A proposal by the government's regulatory reform panel to introduce a system that enables companies and their employees to settle legal disputes over unfair dismissals with financial compensation should be scrutinized to determine its pluses and minuses from the viewpoint of protecting workers' interests. It must not result in the creation of a system that effectively makes it easy for businesses to fire workers by offering severance money.

A similar idea was entertained by the government in the early 2000s, but has so far not materialized due to opposition from labor organizations. The Abe administration, which considers some labor regulations to be obstacles to the enhancement of Japanese businesses' competitiveness, called for renewed discussions on the issue in its economic growth strategy adopted last year. The panel's proposal lacks specifics and details are expected to be discussed further by the Health, Labor and Welfare Ministry.

The panel proposed last month that a system be considered to make it possible for a company to settle dispute with an employee whose dismissal has been ruled as invalid by court by offering financial compensation in lieu of reinstating the worker. When fired workers take their case to court and win a decision that invalidates their dismissal as unfair, they often face practical difficulties in returning to their former jobs because their relationship with their company have been damaged by the legal battle, the panel said. Instead of them getting their jobs back, monetary compensation should be weighed as an option to quickly resolve such disputes, stated the panel. To prevent such a scheme from being abused by employers willing to pay to fire their workers, the panel said only workers should have the right to seek to resolve a dispute through financial compensation.