On April 11, an expert panel of the Ministry of Health, Labor, and Welfare (MHLW) held a meeting to discuss a system whereby companies would pay money to workers who have been wrongfully dismissed, rather than returning to work. The committee compiled a report outlining legal issues, and the Labor Policy Council, whose members are representatives of labor and management, is expected to hold a full-fledged discussion on the pros and cons of the introduction of the system. The report envisions a system whereby workers whose dismissals are invalidated by lawsuits or labor tribunals would receive money from the company to end their labor contracts if they so desire.
Discussions on a monetary settlement system for layoffs began after the government included it in its growth strategy in 2015. While the government and the business community have been active in introducing the system, labor unions and others have opposed it, claiming that it will be misused for restructuring, and discussions at the Labor Policy Council are expected to be difficult.
The report defined the system as covering workers whose dismissals notified by their employers were found to be invalid for lack of reasonable cause. The motion for monetary settlement was limited to workers. The proposal was not included in the discussion because there are issues that are not easy to solve under the current circumstances, such as allowing a company to dismiss a worker again.
The amount of salary, years of service and age are presented as requirements for consideration in the calculation of the “labor contract termination payment” to be paid to workers. Setting a maximum or minimum amount to increase predictability should be discussed in the future.
There are already mechanisms, such as lawsuit settlement procedures and labor tribunal conciliation, whereby a worker who considers his or her dismissal unfair but does not wish to return to work can receive a monetary payment from the company to end the labor contract. However, the government has been pushing for the introduction of a new system, saying that it would give workers more options.
In May 2017, another expert panel of the Ministry of Health, Labor and Welfare (MHLW) compiled a report stating that “a certain degree of necessity is recognized,” but later, at a subcommittee of the Labor Policy Council, members of the labor side of the introduction of the system were opposed, saying that there were concerns that it would be used as a means of restructuring or lead to more options for dismissal.
The MHLW established a study group of legal scholars in 2018 to further clarify legal issues, and discussions were ongoing. (Kyodo News)
