Recently, the Tokyo Public Law Office has seen a surge in inquiries similar to the following:
I’m coming up to my company’s set retirement age of 60. The company offers workers a re-employment contract after we turn 60 — a one-year fixed-term contract that is renewable until the age of 65. The problem is that the salary under the re-employment contract is considerably lower than my current pay, in spite of the fact that I would be performing the same job with the same responsibilities as I have now. Isn’t this discriminatory and unacceptable?
In Japan, many companies adopt a system of set retirement at the age of 60, even though people can only receive the national pension from the age of 65. That means there are people who can’t receive any income between the ages of 60 and 65.
The Law Concerning Stabilization of Employment of Older Persons requires companies to take measures to protect the employment of elder workers until the age of 65 by introducing one of following three systems: 1) abolition of the retirement system altogether; 2) raising the retirement age to 65; or 3) mandatory continuous employment for all employees who wish to keep working after the age of retirement.
However, though the law obliges companies to take one of these measures, it does not say anything about the terms and conditions of any re-employment contract. Basically, the act assumes the company will decide these matters based on a labor-management agreement (LMA) reached through negotiation between a union and management. However, there are lot of companies that don’t have LMAs that cover these circumstances. Because of this, there have been a growing number of labor disputes and complaints regarding employment conditions for workers over 60.
In general, at companies that have introduced continuous employment systems for workers over 60, the employment contracts they are offered have a fixed term of one year and are renewable until the age of 65. It is important here to note what Article 20 of the Labor Contracts Act says:
If a labor condition of a fixed-term labor contract for a worker is different from the counterpart labor condition of another labor contract without a fixed term for another worker with the same employer due to the existence of a fixed term, it is not to be found unreasonable, considering the content of the duties of the workers and the extent of responsibility accompanying the said duties, the extent of changes in the content of duties and work locations, and other circumstances.
Although written in a confusingly roundabout way, what Article 20 means is that employees on fixed-term contracts can be treated differently by an employer than those on indefinite-term contracts, but only if this is justifiable based on a difference between the two groups’ duties, responsibilities and so on. Conversely, it follows that those doing the same work under the same conditions and with the same responsibilities should not be treated unfairly just because they are on fixed-term contracts.
In May, the Tokyo District Court ordered a company to pay a group of workers the difference between their decreased salary under its re-employment system and their previous pay, based on Article 20 of the Labor Contracts Act. In this case the plaintiffs, who were re-employed as truck drivers, had sued based on discriminatory treatment after receiving a reduced salary when they were re-employed, in spite of the fact that they were doing exactly the same job as they had been doing before turning 60.
If you feel your employment conditions or treatment at work may be discriminatory, you are advised to consult with your labor union, if you have one, or a lawyer specializing in labor and employment law.
Yumi Itakura is an attorney with the Foreign nationals and International Service Section at Tokyo Public Law Office, which handles a wide range of cases involving foreigners in the Tokyo area (www.t-pblo.jp/fiss; 03-6809-6200). FISS lawyers address readers’ queries once a month. Your questions and other comments: email@example.com