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Tokyo High Court overturns decision on contract wages after retirement

The Tokyo High Court on Nov. 2 overturned a lower court decision ordering a Yokohama transport company to pay three truck drivers re-hired as contract workers after retirement age the same wages as full-time employees.

    The Tokyo District Court's earlier decision had called the pay cut illegal. However, high court Presiding Judge Norihiko Sugihara stated in his ruling, "Pay cuts after (employees) have reached retirement age are widely practiced, and you can't say there is anything illogical about it."

    The three workers were employed by Nagasawa-Unyu, based in Nishi Ward of Yokohama, Kanagawa Prefecture. In 2014, they reached the retirement age of 60, and were re-hired on one-year contracts. However, their pay was roughly 30 percent less than before. The Labor Contract Act prohibits an unreasonable gap in working conditions between permanent and set-term contract employees. The district court had ruled in May that the pay gap -- totaling 4.15 million yen when compared to the drivers' previous salaries -- had indeed been unreasonable.

    The Tokyo High Court pointed out that "since companies are required to keep employees after 60, there is nothing illogical about trying to prevent costs from ballooning by reducing the wages of employees past retirement age." The court recognized that the wages of the men were cut 20 to 24 percent by the company even though their duties did not change. However, the court concluded this was not in violation of the Labor Contract Act because the men had also been paid a severance allowance, which actually made the pay gap less than at companies of comparable size.

    "Lowering the wage for doing the same work is a typical and socially accepted practice," the court said. The lawyer for the three men, Kunio Miyazato, criticized the court's decision, saying "social acceptance" was made up by the court for its own convenience.

    "This was an unjust decision. We will appeal until we win in the Supreme Court," said tearful plaintiff Mitsunari Suzuki, 62, of Tokyo's Ota Ward. Suzuki had been a truck driver for Nagasawa-Unyu for some 34 years. Fellow plaintiff Osamu Yamaguchi, 62, of Setagaya Ward, emphasized, "Even though it's the same work, there is a pay difference of 1.2 to 1.4 million yen. We just can't accept that."

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