It could be said that the Supreme Court has issued rulings that respect companies' management judgments while demanding the elimination of unreasonable pay gaps.
The Supreme Court has handed down rulings on two cases over pay disparities between regular and non-regular employees. When looking into the legality of the disparities, the top court ruled that "the purposes of individual wage items should be considered, not simply by comparing the total amounts." This is the first such decision of its kind.
The Labor Contract Law prohibits "unreasonable disparities" between regular and non-regular employees. Non-regular workers now account for nearly 40 percent of the nation's total workforce. Pay levels of non-regular workers, including part-timers, stand at about 60 percent of those for regular employees.
Lawsuits calling for the rectification of such disparities have been filed across the nation, but decisions by lower courts have been divided. It is significant that the Supreme Court has presented its method for judging the matter.
In a case in which a contract worker sought from his company the payment of allowances that have been paid to regular employees, the top court ruled that the disparities in benefits, such as a commuting allowance and a reward for perfect attendance, are "unreasonable." The court concluded that not providing housing allowances to non-regular employees is not unreasonable.
Pay systems differ among types of businesses and companies. Rightfully, there exist allowances paid only to regular employees from the viewpoint of whether employees are subjected to transfers that require relocation as well as human resources development.
It stands to reason that the ruling pointed out that "there are aspects of labor-management negotiations and management judgments by employers that should be respected."
Make pay rules transparent
In another case, the top court mentioned how those rehired after reaching retirement age should be treated. The court pointed out that the status of reemployment can become a factor in determining whether the gaps between regular and non-regular workers are appropriate. It offered its understanding toward a company not paying bonuses to rehired employees.
Rehired employees had received pay as regular workers until they reached retirement age, and retirement allowances had been also paid to them. If the conditions are met, they can also receive old age employees' pensions.
In light of these points, the logic of the ruling appears to be appropriate.
A drive to promote a system of equal pay for equal work is one of the pillars of work style reform legislation, which the government is aiming to enact during the current Diet session.
In 2016, the government drew up draft guidelines that give examples to specify acceptable or unacceptable disparities in conditions between regular and non-regular workers. The draft guidelines call for equal treatment for non-regular workers in terms of commuting allowances and some welfare benefits, while accepting pay gaps depending on employee's abilities, achievements and extent of their responsibility. The ruling is largely in line with the draft guidelines.
In principle, pay and other conditions for workers are decided based on labor-management agreements. It is crucial to establish objective and highly transparent rules to determine pay after thorough discussions. With these rulings taken as an opportunity, efforts are urged to eliminate unfair disparities in working conditions between regular and non-regular employees.
Needless to say, it is no easy task to review current personnel and pay systems in a short time. It is a huge burden to small and midsize companies, in particular. The government should expand support measures for them.
(From The Yomiuri Shimbun, June 2, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
