August 23, 2019

The government led by Prime Minister Abe Shinzo seeks to attain its four-year-old ambition to introduce its so-called “monetary settlement system for dismissal disputes” which allows wrongful dismissals if accompanied with a certain amount of compensation.

The introduction of the “monetary settlement system” was attempted by the government twice in the past under strong pressure from both Japanese and U.S. business circles. However, each time, facing fierce opposition from unions and concerned citizens, the government attempt was foiled. Nevertheless, the Abe government in 2015 expressed its intent to relax dismissal rules and introduce a system similar to the one which was foiled. A Labor Ministry panel last year began discussions on a new monetary settlement system.

What the ministry panel designed is a “severance payment system”. Under this system, an unfairly dismissed worker will be required to file a lawsuit for severance pay. If the worker obtains a court order recognizing his/her dismissal as illegal, the worker can receive a fixed amount of money and his/her employment contract will be terminated.

However, there is no need to establish such a system because, even now, in many court battles against arbitrary dismissals, dismissed workers reach an agreement with employers to accept the termination of the employment relationship in exchange for a certain amount of monetary compensation.

The Japan Lawyers’ Association for Freedom (JLAF) has been criticizing the Abe government’s intent to introduce the “severance payment system” as paving the way for a society where employers can fire their workers arbitrarily without restriction. Regarding upper and lower limits of termination pay under discussion at the ministry panel, the lawyers’ association warns that a ministry-set baseline for severance pay would be used by employers as a tool to force targeted workers to accept the termination of employment contract.

The JLAF stresses that what the government should do is not to create a system allowing corporate arbitrary dismissals with severance pay but to defend workers from such a wrongful and unfair labor practice. The JLAF has been demanding that the government establish a legal framework under which dismissed workers wishing to be reinstated to their original positions can claim their right to work. In addition, the lawyers’ group requests the government to improve the existing labor tribunal system for settling labor disputes.

Past related article:
> Abe gov’t yet again begins discussing relaxation of dismissal rules [December 24, 2015]