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Supreme Court rules in favor of nonregular workers over allowances

Two of the plaintiffs, center right and fourth from right, answer questions from reporters in front of the Supreme Court in Tokyo's Chiyoda Ward on June 1, 2018. (Mainichi)

TOKYO -- The Supreme Court on June 1 ruled that nonregular workers were being unfairly treated over allowances they receive at a Yokohama transport company and partially scrapped a lower court ruling.

The top court ordered the company to pay three rehired employees perfect attendance allowances while deeming that the differences in other aspects of their wages were reasonable.

The top court ruled on an appeal filed by three plaintiffs, who were rehired after reaching the retirement age of 60 at Nagasawa-Unyu transport company, against a November 2016 Tokyo High Court ruling.

In its ruling, the top court's Second Petty Bench said, "Differences in working conditions should be judged by not only the total amounts of wages but also each individual item of wages (such as allowances)." This is the first time that the Supreme Court has made such a judgment.

The court then deemed it unreasonable for the company not to pay the 5,000 yen for the monthly perfect attendance allowance to nonregular workers such as those re-employed, and ordered the company to pay the three 50,000 yen to 90,000 yen.

On the other hand, the Supreme Court dismissed the plaintiffs' claim that the differences in the base pay and other allowances were unreasonable, noting that they will soon begin to receive pension benefits.

The court then ordered the high court to redo a trial on calculations of the plaintiffs' overtime allowances that are linked to their perfect attendance allowance.

The four justices in the petty bench unanimously reached the decision.

In 2014, the three men, aged 63 to 64, sued Nagasawa-Unyu for cutting their pay when it re-employed them after retirement though their work duties remained the same, based on the Labor Contracts Act's prohibition of "unreasonable differences" in compensation for the same work.

Article 20 of the amended Labor Contracts Act, which went into effect in 2013, states that if the labor conditions of an employee with a fixed-term contract are different from those of a fellow employee without a fixed term (a regular employee) under the same employer, then "it is not to be found unreasonable, considering the content of the duties of the workers and the extent of responsibility accompanying the said duties, the extent of changes in the content of duties and work locations, and other circumstances."

The Tokyo District Court ruled in favor of the men in May 2016, stating, "Creating a difference in pay for exactly the same work is unreasonable in the absence of special circumstances," and ordered Nagasawa-Unyu to pay a total of about 4.15 million yen in compensation.

However, in its ruling in November that year, the Tokyo High Court recognized that the company's rehiring of the three plaintiffs based on the Act on Stabilization of Employment of Elderly Persons, which requires companies to retain employees wishing to keep working until age 65, falls under "other circumstances" in Article 20 of the Labor Contracts Act.

The Tokyo High Court verdict stated that "lowering the wage for doing the same work (after retirement) is a socially accepted practice," and found in favor of the company.

The three plaintiffs claimed in their 2014 filing that their annual income under their post-retirement contract was 20 to 30 percent lower than what they had received as permanent employees, though their duties stayed the same.

"We cannot say it is unreasonable for a company to reduce the pay of retiree workers in order to avoid swelling personnel costs," the high court stated.

(Japanese original by Naotaka Ito, City News Department)

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