Japan's Supreme Court recently ruled that the different treatment of regular and nonregular employees, in which the latter are not provided with bonuses or severance pay, is reasonable.
In two separate cases brought by a former part-time employee at a university and two former contract workers at a subway kiosk, high courts ruled earlier that not paying such allowances to nonregular workers was illegal. The top court, however, overturned the lower court decisions and finalized the workers' legal defeat.
The top court recognized in both cases that jobs done by nonregular employees are not as complex as those performed by regular employees. It also noted that nonregular workers are not subject to being transferred.
We must argue that the top court should have looked more carefully into the reality of employment. The latest ruling could put a damper on the promotion of Japan's "equal work, equal pay" system launched this past April.
In fact, one of the justices dissented, stating that job description for the fixed-term contract worker did not greatly differ from that for their regular employee colleagues, and that it was unreasonable for their employer not to provide the contract worker severance pay.
Among the issues with the different treatment of regular and nonregular employees is the strong sense of unfairness felt by the latter over seasonal bonuses and severance pay, as these are usually sizeable.
The latest ruling pointed out that the objectives of these allowances were to attract staff and encourage workers to stay. In its supporting opinion, the top court said that to pay retirement allowances, employers must save funds over an extended period, and this is largely left to their discretion. The ruling can therefore be regarded as lending weight to companies' positions.
At the same time, the ruling also specifically noted that in some circumstances the non-provision of such allowances cannot be permitted. The highest court's decision should not be used as a hall pass for employers to arbitrarily decide labor conditions.
Meanwhile, related legislation has been revised and developed to put the equal work, equal pay system into practice, and the Ministry of Health, Labor and Welfare has created a guideline for the operation of the laws. While differences in the provision of bonuses is listed as unreasonable, the content remains unspecific, and there is no clear guidance regarding severance pay.
In reality, labor and management negotiations play a decisive role in improving the treatment of nonregular workers. Labor unions should actively get involved in the matter. Support from administrative bodies is also essential.
Nonregular workers make up nearly 40% of Japan's labor force, but their pay remains at around 60% of regular workers'. It is clear that nonregular laborers have been put in a tough position.
Amid the coronavirus crisis, nonregular workers are treated as employment adjustment valves, and many of them are being fired or having their contracts terminated. Companies must wake up and realize that it is their responsibility to improve the treatment of such workers.
As ways of working have become more diverse, fair treatment of workers is becoming more important not only for the workers themselves, but also for companies trying to secure labor. Japan must not stop the work to correct the difference in how workers are treated.