The Supreme Court has ruled that employers' refusal to provide non-regular workers with some allowances including commuting subsidies given to full-time employees is unreasonable in light of their purposes. It was the first such judgment by the top court.
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The decision responds to the current social situation in which the way people work has been changing and weight is attached to equal pay for equal work.
The Supreme Court's Second Petty Bench ruled on a lawsuit filed by a contract truck driver for a logistics company. The key point of contention in the case was whether a gap in compensation between regular and non-regular employees who perform the same job qualified as an unreasonable difference banned by the Labor Contracts Act.
The first trial at the Otsu District Court's Hikone branch ruled in September 2015 that only the employer's refusal to pay a commuting allowance to the plaintiff was unreasonable. On appeal, the Osaka High Court judged in July 2016 that the defendant withholding four of the six allowance types paid to regular employees, including for having no accidents, for meals and for commuting, was an "unreasonable difference."
In addition to these four allowances, the Supreme Court determined that the company's failure to pay a perfect attendance allowance to non-regular workers is unreasonable, pointing out that the allowance was introduced to secure enough drivers.
However, the top court ruled that refusing to provide a housing allowance to contract workers is reasonable, pointing out that there are differences in the extent of job transfers. Still, the ruling should be appreciated as the top court closely examined differences in each allowance between regular and non-regular workers and recognized a wider scope of unreasonable treatment than had lower courts.
Currently, non-regular employees account for roughly 40 percent of the nation's workforce. The ruling will force businesses that have similar differences in wages between regular and non-regular workers to review their practices. The decision will also likely influence similar lawsuits being tried at courts across the country.
On the same day, the Supreme Court handed down a ruling on another suit filed by three truck drivers over a cut in remuneration when their company rehired them as contractors after they reached mandatory retirement age, though their duties remained the same.
The court's Second Petty Bench pointed out differences in the base pay and most of the allowances before and after they were rehired cannot be deemed unreasonable, noting that rehired workers have received retirement allowances and will soon begin to receive pension benefits.
However, the top court concluded that the company's refusal to pay a perfect attendance allowance to re-employed workers and a gap in overtime allowances are unreasonable.
In their lawsuit, the three plaintiffs complained that their annual income had dropped by 20 to 30 percent from what they had received as regular workers.
Their employer contended that lowering wages for rehired employees is socially acceptable, which was upheld by the high court. The Supreme Court warned against this idea while deeming that a certain level of wage difference is acceptable.
As the policy of ensuring equal pay for equal work is being promoted as part of work-style reform, it goes without saying that unreasonable differences in wages must be rectified. However, narrowing such wage gaps is closely linked to a review of the wage structure for regular employees. Based on the top court rulings on these two cases, labor-management discussions on the issue should be promoted with an eye to future employment practices.