"Five-Year Rule": Questions From The Union To The Labor Ministry

Recently, the General Union spoke with representatives from the Ministry of Health, Welfare, and Labor (MHLW) in regards to the "Five-Year Limited-to-Unlimited Contract Conversion Rule" (henceforth referred to as the "five-year rule").

With employers reluctant to give limited-term workers the right to change to unlimited-term contracts, there are currently numerous cases across the country of employers attempting to limit (either retro- or pro-actively) the total length of employment that current and future employees will be able to maintain with the employer in question.

In addition to this, there have been cases of employers who are engaging in half-year dismissals, occurrences (or planned occurrences) of mass dismissals, and a greater social debate in regards to how to prevent such flagrantly illegal actions from being normalized (aka how to ensure that the law actually has teeth).

For their part, the Ministry of Health, Welfare, and Labor, has made firm promises to take action on these problems, citing examples such as an indication to strengthen their guidance to various institutions, and plans to working closely with each labor bureau to ensure that employers are fully compliant with the "five-year rule" law.

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Despite notifications from the Labor Standards Bureau Chief, and guidance from both ministries, there have been many cases of employers who are engaging in "dismissal at the end of (fiscal year) 2017" with the addition of non-renewal clauses to contracts, and of "setting five-year maximum limits or half-year cooling periods", with the overall purpose of seeking to evade the "five-year rule".

Without stronger action, there is a very real great danger that the number of such cases will dramatically increase as we move closer to, and then beyond, the end of FY2017.

To that end, examples of actions that Japan's legal systems need to perform are:

① The prohibition of changes to employment contracts and/or working rules which are violations of Article 18. Ministries should, once again, issue urgent notices, and carry out inspections of the corporations in question.

② The prohibition of dismissals at the end of FY2017 (as a means to evading unlimited-term contract employment).

③ The prohibition of companies engaging in forced-transfers or other means of retaliation towards an employee seeking limited-to-unlimited term employment, and assurances of equal treatment in accordance with Article 20 and the concept of "equal pay for equal work" in regards wages, bonuses, allowances, breaks, and so on.

In speaking with representatives from the Ministry of Health, Welfare, and Labor, the General Union had a number of questions, which are documented below.

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Question from the General Union:

Despite notices and guidance from both ministries, the setting of five-year upper limits on employment, imposition of half-year cooling periods, and other machinations designed to evade [the "five year rule"] are rampant.

There have also been many cases of mass dismissals announced for the end of FY2017, such as at [the University of Tokyo], [Sugiyama Jogakuen University], and [Osaka Shoin Women's University].

What is your take on these circumstances?


Response from the Ministry of Health, Labor, and Welfare:

Employers may not make changes to working rules for the purpose of evading conversion to unlimited-term contracts. Changes in working rules become possible only when, through negotiations with a union over their necessity and any disadvantages they may bring to the workers, they are recognized as reasonable.

The Ministry of Health, Labor, and Welfare is tasked with protecting workers, and we consider dismissing workers before they gain the right to unlimited-term conversion - with the aim of avoiding unlimited-term conversion - as a violation of the Labor Contract Act.

We have so far engaged in many different types of activities to disseminate information on the unlimited-conversion rule, and - any time we become aware of these sorts of violations - we would like to carry out guidance via the relevant prefectural Labor Bureaus.

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Question from the General Union:

Has [the ministry] become aware of any concrete examples of evasion of the law regarding unlimited-term conversion?

It is stated on both the Labor Ministry and Education Ministry websites that "setting employment limits or cooling periods in order to evade unlimited-term conversion is illegal. If you see any cases of this, please contact your local Labor Bureau."

We hope you will send written notices and do whatever other administrative guidance you can, while also making information available to the public on what measures were taken and their corresponding results."


Response from the Ministry of Health, Labor, and Welfare:

We would like to engage in education and guidance along with each of the Labor Bureaus [and] we will deliver these survey results to everyone.

We have collected statistics, but we cannot report them here right away.

There have also been some examples of five-year limits and the cooling-period problem that we are aware of.

We already know from news media and the Internet that examples of such things have happened at [Sugiyama Jogakuen University] in Nagoya and [Osaka Shoin Women's University] in Osaka.

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Question from the General Union:

Those two examples [that the ministry cited in the response above] are unquestionably illegal.

Without any reason other than to coincide with the change to the Labor Contract Law, [those employers] have set an upper limit on the term of employment or implemented forced six-month resignations.

At both institutions, the board of trustees has taken the overt decision that "[w]e will not follow the Labor Contract Law. We will not convert to unlimited contracts. This law will not apply to part-timers".

This attitude and abhorrent textbook case of evading the law, and we are sure that neither Ministry of Labor nor the Ministry of Education will fail to say that this is a problem.

We hope that there will be active measures taken to prevent such illegalities from occurring.


Response from the Ministry of Health, Labor, and Welfare:

[Such prevention] is indeed what we would like to do. It is certainly a problem, and can no doubt be thought to be potentially illegal.

At our ministry, we would like to be active in making sure - based on the law - that dismissals for the purpose of evading unlimited-term conversion do not occur.

We also understand the cases of [Sugiyama Jogakuen University] and [Osaka Shoin Women's University].

The Osaka Labor Bureau has already begun proceedings on the [Osaka Shoin Women's University] case, and we at this Ministry will take measures in coordination with the Labor Bureau.

For the [Sugiyama Jogakuen University] case: once the union has brought it to the Aichi Labor Bureau, we will work together from that point onwards.

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Question from the General Union:

The law states that "conversion to unlimited term" should occur "without worsening labor conditions" in the process.

However, there are several immoral companies where management has introduced or revised a retirement-age system, or reset the count of days for giving annual leave or severance pay.

Shouldn't the Ministry, via notices or other means, take measures to circulate information to foster proper understanding of the law?


Response from the Ministry of Health, Labor, and Welfare:

Upon conversion to unlimited-term contracts, "no change in working conditions" is the basic rule that an employer must adhere to. We also understand your point in regard to spreading information.


Additional information