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Graduates needn’t be hostages to advance contracts

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The seniors I teach at Sagami Women’s University have already handed in their final dissertations and now await graduation in March. You can feel that a heavy burden has been lifted from their shoulders: “My friends and I are going to Fiji for our graduation trip”; “I’ve already reserved the traditional gown I’m going to wear to the graduation ceremony.”

In April they will go out into the world as shakaijin, or full-fledged adult members of society. As I’ve mentioned before, graduation and finding employment are seen as a single event in Japan. Students at university weigh up their strengths and interests, research the industry they aspire to join, perhaps do an internship, and then apply and interview for jobs. This whole process is called shūkatsu.

If an employer says they want you to start next April, then that is effectively an official promise of employment, or naitei. In a previous column, I explained that the employer is, in a sense, legally bound by the naitei, but today I would like to discuss the obligations of the prospective employee.

All of my current students have already received their naitei from assumed future employers. Many companies insist that students affix their personal seal to a written pledge to work for them.

My students often ask me if they are legally bound to work for the company once they put their stamp to such a pledge. “Could a company sue me for damages if I later back out?” they fret.

To answer this question, we must first ascertain the legal status of naitei. Case law — specifically, the Dai-Nippon Printing case (verdict handed down July 20, 1979) — has established that the naitei is a labor contract that has not begun yet, meaning that either side can still back out. In most cases, the start date of the contract is April 1.

But corporations are clearly in a stronger negotiating position. The foundational principle of labor law in Japan is that an overwhelming power imbalance exists between employer and employee. A student is not even a worker yet, so she or he stands at an even greater disadvantage; in a way, they are hostage to the employer in whose hands their career rests. So whereas either side has the legal right to cancel the contract, the employer must have a rational, reasonable, socially acceptable reason for withdrawing their offer (such as a falsified resume or the commission of a serious crime). In contrast, the future worker has no such formidable burden of justification for backing out. My students can, if they like, simply change their minds.

There is no particular legal restriction on students lined up for future employment canceling the naitei. This is because of the aforementioned power imbalance, but also because all workers are guaranteed the right to choose their occupation under Article 22 of the Constitution.

But in that case, you may ask, what does such a pledge to join a company even mean? Well, although there is no legal compulsion, there is social and ethical pressure not to back out after making such a promise. Japan’s Civil Code (Minpō) stipulates that any employee must give their employer two weeks’ notice before resigning. Having established that the naitei is legally an employment contract of sorts, the would-be employee must give the same fortnight’s notice before the start of the contract if they would like to back out.

So, my students have no reason to fear being sued for damages. Some companies even demand that a student’s teacher write a recommendation letter for them. This is an effort by the company to bring even professors and lecturers into the equation, to apply even greater social pressure on the student to keep their promise. Nevertheless, the student still has the freedom to opt out.

I would recommend that students tell their teachers if there is a possibility that they might back out, in cases such as when the employer is not their first choice. Plus, although students are under no legal obligation, the socially responsible thing to do would be to try to avoid canceling the arrangement at the last minute. Contact the company as soon as you decide that you no longer want to work for them.

These days some companies go further and even demand that students fulfill certain tasks, submit reports, train at the company and attend seminars and other events in the months leading up to April. This almost never happened 20 years ago when I was doing my shūkatsu, yet about half of my current students are being imposed upon by their future employers in such a fashion.

Of course, they do not get paid a single yen for all of these tasks. I asked my students if they could refuse such orders, and they replied that whereas the companies don’t insist that they absolutely must complete the tasks, the students fear that if they don’t, they could lose the naitei.

This infuriates me. Corporations are interfering with the precious hours of these students’ college days. Students not yet employed have to spend long hours doing the bidding of their future employers for free, all while fearing that they could lose their spot in the company at any time. The companies are holding them and their time hostage.

The Tokyo District Court handed down a ruling in January 2005 in a case involving marketing communications firm Sendenkaigi. The company had given a naitei promise of employment to a graduate student and had him undertake a number of tasks and undergo training while he was working hard on his Ph.D. At one point he refused to attend a training course demanded by the company, saying that the extra (free) work was interfering with his ability to make progress on his doctoral dissertation. The company responded by saying he had two choices: start the process of joining the company all over again or extend his period of probation. The graduate student refused both options and the company cancelled the naitei.

The court ruled that the cancellation was illegal because “there were no grounds for ordering training before entering the company, something that ordinarily takes place after joining.” The court also said that the employer can do no more than request such tasks be completed — and that the future employee can choose to comply or not. The company was ordered to pay restitution of ¥500,000, plus one-month’s salary and ¥100,000 in legal fees.

This is a reassuring albeit common-sense verdict. University students should be focusing on their studies. Work for a future employer that doesn’t pay you yet should be optional, yet students feel they can’t say no. There is unspoken compulsion at play here. I strongly believe that college kids should, free of exploitative employers, enjoy their studies and college life right up until the very end.

Hifumi Okunuki teaches at Sagami Women’s University and serves as executive president of Tozen Union. She can be reached at tozen.okunuki@gmail.com. Labor Pains appears in print on the fourth Monday Community Page of the month. Your comments and story ideas: community@japantimes.co.jp

  • KenjiAd

    I wonder if the author has ever been an employer. Probably not, because employers are characterized as villain in this article and the author seem to think that it’s OK to hurt employers.

    My experience as an employer is limited to America and China, so my opinion may not be directly applicable to Japan. Anyway, here’s what I think.

    Whenever we employers tell you that we are going to hire you and if you say you will come working for us, we must be able to believe you. Because we will have to make significant commitment to you.

    For starters, we stop recruitment for the position you will be occupying. We have to say ‘no’ to the other candidates who might be as qualified as you are. Most of us also start planning certain schedules based on your start date, such start of training or project.

    If you changed mind, there would be a very significant damage, because we would have to start over the recruitment; any schedule based on your arrival would have to be thrown out of window.

    I suspect this author does not know how expensive recruitment costs in terms of money and time.

    If a significant fraction of ‘naitei’ students start breaking their promise, then what will happen is this. Because there is no legal remedy available for us employers, I think we would start delaying hiring. Some of us might start offering more “naitei’ than the actual number of job opening and then trim them down later. this is unethical, but if they know, say, half of students will change their mind, they may have to do that.

    These scenarios would ultimately not benefit job seekers. Trust is important. A promise must be respected from both employee and employer’s side. So before saying “yes” to job offer, the most sensible thing to say to the employer is to ask for time to think.

    • Yosemite_Steve

      OK, Kenji, it seems fair that both sides of an agreement should have to play by the same rules, but it’s hard to see how you can bind anyone to an agreement in advance. Maybe the employer should give a hiring bonus in advance and require repayment in full if you don’t end up taking the job. Since most students will probably spend the money right away and have a hard time paying it back, practically speaking they won’t be able to back out later.

      On the other hand, since you want to take the employers’ side Kenji, then how about addressing this abusive system where the employer hasn’t hired me yet, but still makes demands that I start training and doing some assignments before I’m really hired, demanding a non-trivial amount of my time, (say some days of full time ‘training’) without paying me a cent. How do you justify that?

      Seems really abusive to me, but I will say that these days employers everywhere are remarkably abusive with stuff like ‘zero hours contracts’ (no guarantee whatsoever about minimum number of hours) in the UK, or ‘flexible scheduling’ in the US where they require the employee to be able to take hours whatever shift the employer wants which varies from week to week. So even though they only give 25 hours/week, the employee can’t take another job or go to school when not working, because their work schedule gets shifted at the employers whim. Anyway, Kenji, please address the above paragraph not this one. This one is just to acknowledge that heavy handed employers are not unique to Japan!

      • KenjiAd

        As you said, it’s hard (impossible) actually to bind a supposedly future employee to the promise this person made for employment. Even this idea of yours below…

        Maybe the employer should give a hiring bonus in advance and require repayment in full if you don’t end up taking the job.

        … will not work if this person simply disappear. lol And it doesn’t make a whole lot of economic sense for the company to try find the runaway promise-breaker and make him/her pay the fine.

        I think that’s where the old-fashioned “trust” comes into play. I always believed that trust is the most critical element in business transaction, including employment. Of course written contracts play an important function, but they can not fill the void created by lack of trust, I think.

        … how about addressing this abusive system where the employer hasn’t hired
        me yet, but still makes demands that I start training and doing some
        assignments before I’m really hired, demanding a non-trivial amount of
        my time, (say some days of full time ‘training’) without paying me a
        cent. How do you justify that?

        I cannot and don’t justify it. I don’t think a company should do that. My company has never done it.

        With that said, I can think of the reason why some companies do that.

        Remember that training itself is not profitable for any company. It drains human resources; someone has to teach a new hire, during which time this temp teacher can’t do his actual work. In an ideal world, the trainee acquires job skills quickly and will contribute to the business for years to come. In the traditional life-time employment system in Japan, this is more or less the scheme that most companies operated.

        In reality, however, some employees, as soon as they learned things, would move onto another company that pays more. I don’t know if this happens often in Japan, but it happens often enough in America or China. So it’s like you use your own money to teach someone for another company.

        So I can see why some companies are reluctant to pay someone who is still in training. Again I’m not saying it’s right; I’m saying why this might be happening.

        Finally, one could argue that American workers are by far the most abused. That’s partly by design: a concept of “employment at will,” in which both employer and employee can terminate the employment for good reason, bad reason, or no reason at all (except constitutionally prohibited reasons such as race, gender, etc). In America, I can fire you just because I’m having a bad day. I don’t think people in Japan realize this.

      • Yosemite_Steve

        “In America, I can fire you just because I’m having a bad day. I don’t think people in Japan realize this.”

        True, and conversely as an American the above concept seems like more or less common sense, so it’s a bit hard for us to appreciate the sense of right to employment you get in Japan as soon as you are hired as a ‘sei-shain’. Some people think sei-shain translates to ‘full time employee’, but actually it means ‘regular employee’ because you could be full time as a contract employee but being a sei-shain gives you much stronger rights than a short term or contract hire.

        Actually the biggest problem in Japan seems to be that, maybe in part due to the strong employment rights, nowadays there are far too many workers stuck as forever contractors. That’s outside the scope of this article, but from that perspective, it doesn’t seem like new employees can complain too much as long as they are getting hired as regular employees, LOL.

        In terms of the article the interesting question is how this actually works in practice: do many students end up getting a naitei ‘offer’ and then going elsewhere? As for how fair that is, it seems to me that it depends on how the whole system works: are students given the chance to actually consider more than one offer, or to keep an offer ‘on hold’ for some weeks while pursuing a different offer? I agree that it’s not fair at all for students to ‘lead the company on’ for any length of time, but at the same time, ideally they should be able to hold onto an offer for a short period of time and not have to immediately accept or lose the offer. It seems like there is a bit more to this situation I’d have to understand to know how it works in practice.

      • KenjiAd

        I know we are digressing a bit, but the difference in employment mentality between American and Japanese workers is a very interesting topic. Actually it may be quite relevant to the main topic of this article.

        In a nutshell, the default mentality of an American worker is that your current job is temporary. You may be fired or laid off at any time with no warning. Also you would really not want to be trapped in the same company forever.

        Correct me if I’m wrong, but the default mentality of a Japanese worker is that you will be working for the same company until you retire. At least that was the case when I was growing up in Japan (I left Japan in 1986).

        Since I spent all of my professional life in America, I’m used to the American way and tend to find the mentality of Japanese workers perplexing and even a bit frustrating. On the other hand, at least as an employer, I appreciate the loyalty shown by many (not all of course) Japanese workers.

      • Yosemite_Steve

        I’m a boomer and things in the US have changed enormously. Many in my generation did find long term, full career with one company employment in the US. By now I think that even in the large companies that do stuff like offer career planning seminars, the guidance is probably focused on being ready to change jobs, don’t count on this company always having a job for you, etc. One of the demographics hardest hit by the long downturn is the middle aged workers say 40-45 or older who lost good paying jobs and ended up not being able to find anything like what they lost. Of course if we get into that age bracket then in Japan we get into the rather unique Japanese traditional screwed-up situation of many workers being forced to retire at 55 and then being offered related work but at totally miserable wages. Again, that’s another interesting topic on its own. Anyway now everybody in the US must know that they will have to job-jump and work for at least 2-3 companies even in a ‘career type’ white collar job.
        But I wonder how much perspectives have changed for this generation in Japan compared to the boomers. Are college graduates still expecting they’ll get their first job and be able to stick with that company for their whole career? Even in Japan there’s been a whole lot of economic displacement, reaching up even into the biggest enterprises. Is lifetime employment still the default expectation for all the top college graduates now? I think not, though certainly they will try to get the most stable looking situation they can find. But maybe they still do expect they will have a lifetime job if they get hired into the right company. And is that realistic now?

  • Peter

    “Students not yet employed have to spend long hours doing the bidding of their future employers for free, all while fearing that they could lose their spot in the company at any time. The companies are holding them and their time hostage.”

    Sounds like good practice for the next 40 years of their life.

  • Peter

    “Students not yet employed have to spend long hours doing the bidding of their future employers for free, all while fearing that they could lose their spot in the company at any time. The companies are holding them and their time hostage.”

    Sounds like good practice for the next 40 years of their life.