WHO IS THE REAL EMPLOYER? - from a Japanese policy and law perspective

The company that is suing Charles Hector says that workers that are supplied by the 'outsourcing' agent, are not their workers. The say that these workers are not in their 'direct payroll', and their salary are all paid to the 'outsourcing' agent according to the agreement between the company and the outsourcing agent. The company claims that they are responsible for these workers, who all worked in the Asahi Kosei factory under the control and supervision of the company, using the tools provided by the company and who get paid based on the number of days/hours they work, the shift they work on, overtime work they do, work on rest days/public holidays,...that they do. It is interesting to see whether the law will allow the company to escape an employment relationship with the workers, with which comes the duty and obligations of an employer including the provision of legally guaranteed worker rights. Have a look at the article below to see how the Japanese courts and law has to say about this....

WHO IS THE REAL EMPLOYER?  - from a Japanese

policy and law perspective

Today, many companies have tried to avoid employment relationship with workers working at their factories through various different means. One such method employed is the use of contracts with third parties, for the supply and provision of workers to work at the company’s factory and workplace, whereby in the said contract there may be even stipulations that state that the said workers are not the employees of the company, rather the third party. And the company pays directly the said third party for the work done by the workers supplied. These, and other such ‘sneaky’ arrangements have been frowned upon by human rights and worker rights advocates, and today even the International Labour Organisations(ILO) is of a similar position, and has come out with Guidelines and Recommendations towards ending such avoidance of an employment relationship by some companies. [See THE EMPLOYMENT RELATIONSHIP: An annotated guide to ILO Recommendation No. 198 (http://www.ilo.org/public/libdoc/ilo/2007/107B09_141_engl.pdf), the said ILO Recommendation No. 198 is also annexed to this document]

It is interesting to note also that there have been discussions, Government studies and even Japanese Court decisions on the said subject, and in brief the court will actually look at the facts of the case – not just the words of any contract. The Japanese courts have judged that there exits an employment relationship when the actual work circumstance lends itself to an employment relationship regardless of the provisions of the contract (SAGA TV Case: Fukuoka High Court Judgment 7 July 1983, Hanrei Jiho No.1084, p.126; SEN-EI Case: Saga District Court Takeo Branch Judgment 28 March 1997, Rodo Hanrei No.719, p.38).

Thus, in the recent case involving the workers working in Asahi Kosei(M) Sdn Bhd (AKM), who alleges that these 31 workers are supplied by an ‘outsourcing’ agent, who the company claims are not on their direct payroll and is hence, simply put, not their responsibility, according to current Japanese policy and law may not hold water. Why?

Because all the said affected workers, who have been working in AKM since they first arrived in Malaysia from Burma since mid-2010, who wear the AKM T-shirt to work just like all other workers, who is under the direct control of AKM at the workplace, where it is AKM who also determine the shift that they work on, the overtime they be allowed to work, the Sundays that they have to work, whether they can leave the factory during working hours or not, who work on the production line as with all other workers, who are directly supervised by a supervisor/line leader who is an employee of AKM, …..and, as such, current Japanese governmental policy and law will most likely come to a position that all these 31 migrant workers are really in an employment relationship with AKM, and as such AKM is directly responsible as employer for the welfare and rights of all these workers. Being migrant workers, there is also an added responsibility that extends beyond the workplace to also the provision of board and lodging, including the general security and welfare of these workers.

Selected extracts from the THE EMPLOYMENT RELATIONSHIP: An annotated guide to ILO Recommendation No. 198 relating to Japan is as follows:-

Japan - Regarding the definition of “worker” two legislative definitions exist, one being broader that the other, thus demonstrating the need for clarity in policy instructions. On the one hand, Article 9 of the Labour Standards Law states “In this Law, “worker” shall mean one who is employed at an enterprise or place of business and receives wages therefrom, without regard to the kind of occupation.” And this meaning applies in the Minimum Wage Law, Occupational Safety and Health Law, Workers’ Accident Compensation Insurance Law and other laws related to the Labour Standards Law. On the other hand, the Trade Union Law provides in Article 3: "’Workers’ under this Law shall be those persons who live on their wages, salaries or other remuneration assailable thereto, regardless of the kind of occupation.” The principal difference in the definitions of the laws is that the Labour Standards Law does not cover unemployed persons, while the Trade Union Law does.

Japan Labour Standards Law

Article 15: In concluding a labour contract, the employer shall clearly state the wages, working hours and other working conditions to the worker. In this case, matters concerning wages and working hours and other matters stipulated by Ordinance of the Ministry of Health, Labour & Welfare shall be clearly stated in 17 May 2007 32 the manner prescribed by Ordinance of the Ministry of Health, Labour & Welfare.

The Japanese courts have judged that there exits an employment relationship when the actual work circumstance lends itself to an employment relationship regardless of the provisions of the contract. That is to say, when there is an effective control over the work and the payment of wages, the court determined an employment relationship. This interpretation principle applies also to the Work-for-Contract relations as well as to the worker dispatching-type relations (SAGA TV Case: Fukuoka High Court Judgment 7 July 1983, Hanrei Jiho No.1084, p.126; SEN-EI Case: Saga District Court Takeo Branch Judgment 28 March 1997, Rodo Hanrei No.719, p.38).

Japan - In determining the existence of an employment relationship, the courts have placed stronger emphasis on the subordination element rather than the dependence element.

Japan - According to the 1985 report of the Government-instituted study group, an employment relationship is determined initially by two factors: existence of a control over the person concerned, and the remuneration paid in return to the work performed. In case control is difficult to determine, a comprehensive approach is adopted in the court of law by considering other criteria, such as the degree of the self-employment or degree of exclusiveness. For instance, when a worker uses his/her own tools and machineries, which are considerably expensive, such work weakens the worker’s position as an employee and attributes a nature of self-employment, in which a work is performed by a person at his/her own calculation and risk.

As the employment relationship is basically judged in Japan by the degree of control, economic dependence is not given a special status. This criterion is useful in ascertaining employment relationship for a self-employed worker working exclusively for a single undertaking, but it may entail a risk of depriving his/her rights working for multiple undertakings.