Summary of Amendments to the Worker Dispatch Law (Law No. 88 of 1985, as amended), Effective as of September 30, 2015
Masanori Nakajima, Bengoshi
Beginning September 30, 2015, worker dispatch services (also called “temp agencies”) in Japan that provide dispatched workers to corporate clients are now subject to newly enacted amendments to the existing Worker Dispatch Law. These amendments are supposedly designed to provide clarity to and improve the employment rights for such temporary employees. We hope the following summary provides some clarity to this recent amendment and generally to this area of law.
1. Permission to Conduct Worker Dispatch Business
Until recently, the Worker Dispatch Law (the “Previous Law”) classified the dispatched (aka “temp”) worker business into two (2) categories: Specified Worker Dispatch Business and General Worker Dispatch Business. In order to operate its business, a Specified Worker Dispatch Business operator was required to provide only a notification (not obtain a license) to the relevant Japanese authorities. A General Worker Dispatch Business operator however was required to obtain permission from Japanese authorities. The Worker Dispatch Law, as recently amended (the “New Law”), now abolishes this distinction, and all worker dispatch business operators must obtain permission in the form a license from the relevant Japanese authorities.
2. Worker Dispatch Period is Now Limited to 3 Years for ALL Types of Dispatched Employees
The Previous Law classified certain specialized types of businesses into one of twenty-six (26) businesses (the “26 Specialized Businesses”). The Previous Law did not limit the worker dispatch period for such 26 Specialized Businesses (the dispatch period for a business other than any of the 26 Specialized Businesses was not to exceed three (3) years).
The New Law abolishes this 26 Specialized Businesses exemption and creates the following new system:
(a) Period Regulations for Business Place Unit
On and after September 30, 2015, a “Client” (i.e., a company that receives worker dispatch services from a dispatching company) may not receive a dispatched worker “at a single business place” “for more than 3 (three) years.” A Client who intends to receive such dispatched worker for more than three (3) years will be required to consult with the labor union (or the employees’ representative) to which the majority of the client’s employees belong. If the client receives a response from the labor union/rep, the client is obliged to address such response.
(b) Period Regulations for Individual Unit
A Client may not receive a single dispatched worker “at the same organization unit (soshiki-tanni in Japanese)” “for more than three (3) years.” However, a Client may receive a single dispatched worker for more than three (3) years if the dispatched worker works, sequentially, at different organizational units (e.g., department, division). By way of example, the same dispatched worker can work for 3 years in the Finance Department and 3 more years in the Marketing Department of the same Client company, since these functions would be considered to be different organizational units.
Regardless of the regulations stated in (a) and (b) above, as a general rule, such worker dispatch period regulations shall not be applicable to the following cases:
(i) the dispatched worker enters into an employment agreement with the worker dispatch business operator without a definite period – note 3(c) below: under the new law, depending upon the worker dispatch period, the dispatch company is obligated to provide indefinite term contracts to their employees (i.e., the dispatched workers) and if the dispatch company complies with this obligation in 3(c) below, an exemption will apply and thus, the new law will not apply to limit the period of dispatch to 3 years.
(ii) the dispatched worker is sixty (60) years of age or older;
(iii) the dispatched worker engages in project of which termination date is clear;
(iv) the dispatched worker works for ten (10) days per month or half of the working days for other general workers; and
(v) the dispatched worker is dispatched by reason of maternity leave, family-care leave, etc.
3. Employment Stabilization of Dispatched Worker
The New Law provides the following measures in order to pursue dispatched worker’s employment stabilization depending upon the worker dispatch period:
(a) A worker dispatch business operator is obliged to request Clients to directly employ a dispatched worker following the expiration of his dispatched term;
(b) A worker dispatch business operator is obliged to provide a new Client to the dispatched worker once the dispatch period to the initial Client expires;
(c) A worker dispatch business operator is obliged to enter into an employment agreement with the dispatched worker without a definite period; OR
(d) any other measures to pursue dispatched worker’s employment stabilization.
4. Dispatched Worker’s Career Development
A worker dispatch business operator is obliged to provide the dispatched worker with gradual and systematic education and training, and to provide career consulting to him/ her.
5. Implementation of Equal Treatment
A worker dispatch business operator is obliged to give the dispatched worker a comparative explanation about the wages, education and training and benefit packages received by the dispatched worker as opposed to those received by similarly situated workers, e.g. regular salaried workers. The worker dispatch company would most likely be aware of the salary and benefits of comparably situated regular employees of the Client because the Client ordinarily provides such information to facilitate calculation of the pricing for the dispatched worker.
6. Application to the New Law
The regulations set forth in the New Law are applicable to a worker dispatch agreement made and entered into “on and after September 30, 2015.” The regulations set forth in the Previous Law are applicable to a worker dispatch agreement made and entered into before September 29, 2015, “until its expiration date.” Thus, an agreement entered into prior to September 30, 2015 will be governed by the Previous Law until that agreement expires.