Companies Face Prospect of New Rules for Temporary Workers in Japan
Major amendments to Japan’s Worker Dispatch Act of 1985 (the “Act”) are expected to be approved and become effective in 2015. These amendments could have a significant impact on the personnel policies and workforce management of companies in Japan, most significantly by allowing such companies to staff a greater number of positions with temporary workers for longer (indefinite) periods of time.
In Japan, the Act regulates employee “dispatching” arrangements, whereby temporary staffing agencies provide workers to client companies (“Receiving Companies”) who supervise and direct the duties of such “dispatched workers” but are not considered their employers.
Under the current Act, a Receiving Company generally may not utilize dispatched workers in a specific role for a term lasting longer than three years. In order to retain the dispatched worker in the role beyond this three-year term, the Receiving Company must offer direct employment to him or her. The Receiving Company may not avoid this rule by engaging a new dispatched worker in the same role during the three-year term or after the expiration thereof. However, the Act makes an exception for twenty-six (26) specialized occupations, such as technological positions, interpreters and other positions requiring specialized skills (the “26 Jobs”). The Receiving Company may engage dispatched workers in the 26 Jobs indefinitely without offering permanent employment to such workers. Nevertheless, it often is not clear whether a dispatched worker’s duties qualify under one of the 26 Jobs, and thus Receiving Companies may risk misclassifying workers and violating the Act.
The proposed amendments to the Act would make the following significant changes:
- The distinction between the 26 Jobs and other occupations will be abolished.
- A Receiving Company may not utilize dispatched workers for a term lasting longer than three years at each of its business places; however, the Receiving Company may engage dispatched workers for subsequent three-year terms (and the same shall apply thereafter), provided that the Receiving Company hears opinions of the labor union (or other representative of more than half of its workforce, as applicable) regarding such an extended dispatching arrangement (though the union or other representative would not have any power to override the Receiving Company’s decision).
- For all occupations, although the Receiving Company may not engage a particular dispatched worker in a specific department for longer than three years, the Receiving Company may transfer the dispatched worker to other departments for subsequent three-year terms.
Also of note, the amendments will require Receiving Companies, not just staffing agencies as before, to give adequate consideration to the provision of education and training to dispatched workers, and all staffing agencies will be required to obtain licensing from the regulatory authority.
Given these proposed amendments, companies engaging dispatched workers should carefully review their contracts with staffing agencies and monitor dispatched workers’ on-boarding dates to ensure the proper transition of roles between coming and going dispatched workers, especially for workers in any of the 26 Jobs, as dispatched workers in those occupations no longer can be engaged indefinitely.
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