A labor ministry study group has finalized a report on creating a labor contract law that would include financial incentives and other avenues to resolve disputes, an area not fully addressed by existing laws, ministry officials said Monday.

The Labor Standard Law offers provisions on minimum labor conditions but not specifics on resolving disputes.

Previous court cases have so far been used as yardsticks in resolving labor disputes, which have been on the rise and are estimated to number more than 1 million annually, according to the Health, Labor and Welfare Ministry.

In the report, the group proposes introducing monetary incentives to terminate employment contracts even when conditions do not permit the employer to dismiss a worker.

When the employer wants to change labor conditions and there are no unions, the study group proposes establishing a labor-management panel to discuss whether changes should be made.

The group suggests banning job transfers without an employee’s consent and not allowing employers to prevent employees from holding a second job.

It recommends that a temporary worker hired on a contract basis without any specific termination date presented beforehand be considered a full-time employee.

The group says employees should be allowed to keep their jobs even when they are engaged in a court dispute with their employer over labor conditions that the employer wants to change.

The ministry is planning to present a labor contract bill, to be incorporated into the Civil Code, to a regular Diet session in 2007, after holding discussions with union officials, employers and other experts at the ministry’s Labor Policy Council possibly starting next month.

The report is expected to serve as a springboard for the discussions.

On instituting the new law, neither the Japan Business Federation (Nippon Keidanren), nor Rengo, the nation’s largest labor organization, expressed opposition in the course of the study group’s discussions.

But Rengo has said it would oppose establishing a law if the mechanism of using financial incentives to terminate employment is introduced.