Issues | LABOR PAINS

For work rules in Japan to legally count, employers must hammer them home

by Hifumi Okunuki

I first heard about shūgyō kisoku (official work rules) from a professor at law school: “An employer can change the work rules unilaterally if it is gōriteki,” I remember him saying.

I would hear the word “gōriteki,” meaning reasonable or logical, thousands more times during my law school years, and later in my career teaching law. It is one of the key concepts underpinning the Japanese legal system. Nearly any gray zone of the law is resolved by the court looking at what is “reasonable.” And so it is with changing work rules without the employees’ consent.

But it wasn’t supposed to be that way. Shūgyō kisoku are the foundational rules of a workplace that decide wages, work hours and much else. That’s right: It is work rules that settle these fundamental issues, taking precedence over individual labor contracts. They must be created and promulgated at any workplace with 10 or more employees.

For workers, shūgyō kisoku are the bread and butter of their working existence, so can employers really just downgrade these rules without their consent? Rules by their very nature must be agreed upon by those subject to them. Isn’t that the case? Isn’t the whole justification for workplace exploitation that workers sign on the dotted line, that they agree to the rules? My professor’s words left me wondering whether employers could just change the work rules in whatever self-serving manner they choose, then claim the change was reasonable and get away with it.

The fact that in some cases (gōriteki cases) an employer can unilaterally downgrade work rules brings with it countless problems. But my purpose in this installment is not to discuss these legal issues, but rather a problem more fundamental still — one that presents itself the moment a worker begins their employment at a new place: That is, the obligation to promulgate (shūchi gimu) the work rules, as codified in Article 106 of the Labor Standards Act (Rodo Kijun Ho).

The obligation to promulgate, or make known, the work rules is grounded in Articles 7 and 10 of Labor Contract Act (Rodo Keiyaku Ho). Article 7 says: “If a worker and an employer conclude a labor contract, and the employer has informed the worker of the rules of employment that provide for reasonable working conditions, the contents of the labor contract are to be based on the working conditions provided by such rules of employment.” Article 10 sets promulgation as a necessary condition before employers can change working conditions in a way that is unfavorable to the worker.

But what is the purpose of creating work rules in the first place? 1) To make employees’ working conditions and workplace rules explicit; 2) to share these between workers and management; and 3) to prevent pointless labor disputes. To stop management from forever adding prohibitions after the fact to manipulate workers, the rules must be laid down clearly and in writing from the start.

So, it is not enough to create the work rules. Their content must be made known to the workers in an appropriate manner, and only then do they have any meaning. And how ought they to be promulgated? Let me introduce the textbook court precedent for this.

Fuji Kosan handed Worker A a disciplinary dismissal (in Japan, a more severe dismissal that entails losing some benefits) for repeatedly causing trouble with a corporate client, insubordination and cursing. The disciplinary dismissal was given in line with the regulations in the work rules, but those work rules were kept only at the company’s head office, not at the site where A worked.

On May 5, 2001, the Osaka High Court upheld the validity of the work rules, noting that they had been created with the consent of a representative of the majority of employees. However, the Supreme Court overturned the high court ruling in October 2003 and invalidated the dismissal, saying that the work rules were the basis for the disciplinary dismissal, but that these had not been made known to the workers and were therefore not in legal effect. “In order for the work rules to be binding with the force of legal standards, procedures must be taken for the content to be made known to the workers of the workplace subject to them,” the top court ruled.

The acceptable methods for promulgation are stipulated in Article 52.2 of the Labor Standards Act enforcement ordinances, as follows:

1) Posting or placing them at each place of habitual work.

2) Giving them to workers in writing.

3) Recording them on magnetic tape, disc or similar medium, and setting up a device that enables workers at each workplace to check them at any time.

Fuji Kosan had not placed a copy of the rules at A’s workplace, so it violated options 1 and 2 above. Option 3 is kind of anachronistic, so we need not linger there except to say that legislators might want to delete it.

Let’s move on to the K.K. Nichion severance pay case. Worker B and others removed products from the company’s inventory without permission, copied and removed customer data, deleted PC data, among similar actions, before quitting en masse. The company refused to pay the severance listed in the work rules, citing the above actions.

The January 2006 Tokyo District Court ruling in the case stated, “In order for the work rules to hold legal force, the employer need not listen to the opinion of the employee-majority representative or register the rules at the Labor Standards Office (LSO); promulgating them effectively to employees is sufficient.” Effective promulgation requires only that they be “placed such that a majority of employees know what they say or can know what they say.” So even though the law requires listening to the opinion of the employee rep and registering work rules at the LSO, this judge said that even if those parts of the law are ignored, the work rules are still binding.

The court ruled that the nonpayment of severance was correct because of the following discovered facts:

1) The work rules were kept in the boss’ drawer and could be perused by going through that boss.

2) They were placed on a bookshelf that was not locked.

3) Employees knew where the work rules were kept.

Another case where the obligation to promulgate was deemed not to have been met was the Chubu Color severance case. The Tokyo High Court ruled in October 2017 that a change in severance pay was invalid because it was not properly promulgated, and therefore the original severance amount had to be paid to Worker C. The company’s means of promulgating the change was to announce it twice during morning assemblies and ask if anyone had any questions. Chubu Color then placed written notice of the changes in the break room.

The court noted that the method was insufficient, saying: “The change entailed a major cut in the amount of severance for those who transferred to the company mid-career, yet the demerits and calculation method, including the change in amount, were not explained. … Even if the work rules had been hung on the wall of the workers’ break room, we cannot say that the severance calculation was effectively promulgated to C and other workers.”

This case suggests that just placing the rules where workers can see them is not sufficient to validate a disadvantageous change to the shūgyō kisoku. Employees must be made to understand them, or the promulgation will be deemed to be ineffective. In this case, it appears at first glance that Article 52.2 of the Labor Standards Act enforcement ordinances was complied with, yet pro forma placement is not enough. Each workplace is considered case by case. The information must not only be accessible, but also explained until it is understood.

Over my years of labor union work, I have witnessed disputes over work rules involving language teachers whose native language is English, yet whose work rules are only produced in Japanese. In some cases, the local union branch has asked for these documents to be translated but the school has refused — or even refused to give them a copy of the original Japanese rules.

In one extreme instance, teachers have to ask a particular member of staff at a set time for access, and employees are not permitted to make copies or take photos of the rules, though they may copy out them out by hand. So even though Japanese is not their first language, these teachers use up their break times carefully writing out each character as best they can, one line at a time. Like ascetics.

Yet why should teachers give up their lunch breaks to learn about the rules that affect their own workplace — the rules that bind them? At times teachers are issued warning letters citing these very same rules that they are not permitted to know or take home. Are these work rules “made known” to employees?

This kind of employer is a minority, I want to believe. The government of Prime Minister Shinzo Abe has declared its intention to accept droves of foreign laborers in order to alleviate an increasingly grave labor shortage. Yet I wonder how many corporations are truly ready to make their work rules known to their multinational and multiethnic workforces. How many do now?

I’ve dealt with corporations that claim they can’t give out copies for fear of leaks, yet the rules and obligations of workers are legally required to be made known; they are not corporate secrets. Such behavior suggests these companies may have something to hide.

Does your workplace have 10 or more employees? If so, your employer must create shūgyō kisoku work rules. Do you know what they are?

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 usually appears in print on the last Monday Community page of the month.