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Nova failure: Can teachers recoup lost pay, keep jobs?

by Reiji Yoshida

When Japan’s largest employer of foreigners effectively went bankrupt last week, thousands of instructors at the foreign-language school giant were left without jobs. Many now face complicated legal problems in a language not their own.

What will happen to Nova Corp., their contracts and the money they are owed? Will they be able to collect unemployment and insurance benefits? Is this the end of Nova? Following are some answers to those questions:

What exactly is the situation at Nova Corp.?

Since Nova filed for protection on Oct. 26 under the Corporate Rehabilitation Law, all its assets became protected from claims by creditors, including its employees.

Nova’s executives were removed from management and replaced by two court-appointed trustees — lawyers Toshiaki Higashibata and Noriaki Takahashi. The trustees are looking for a company to sponsor Nova’s rehabilitation and hope to draw up a rebuilding plan by around month’s end.

If the court OKs the plan, Nova will try to resume business after it is carried out.

What if the trustees cannot find a sponsor?

The company will likely be liquidated, which means all of Nova’s assets will be divided among its creditors and the company will cease to exist.

Higashibata said Tuesday that Nova was negotiating with “several” companies and hoped to decide on a sponsor by the end of next week.

Is liquidation a real possibility?

Observers say yes. The trustees initially cited four major firms as possible candidates, but all appear reluctant to sponsor Nova, given its huge liabilities and low cash reserves.

Students have paid at least ¥40 billion in advance lesson fees, and that sum is part of Nova’s liabilities.

If a sponsor emerges and Nova manages to reorganize, what will happen to the contracts the teachers signed?

It will all depend on the rehabilitation plan drawn up by the trustees and any sponsor.

During rehabilitation, the size of a company and its workforce are often reduced, and the conditions of the remaining employees’ contracts are often changed to help it rebuild.

“Of course we have no choice but to close unprofitable branches in a prompt manner, after due consideration,” the trustees said in a written statement on Nova’s Web site.

According to the Labor Standards Law, a company has the right to fire workers “if there are rational reasons and it does not violate socially accepted norms.”

Dismissing workers as part of a rehabilitation plan would probably be justified under that condition, said officials at the Shinjuku Employment Assistance and Instruction Center for Foreigners in Tokyo’s Kabukicho district.

Many teachers haven’t been paid for months. How can they get their money?

According to the employment assistance center, most of the Nova teachers who have come to them say wages haven’t been paid for two months.

The job center’s first piece of advice is to wait and see whether the trustees can find a sponsor company, and whether the court will approve a rehabilitation plan.

If rehabilitation starts with a proper sponsor and the court’s approval, all unpaid wages are usually paid out by the company — eventually. Payment of unpaid wages usually gets higher priority under the law than other general liabilities, including refunds for unused lesson tickets.

Even if Nova liquidates, the government-backed Japan Labor Health and Welfare Organization will guarantee payment of around 80 percent of any wages left unpaid by a failed company.

The employment assistance center advises Nova workers to keep updating their contact addresses so they can receive notices on unpaid wages and other important documents.

How can Nova teachers apply for unemployment insurance?

First, check your pay slip to see if you’re covered. Premiums — if any — deducted for unemployment insurance would appear on the slip.

In order to get benefits, however, you must have worked for at least six months at Nova.

If you voluntarily quit the company and don’t take another job, you can start receiving benefits three months after registering your unemployed status at a local Public Employment Security Office, commonly referred to as Hello Work.

If you are forced to quit or if wages are not paid for more than two months, you can start receiving benefits in as few as seven days after acquiring jobless status. To apply for the benefits, workers need to submit two kinds of unemployment slips from the company to prove they have work records, as well as an ID card, a “hanko” (personal seal), two photos and bank account information. In lieu of a hanko, signatures are usually accepted.

Will it be difficult to get a job at another language school if I can’t speak Japanese?

According to the employment assistance center, this may be the case. Most Nova teachers have a one-year work visa for a Specialist in Humanities/International Services.

Most jobs available in this category, including English-teaching jobs, require a certain level of Japanese skill, some qualifications or other special skills, the center said.

The Shinjuku job office thus generally recommends that Nova teachers who cannot speak Japanese consider returning to their home countries for the moment because their visas could expire before they can find a new job in Japan.

The Shinjuku Employment Assistance and Instruction Center for Foreigners offers counseling for Nova employees and has interpreters and experts on hand. The phone number is (03) 3204-8621.