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Labour Policy Council of Japan Reports on Future Legislation concerning Labour Contract and Working Hours

     The Labour Policy Council of the Ministry of Health, Labour and Welfare submitted its reports on "Future Legislation concerning Labour Contract" and "Future Legislation concerning Working Hours"[Japanese] on 27 December 2006.
     In recent years, Japan has witnessed the diversification of employment patterns due to changes in business management circumstances, reflected in, for example, the increase in cases of temporal or permanent transfer to other companies and "irregular" forms of employment; this has also led to the increase in individualized labour conflicts. In response, the Ministry of Labour requested the Council for advice on legislation concerning labour contract and working hours, respectively in September 2005 and February 2006.
     The internal task forces of the Ministry had issued reports on the two issues prior to the request. With regard to legislation concerning labour contract[Japanese], it had been reported that fair and transparent legislation was required in order to ensure that labour and management can make voluntary joint decisions on working conditions on an equal footing. The task force on legislation concerning working hours had indicated the need to ensure work-life balance, calling for the promotion of getting annual paid leaves and for the review of the premium rate for overtime work. It had also proposed the introduction of a discretionary work-hour system for "workers who are granted discretion for their work and who warrant to be evaluated on the basis of achievements or merits instead of working hours".
     The Council's report on legislation concerning labour contract[Japanese], submitted on 27 December, confirms the principles that the conclusion of and modifications to labour contracts should be based on labour-management agreement on an equal footing and that the employer should have considerations for workers' life and physical security at workplace. It does not refer to the principle of equal treatment for different categories of employees, however; the issue will be subject to further consideration. With regard to the issue of dismissal, it recommends that the provision of the Labour Standards Law concerning abuse of the right of dismissal (Article 18-2) be removed into a proposed labour contract law. The issue of dismissal as a means of employment adjustment was not included, being subject to further consideration in the light of the jurisprudential development; pecuniary resolution was not proposed in the report. Concerning fixed-term employment, the report states that fixed-term contracts cannot be dissolved before the expiry unless there are compelling reasons to do so and that the employer should seek to avoid concluding a contract with an unnecessarily short term with the intention of renewing it repeatedly. On the other hand, conditions justifying the use of fixed-term employment, restrictions on the number of renewals and the length of the term as well as the application of the principle of equal treatment will be subject to further consideration.
     The report on legislation concerning working hours recommends measures to discourage long working hours, such as raising the premium rate for overtime work which exceeds the specified limit, with a view to reducing overtime work, and making it possible to get annual paid leaves by the hour. In addition, it proposes that the white-collar exemption system be introduced in order to "create a system fit for more flexible working styles". Under this system, the regulations concerning working hours are not to be applied to certain categories of white-collar workers, who perform job duties that cannot be evaluated on the basis of working hours, who hold positions with powers and responsibilities, who do not receive specific instructions from the employer about such matters as the distribution of work time and, finally, whose annual wages are significantly high.

See:
· On the reports from the Labour Policy Council on "Future Legislation concerning Labour Contract" and "Future Legislation concerning Working Hours", the Ministry of Health, Labour and Welfare [Japanese]
· The report of the Labour Policy Council on future legislation concerning working hours (summary), the Ministry of Health, Labour and Welfare [Japanese]
· The report of the Labour Policy Council on future legislation concerning labour contract (summary), the Ministry of Health, Labour and Welfare [Japanese]


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