world.” In May, he set up a National Strategy Special Zone Working Group, made proposals to local governments and corporations, and announced that special zones, or tokku, for health care, agriculture, education and other areas will be established.

The plan is to be submitted to an extraordinary session of the Diet in autumn as the Industrial Competitiveness Strengthening Bill. Most controversially, a so-called Special Employment Zone is among the options being considered, an idea that has already been dubbed the Special Dismissal Zone, or kaiko tokku, by the media.

Currently, throughout Japan, employers must overcome several high hurdles before they can dismiss an employee legally. In short, you can’t fire someone without a damn good reason.

The thinking for the Special Dismissal Zone, however, is that rules about sackings would be relaxed roughly to the point of “employment at will,” as is practiced in some parts of the United States. Within the zone, the idea is that if the worker and employer agree ahead of time on what behavior warrants dismissal, then such a dismissal under those circumstances will always be permitted, regardless of bothersome legal protections outside the zone. For instance, if employer and employee agree that the worker can be dismissed for turning up late once, then the employer can legally sack that worker when he clocks in at 9:30 for the very first time.

A second special feature of this zone would be that work hours would not be restricted for employees earning above a certain salary — currently set at about ¥8 million a year. That means employers could theoretically make their employees work all night and not pay them a single yen for the overtime. Such a high salary is safely beyond the grasp of most of us working stiffs, but keep an eye out for that falling floor — and watch out as that zone spreads.

A third sweetener for these business oases: The “five-year rule” wouldn’t apply if foreign workers make up more than 30 percent of an employer’s work force. This rule refers to the change to the Labor Contract Law (Article 18) that gives workers the chance to win permanent status if they stay with an employer for more than five years. I spoke about the problems emerging with this legal change in March (“Labor law reform raises rather than relieves workers’ worries,” March 19). Whatever the shortcomings of this reform, the special zone would suspend this protection to all company employees if a firm’s gaijinquota tops 3 out of 10.

Responding to the announcement of the kaiko tokku plan, Osaka’s firebrand mayor, Toru Hashimoto, on Sept. 11 announced that Osaka Prefecture and Osaka city will jointly submit a proposal to the Cabinet Office to set up a zone that would encourage performance-based wages, to be called the Special Challenge Zone. This zone would include Osaka’s economic heart, the Midosuji area. Companies paying above a certain wage would enjoy relaxed work-hour restrictions and the right to fire at will.

Osaka prefectural Gov. Ichiro Matsui stressed that the zone would only affect elite workers. “This is for highly skilled professionals, not for low-income workers,” he said. “This enables mismatches between employer and employee to be rectified by moving around high-income, highly skilled, self-confident workers. This is not for workers barely making ends meet.”

For workers, these plans come as a bolt out of the blue. What is going on here? Well, according to the government, clarifying dismissal rules will boost the development of new industries and attract start-up and foreign firms, creating a healthy investment climate in Japan for the world’s corporations.

Many business and political leaders whinge about how hard it is to fire someone in Japan. “It is harder to dismiss a worker in Japan than in any other country in the world,” they whine. “Japan is going to be left behind.” Is that really the case?

Article 16 of the Labor Contract Law states: “A dismissal is invalid and the right to dismiss has been abused when it lacks objective, rational grounds and cannot be deemed reasonable according to social norms.” I took this up in my February 2012 column (“Oversleeping radio anchor set tough precedent for firing staff,” Feb. 28, 2012).

In Japan, case law often leads to laws being rewritten. The wording of Article 16 has its origins in a Supreme Court case brought against Nippon Salt Manufacturing in 1975. The gist of the ruling was that employers cannot fire workers whenever they please. Since workers earn wages that form the basis for their livelihood and enable them to raise families, unchecked dismissals could lead to the breakdown of the family unit and cause instability even within society as a whole. Wages are the basis of workers’ livelihoods, so sackings should be avoided — that was the thinking behind this legal principle of kaikoken ranyō hōri, or abuse of the right to dismiss.

Business leaders and some politicians counter that the principle has left Japanese workers overprotected, and that it damages Japan’s competitive edge in the world. I must disagree strongly. Establishing the principle that you cannot dismiss a worker without good reason stabilizes industrial relations, places limits on the exercise of runaway, arbitrary power by employers, and helps preserve social harmony.

During Japan’s period of dramatic postwar economic growth, companies rallied under the slogans of “lifetime employment” and “your company is your family.” Jobs were far more secure back then. Granted, the slave-like treatment of workers during that time tarnishes the sheen of job security, but at least workers were not treated as disposable objects, to be used then tossed away like garbage.

The government and business community are swearing up and down that the new zones will only apply to elite, high-income workers. But I have no doubt that if we deregulate dismissal in these zones, the deregulation will break out into the wider world. This in turn will encourage workers to see each other as rivals rather than comrades, enemies rather than allies. When that day comes, who will be laughing from their high perch? The answer is too obvious to state.

More than 35 percent of workers in Japan are in irregular or contingent employment. Income is declining while the number of work hours and the number of workers not enrolled in the shakai hoken health and pension scheme continue to rise.

As Japan ages, more and more workers must provide nursing care to parents on top of tough, long-hour jobs. More employees are taking time off work, resigning or even killing themselves due to depression, which is now considered by some to be the national disease.

The last thing Japan needs is a Special Dismissal Zone to make workers more miserable than ever.

“Taking back Japan” is one of the Abe government’s favorite catchphrases. Around town, you see this phrase in bold letters splashed across huge posters depicting the prime minister gazing into the distance, the Hinomaru flag fluttering in the background. But I cannot see where Abe’s eyes are looking. From and to where does he want to “take Japan back”?

Hifumi Okunuki teaches at Sagami Women’s University and serves as the executive president of Tozen Union (Zenkoku Ippan Tokyo General Union). She can be reached at On the third Tuesday of the month, Hifumi looks at cases in Japan’s legal history to illustrate important principles in labor law.

This article originally published in the Japan Times at: