Nagasawa Transportation and Hamkyorex Supreme Court Rulings 2/3 Hamakyorex Case

As in part 1 of this series of 3 we look at the rulings handed down on June 1 around “Same Job Same Pay.” This time we are going to look in more details at the Hamakyorex Case and the allowances that are part of salary. We will also look at these considering the Nagasawa Transportation case that was ruled on the same day.

The Supreme Court organised Article 20 of the Labor Contracts Act as follows:
The Labor Contracts Law prohibits the unreasonable treatment of workers who perform the same duties with the only difference being a fixed term or unlimited (non-fixed term) employment contract. However, when taking into consideration other circumstances including the contents of the work of the worker and the degree of responsibility accompanying the performance of the work (hereinafter “contents of the duties”), the scope of change of the content and arrangement of the duties, when these provisions differ then it may not be considered unreasonable.
This prohibits being unreasonable due to a fixed-term contract.

In addition, for fixed term and unlimited term contractors when there are differences in working conditions, the differences must not be unreasonable. Therefore the same treatment does not mean that the working conditions will be the same.

Therefore, when the Rules of Employment and Salary Regulations for Full time employees and the Rules of Employment and Salary Regulations for Fixed Term Workers are separately prescribed, this means that the Fixed Term Workers do not have the same rights as the Full Time Employees and neither do they have the ability to request these either.

When considering whether the differences in the working conditions of fixed term workers are unreasonable, considerations need to be made as to whether their roles and responsibilities (this includes the role performed, the scope of the differences in the content of the role and the arrangement of the relevant duties plus other conditions) are in fact different, and discussions between the workers and management should proceed, with the judgement made by management respected.

When considering the above the various allowances can be considered as follows:
1. The allowances that were deemed unreasonable to not pay to fixed term workers were as follows:
No accident Allowance
The need to Drive Safely and Avoid Accidents is necessary for all and does not differ between workers.
Work Allowance
There were no specifications around the applicable work.
Where there are no differences in the work performed, regardless of placement, there should be no difference in the financial reward for performing the same duties.
Meal Allowance
There are no differences according to responsibilities or employment style.
While there may be differences in responsibilities or placement, the need to break for a meal does not differ and there are no other reasons for why there should be a difference.
“Driver” Allowance
The necessity to secure the attendance of the drivers does not differ due to the work responsibilities or whether the period of employment is fixed or not.
Commutation Allowance
This was judgement calling for equal treatment.
Regarding differences in the allowance of Y5000 for full time employees and Y3000 for fixed term workers, the actual cost of commuting does not differ according to whether the period is fixed or not, or with regards to the duties performed and hence there should be no difference.
Full Attendance Allowance (Nagasawa Transportation Case)
While the contents of the duties remain the same, regardless of being fixed or non-fixed term, there should be no difference and both should receive the allowance.

2. The allowances that were deemed not unreasonable to not pay to fixed term workers were as follows:
Housing Allowance (Hamakyorex and Nagasawa Transportation)
There is the possibility of the cost of housing being different for fixed term workers and full time employees due to the full time employees being relocated when their role of position are changed. Hence not paying the allowance to fixed term workers is not deemed unreasonable.
An interesting point here was the difference in the reasoning between the High Court who stated that “Because housing costs are expected to increase for full time employees compared to contract workers who are not scheduled to be relocated, for the purpose of acquiring and retaining talented personnel by assisting full-time employees with housing expenses and welfare benefits can be considered” whereas the Supreme Court does not mention the acquiring of, or the establishing of talented personnel in the detail of their ruling.
Family Allowance (Nagasawa Transportation)
Due to the wide age range of full time employees, assisting on the full time employees by supporting their families is not deemed unreasonable.
The note here is that in the Nagasawa Transportation case, the case was around full time employees and those employees rehired after mandatory retirement and hence the “wide age range” is contentious!

The ruling deemed that the payment of numerous allowances was not deemed to be unreasonable, and hence it is necessary to understand the logic and purpose for why each allowance is paid at individual companies.

Thank you.