Japan has introduced new provisions to improve the treatment of part-time and fixed-term workers. This article sets out details of the new legal obligations on employers.

By: Nobuhito Sawasaki and Ai Nishiuchi

Firm:  Anderson Mori & Tomotsune

With the increasing number of non-regular workers, disparity in treatment between regular workers and non-regular workers is becoming a social problem. In response to this, the Act on Improvement etc. of Employment Management for Part-Time Workers (Act No. 76 of 1993, the ‘PTEA’) was revised and the Act on Improvement etc. of Employment Management for Part-Time and Fixed-term Workers (the ‘PTFTEA’) which also covers fixed-term employees, was established.

Definitions

Part-time workers are workers whose prescribed weekly working hours are shorter than those of regular workers engaged in the same kind of work and employed by the same employer, unless otherwise specified by Ordinance of the Ministry of Health, Labour and Welfare (Article 2, paragraph 1 of the PTFTEA). Fixed-term workers are workers who execute a labour contract for a definite period with an employer (Article 2, paragraph 2 of the Part-Time/ Fixed-Term Workers Act).

Legislative changes

On 28 December 2018, based on the PTFTEA, Guidelines on preventing the unreasonable treatment of part-time, fixed-term and dispatched workers (that is, agency workers) and guidelines for employers on improving employment management for part-time and fixed-term workers were published.

The PTFTEA was also revised as part of the ‘Act on the Arrangement of Related Acts to Promote Work Style Reform’ promulgated on 6 July 2018. Although Articles 8 and 9 of the current PTEA and Article 20 of the Labor Contracts Act (Act No. 128 of 2007) require employers to treat regular and non-regular workers equally, or in a well-balanced manner, the PTFTEA aims to further improve equality of treatment. Companies are required to reconsider the treatment of their non-regular workers in line with these legal changes and with judicial precedent.

1. Regulations to resolve unreasonable differences in treatment

The PTFTEA specifies that whether particular treatment constitutes an unreasonable difference in treatment between part-time or fixed-term workers and regular workers in the same company shall be determined taking into account the specific circumstances. Different circumstances must be considered depending on the nature and purpose of the particular treatment. In addition, the PTFTEA establishes regulations for the equal treatment of fixed-term workers. It also provides the basis upon which guidelines regarding these matters were established and maintained. The principal articles are set out and explained below.

Prohibition of Unreasonable Treatment (Article 8)

Following the revision of Article 8 of the PTEA, unreasonable differences in the treatment of fixed-term workers are also prohibited.

Specifically, an employer cannot prescribe base salary, bonus and other treatments in a way that creates an unreasonable difference between its part-time or fixed-term workers and regular employees in view of the content of their duties and associated responsibilities (the ‘Content of Duties’), the scope of changes in Content of Duties and the scope of relocation, and other factors which are deemed appropriate in light of the nature and purpose of such treatment.

The previous PTEA stipulated that treatment or working conditions should only be compared within each workplace of a particular employer. Conversely, the revised article allows treatment or working conditions to be compared across multiple workplaces of the same employer. Further, the revised Article 8 stipulates that treatments such as ‘base salary, bonus and other treatments’ will be assessed individually.

Prohibition of discriminatory treatment of part-time and fixed-term workers (Article 9)

Under the revised Article 9 of the PTEA, fixed-term workers who are deemed to be equivalent to regular workers are now also covered by the prohibition of discriminatory treatment in addition to part-time workers deemed equivalent to regular workers. Namely, the employer must not discriminate in terms of base salary, bonuses or other treatment because they are part-time or on a fixed term. Under this article, this is to be assessed individually.

Part-time or fixed-term workers who are deemed to be equivalent to regular workers are workers whose Content of Duties is equivalent to that of regular workers and whose Content of Duties and assignments are likely to be change within the same range as those of regular workers throughout the entire period until the termination of the employment relationship, in light of the practices and custom at the workplace and other circumstances.

Welfare facilities (Article 12)

This article requires employers to provide opportunities to use welfare facilities (company cafeteria, rest room and locker room) to part-time and fixed-term workers, where regular workers are provided with opportunities to use such welfare facilities.

2. Increased accountability for treatment for workers

The PTFTEA requires the employer to explain the nature of, and reason for, different treatment to part-time and fixed-term workers (Article 14).

2.1 When an employer employs a part-time or fixed-term worker, it must promptly explain to him or her certain matters regarding measures it will take pursuant to Articles 8 through Article 13.

2.2 On request from a part-time or fixed-term worker, an employer must explain the nature of and reasoning behind any difference in treatment between part-time or fixed term workers and regular workers. The employer must also explain the factors considered when making decisions on these matters.

2.3 An employer must not dismiss or otherwise treat a part-time or fixed-term worker less favourably because the worker requested an explanation of differences in treatment as described above.

2.4 Details of employers' accountability based on Article 14 are set out in ‘Guidelines for the Measures, etc. concerning the Employment Management Improvement, etc. for Part-Time Workers and Fixed-Term Workers to Be Taken by Employers’ published on 28 December 2018.

2.5 Explanation of differences in treatment

Regular workers to be compared

An employer must explain the contents of and reasons for the difference in treatment by comparison with regular workers whose duties and the scope of changes in duties and assignments are most similar to those of the part-time or fixed-term workers in question. This is determined by the employer.

Nature of difference in treatment

In relation to the difference in treatment, an employer must explain the following:

  • whether or not standards and/or guidelines concerning the treatment of workers are different for regular workers and part-time or fixed-term workers;
  • details of each specific difference in the treatment of regular workers and part-time or fixed-term workers;
  • the standards and/or guidelines concerning treatment of regular workers and part-time or fixed-term workers.

Reasons for difference in treatment

An employer must explain the reason for difference in treatment based on the duties, the scope of changes in duties and assignments, and other circumstances that are deemed appropriate in light of the nature and purpose of the treatment in question.

Methods of explanation

As a general rule, an employer must provide a verbal explanation that enables the

part-time and fixed-term workers to understand the contents. However, provided that the employer uses materials with all matters to be explained included that are simple enough for the part-time or fixed-term workers can understand them, the employer may also explain by providing the workers with materials.

3. Administrative alternative dispute resolution (ADR)

Administrative measures to ensure compliance and ADR mechanisms have been developed in relation to the obligations set out in section 1 and the accountability requirements set out in section 2. As a result, fixed-term workers are also protected by administrative measures to ensure compliance and by ADR. The prohibition of unreasonable treatment in Article 8 PTFTEA is also supported by administrative measures to ensure compliance and by ADR.

4. When do these provisions come into effect?

The PTFTEA comes into effect on 1 April 2020 but small and medium-sized businesses will be temporarily exempted from its application until 1 April 2021. Small and medium-sized business are defined as employers whose capital or total amount of contribution does not exceed JPY 300,000,000 (or JPY 50,000,000 if an employer’s principal business is retail or service or JPY 100,000,000 if an employer’s principal business is wholesale) or employers who regularly employ fewer than 300 workers (50 if an employer’s principal business is retail or 100 if an employer’s principal business is wholesale or service). This excludes the amendment to the provision on conciliation (Articles 26 and 27 of the PTFTEA), which will take effect for all employers on 1 April 2020.