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Retirees can be rehired, but often under worse conditions

by Ashley Thompson

Reader PW teaches at an international school in Tokyo and wants to know about Japan’s retirement laws:

“My school says the retirement age is 60. They will let you keep teaching until age 65, but during that time you lose all retirement pay and raises are frozen. At 65 the teacher must retire. Is there a mandatory retirement age in Japan now?”

MS also has a retirement query:

“I have been employed at a Japanese company for over 20 years. Although I am virtually a full-time employee in terms of the number of hours I work, I have no contract or agreement with this company.

“I was recently informed that I would have to retire next year as I will then be 63 years old. Despite my lack of any contract or agreement with this company, would I have any rights in this situation according to Japanese law?”

The current minimum retirement age in Japan is 60 years old, but this only matters if the company chooses to use a retirement system. If they do, generally firms unilaterally decide on a company-wide retirement age at or above the legal minimum. So one company could have a retirement age of 61, another 64.

Miho Niunoya, an attorney at Atsumi & Sakai, explained the three options a company has in terms of retirement age systems.

“As of today, a company, in principle, must choose one of the following: (i) have a retirement system of age 65, (ii) not have a retirement age system, or (iii) have a retirement age system between ages 60 and 65 and rehire retired employees unless the collective agreement between the company and its employees states otherwise.

“Please note though that this law will change on April 1, 2013. The modified law does not include the following line in (iii) above: ‘unless the collective agreement between the company and its employees states otherwise’. This means that any exceptions for rehire obligation under the collective agreement would no longer be accepted.”

If a company chooses a retirement age between ages 60 and 65 with the intent to rehire retired employees, then the employee may continue working for the company until age 65.

However, Ms. Niunoya said that “It is common for a retiree to be rehired as a contract employee, which is a different status than a life-employment employee. This is the reason PW said that he could work until age 65, but could not receive any retirement pay and his salary would be fixed.”

As Ms. Niunoya mentioned, if a retiree is rehired, some employment terms would likely change, and almost definitely not to the employee’s advantage (as in PW’s case).

According to attorney Masayuki Honda of Masayuki Honda Law Office, “Companies can set new conditions, such as reduced wages, frozen raises and a no-retirement-pay system under a new employment agreement.”

However, as Ms. Niunoya briefly referred to above, the retirement age law was revised in 2004 to reflect changes in the pension system, and companies with a retirement system need to adapt accordingly.

“Roughly speaking,” she said, “although currently an employee of age 60 may start receiving pension payments, under the reform the starting age would be gradually lifted up and, after April of 2025, only an employee who reaches age 65 may start to receive pension payments.”

Kaoru Haraguchi of Haraguchi International Law Office explained that the revisions encourage companies, if they choose to have a retirement age system and don’t plan to rehire retired employees, to raise the minimum retirement age to 65 in accordance with the pension system changes.

But, he added, “Please take note that there are transitional measures and not all companies setting 65 as the retirement age have to choose one of the above choices immediately. They are required to decide and implement their choice in steps.”

In MS’s case, Mr. Honda said the retirement laws do still apply, although how they apply isn’t clear without knowing more details.

If MS’s company is following all of the retirement laws and 63 is their retirement age, MS can seek to be rehired, but until the law revisions take effect in April, the company isn’t necessarily required to rehire a retiree.

It would be best to contact a lawyer about your situation to see what your options are.

You can find Atsumi & Sakai at www.aplaw.jp/en, Haraguchi International Law Office at haraguchi-law.com/english/index.html, and Masayuki Honda Law Office at www.honda-law.net/english.

Ashley Thompson writes unique how-tos about living in Japan at www.survivingnjapan.com. Send all your questions, queries, problems and posers to lifelines@japantimes.co.jp.