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Worker Dispatching Act

2014.12.02




Katsutoshi Kezuka
Professor, Faculty of Law, Chuo University
Area of Specialization: Labor Law

Indirect Employment Promotion Act

An amendment to the Worker Dispatching Act is currently being deliberated in the Diet. (However, this amendment will not be made any time soon due to the Diet dissolution that has suddenly emerged.) The nature of the current bill will be changed to a great extent compared with the current Worker Dispatching Act, and the impact on employment environment will be extremely strong. To simplify, the Worker Dispatching Act in question is the “Indirect Employment Promotion Act,” which allows permanent agency work rather than temporary agency work. When dispatched workers have executed contacts without fixed terms with temporary staff recruitment agencies (dispatching business operators), there is no limit to the duration during which workers are able to engage in temporary agency work. In the future, corporations (client business operators) will be able to use external labor perpetually based on worker dispatch contracts, rather than using service contracts, which can be accused strongly as constituting contracting in disguise. In case that dispatched workers are hired by dispatching business operators on a fixed-term basis, a-3 year upper limit is imposed on the dispatching period, on both an individual basis and a single-office basis. Despite this fact, available operations will not be limited to temporary operations. Thus, all corporations have to do is to replace dispatched workers. The period having a 3-year maximum limit for a single office can be renewed based on procedures for acquisition of opinions rather than consent by representatives of a majority of workers. Such measures will also lead to the promotion of the perpetual use of temporary agency work.

History of Change of Worker Dispatching Act

Policies for temporary agency work in Japan commenced for the good reason of creation of a specialist labor market that would be suitable for the lifestyles of women with strong educational backgrounds. The aforementioned policies targeted specialist personnel only. However, this limitation was considered to be divergent from the global trend (i.e., temporary agency work originally involves temporary labor demand). In 1999, the focus shifted to the temporary dispatching that did not limit targeted operations. Furthermore, in 2003, the limitation on the period for “specialist dispatching” was eliminated, while the limitation on the period for “other dispatched workers” was changed from 1 year to 3 years. As such, the nature of temporary agency work began to decouple from the basic concept of response to temporary labor demands. With the amendment in question, specialist dispatching would be abolished. However, the amendment does not make the act solely for the temporary operation dispatching, but further exacerbate the lack of principles. Whether or not dispatched worker contracts are based on fixed terms or unfixed terms is a key factor. Therefore, this amendment has caused increased confusion regarding the original purpose of temporary operation dispatching. If the amendment is to stick to the original policy for responses to temporary operation demands, it is not reasonable for the limitation on a dispatching period to be eliminated, even if workers are hired by dispatching business operators on an unfixed-term basis. Or, if it intends for dispatched workers to be hired on an unfixed-term basis, even if such workers undertake indirect employment (although it would be meaningless to make workers continue to be hired in temporary staff recruitment agencies which undertake no other substantial business), the condition that the duration for dispatching must be limited to 3 years on an individual basis does not make sense. This condition would simply be a matter of convenience that would allow temporary staff recruitment agencies to avoid conversion into unfixed-term contracts (Article 18 of the Labor Contract Act).

Fundamental Nature of Temporary Agency Work Policies

Temporary agency work entails a three-party relationship in which workers are hired by dispatching business operators and work for client business operators. Employment and labor conditions for temporary agency work are therefore structurally unstable. Temporary agency work does not allow workers to depend on such manner of making a living over their whole lifetimes, and thus it is nothing but a second-best choice. Nevertheless, I am not advocating that temporary agency work be prohibited. Nor would I have temporary agency work in Japan return to its origins as work limited to specialist dispatching. Today, the specialist labor market should be constructed based on normal employment conditions, and “specialist dispatching” no longer possess any intrinsically substantial meaning. Then why is it necessary to acknowledge temporary agency work? This is because temporary labor demands will most certainly accrue in the labor market. The fundamental nature of policies for temporary agency work is to harness demand for temporary labor, to preserve continuous employment, and to have dispatched workers obtain normal direct employment. To that end, dispatching business operators should be sensitive to market conditions, to harnessing of demand for temporary labor, and should ensure the preservation of continuous employment opportunities. Dispatching business operators also must endeavor to develop occupational abilities and help dispatched workers to obtain normal employment opportunities. When labor demand has accrued to an extent that it exceeds temporary demand, client business operators (corporations) should assume responsibility for allowing dispatched workers to obtain normal employment opportunities. Labor unions and worker representatives should undertake appropriate management of temporary labor demand and also should assume the same responsibility described above when labor demand exceeds the level of temporary demand.

Three Methods for Temporary Agency Work Regulation

Of course, considering incentives for temporary agency work that allow easy reduction of employment and wage costs, it is difficult to realize the aforementioned policy purpose. Therefore, three methods have been used worldwide in relation to policies that limit temporary agency work to the fulfillment of temporary labor demand: regulations on the purpose of use, limitation of dispatching periods, and application of the same wage principle. None of the aforementioned methods have been sufficiently implemented in Japan. Today, a wide gap has opened between regular employment and non-regular employment. Given such situation, the most important element of employment policy is obviously the principle of equal or balanced treatment for regular and non-regular workers, as indicated by the amendment to the Labor Contract Act and Part-Time Employment Act. This principle is also applicable to temporary agency work. In contrast to the case of equal treatment for part-time conditions and fixed-term contracts, in the case of temporary agency work, equal treatment applies to between different employers. Therefore, the fact that application of such treatment serves to prevent constant replacement and competition that lowers dispatching work fees cannot be overlooked. Simultaneously, it is necessary to recognize that the same wage principle alone does not resolve the unfair bearing of risk that forces dispatched workers to assume employment risks. It is necessary to reconfirm the obligation to have dispatched workers obtain regular positions at client business operators based on dispatching periods by returning to the principle of equality. Be this as it may, it is my hope that personnel in charge of policies and Diet members begin discussions in order to reconfirm and share the purpose of policies for temporary agency work.
Katsutoshi Kezuka
Professor, Faculty of Law, Chuo University
Area of Specialization: Labor Law

Professor Kezuka was born in 1945 in Tochigi Prefecture, and graduated from the Faculty of Law, Hitotsubashi University in 1969.
He left the doctoral program of Economic Law in the Graduate School of Law, Hitotsubashi University in 1976, after completing the required coursework.
He assumed his current professorship position at the Faculty of Law, Chuo University in 2004 after professorships at the Shizuoka University Junior College of Law and Economics and School of Law, Senshu University.
[Recent major publications by the author]
Role of Labor Act in Business Reconstruction [Jigyo Saikochiku ni okeru Rodoho no Yakuwari] (author and editor, Chuokeizai-Sha, 2013).
Author, “Normative Structure of Altering Working Conditions under the Labour Contract Act” [Rodokeiyakuho ni okeru Rodojoken Henkohori no Kihan Kozo], The Chuo Law Review Vol. 119 Nos. 5 and 6 (2012).
Author, “Prohibition against Discrimination and Equal Treatment under Labor Law” [Rodoho ni okeru Sabetsu Kinshi to Byodo Toriatsukai], Research on Personal Rights of Workers, Volume II [Rodosha Jinkakuken no Kenkyu, Ge] (edited by Yasuo Ishii and Shozo Yamada, Shinzansha, 2011)
Protection of Workers in Business Reconstruction [Kigyo Soshiki Saihen niokeru Rodosha Hogo] (author and editor, Chuokeizai-Sha, 2010)