Legal Status of Part-Time Workers under Japanese Labor Law and Corporate Obligations

In recent years, Japan’s labor law system has entered a significant period of transformation. Particularly, regulations concerning the treatment of part-time workers have become one of the most crucial legal issues in corporate management. While in the past, the name of the employment type could be seen as a justification for differences in treatment, current Japanese law does not recognize such formal distinctions. The present legal system requires companies to judge the fairness of treatment based on the actual nature of the work, rather than the designation of the worker. At the heart of this change is the “Act on Improvement of Employment Management for Part-Time and Fixed-Term Workers,” commonly known as the Part-Time and Fixed-Term Employment Law. This law fundamentally prohibits unreasonable differences in treatment between part-time workers and employees whom companies consider ‘regular workers.’ Companies bear the responsibility to explain any differences in treatment with objective and rational reasons. This legal mandate should not be seen merely as a compliance issue but as a strategic imperative to ensure the logical coherence and transparency of the entire personnel system, thereby achieving sustainable corporate governance. This article first explains the basic principles of treatment established by the law, then analyzes key Supreme Court of Japan precedents that have shaped the specific criteria for judgment. Finally, it details the concrete obligations imposed on companies by the law and practical measures for compliance.

Basic Principles of Treatment: Balanced Treatment and Equal Treatment Under Japanese Law

In Japan, the Part-Time and Fixed-Term Employment Law establishes two important principles regarding the treatment of part-time workers: “balanced treatment” and “equal treatment.” These principles provide a legal foundation for companies to construct and operate their personnel systems.

The first principle is balanced treatment, as stipulated in Article 8 of the Japanese Part-Time and Fixed-Term Employment Law, which signifies the “prohibition of unreasonable treatment.” This principle applies when there are differences in the nature of the work or other aspects between part-time workers and regular employees. The law does not prohibit differences in treatment per se; however, it mandates that such differences must not be unreasonable. In assessing unreasonableness, three main factors are considered: firstly, the “nature of the duties,” meaning the content of the work and the associated level of responsibility; secondly, the “scope of changes to the duties and placement,” which refers to the possibility and extent of transfers, departmental changes, or promotions; and thirdly, “other circumstances,” which include reasonable labor-management practices. Companies must comprehensively compare these elements and logically explain that any differences in treatment are balanced and justified by these substantial differences.

The second principle is equal treatment, as defined in Article 9 of the same law, which means the “prohibition of discriminatory treatment.” This stricter principle applies in limited situations, specifically when the “nature of the duties” and the “scope of changes to the duties and placement” of part-time workers are identical to those of the regular employees they are compared with. When these elements match completely, companies are prohibited from discriminating against part-time workers in terms of base salary, bonuses, and all other aspects of treatment simply because they are part-time employees. In essence, the treatment of both must be the same in principle.

Therefore, the first step for companies is to accurately analyze the actual duties of the part-time workers they employ and determine whether the above two elements are identical to those of the regular employees they are compared with. This initial assessment is a crucial step that will dictate the direction of subsequent personnel strategies and legal risk management. Creating and maintaining accurate job descriptions is not just a matter of personnel management practice but carries significant implications as a legal defense measure.

Criteria for Determining “Unreasonableness”: Key Supreme Court Precedents in Japan

The specific meaning of “unreasonable treatment differences” prohibited by Japan’s Part-Time and Fixed-Term Employment Law has been concretized through a series of recent Supreme Court decisions in Japan. The Court has consistently adopted an approach that analyzes the “purpose” of individual allowances and benefits, determining whether the difference in treatment is reasonable in light of that purpose. This “purpose-oriented approach” is an essential guideline for companies to review their personnel systems and assess legal risks.

Regarding various allowances, the 2018 judgments in the Hamakyorex and Nagasawa Transport cases have become important precedents. In these cases, the Supreme Court individually examined the purpose of each allowance. For example, it was deemed unreasonable not to provide part-time workers with commuting allowances (purpose: to compensate for commuting costs), meal allowances (purpose: to assist with meals during work), and perfect attendance allowances (purpose: to encourage full attendance), as their purposes do not change between regular and part-time workers. On the other hand, for housing allowances, which are intended to support the living expenses of employees who may face job transfers involving relocation, it was considered reasonable not to provide them to contract employees who are not scheduled for such transfers.

For significant monetary benefits such as bonuses and retirement payments, the 2020 judgments in the Osaka Medical and Pharmaceutical University case and the Metro Commerce case have drawn attention. The Supreme Court ruled that not providing part-time workers with bonuses or retirement payments is not immediately unreasonable under certain circumstances. The reason is that these benefits serve not only as deferred wages but also have complex purposes, such as rewarding long-term contributions to the company and securing and retaining core personnel expected to perform well in the future. In these cases, the part-time workers were not in a position to be expected to make such long-term contributions in terms of job content and the scope of job transfers. These rulings do not generally condone the non-payment of bonuses and retirement payments but rather question whether there is consistency between the purpose of the payments and the actual duties of the workers.

Regarding holidays and other benefits, a series of 2020 decisions related to the Japan Post case provided important judgments. The Supreme Court ruled that it is unreasonable not to grant part-time workers summer and winter vacations, paid sick leave, year-end and new year work allowances, and dependent allowances. The purposes of these benefits, such as mental and physical refreshment (vacations), living security during illness (sick leave), and compensation for working during busy periods (allowances), are deemed valid for all workers engaged in daily tasks and are not directly related to the long-term career paths of the workers.

What these precedents collectively indicate is that when companies establish differences in treatment, they must clearly define the purpose of each system and explain, based on objective facts such as job content, responsibility, and the scope of job transfers, why the purpose applies only to certain groups of workers and not to others. This logical consistency is the key to underpinning the “reasonableness” of treatment differences.

Employer’s Main Obligations and Practical Responses Under Japanese Part-Time and Fixed-Term Employment Law

The Japanese Part-Time and Fixed-Term Employment Law not only prohibits unreasonable differences in treatment but also mandates specific actions for companies. Fulfilling these obligations is essential to prevent legal disputes and to build healthy labor-management relationships.

One of the most important obligations is the ‘duty to explain’ as stipulated in Article 14 of the Japanese Part-Time and Fixed-Term Employment Law. This duty has two aspects. Firstly, when hiring part-time workers, companies must promptly explain the content of employment management improvement measures they have taken, such as wage systems, training and education, welfare facilities, and regular employee conversion measures. Secondly, when part-time workers request an explanation of the differences and reasons between their treatment and that of regular employees, companies are obliged to respond with objective and specific explanations. For example, vague explanations such as ‘because you are a part-time worker’ do not fulfill the obligation; it is necessary to specify differences in job responsibilities or other concrete factors. Dismissing or otherwise disadvantaging a worker for requesting such an explanation is strictly prohibited under Article 14, Paragraph 3 of the same law. This duty to explain functions as a substantial enforcement mechanism, prompting companies to continually review the logical basis of their personnel systems.

Next, Article 13 of the same law obligates companies to take measures to promote the conversion of part-time workers to ‘regular employees.’ Companies must implement at least one of the following three options:

1. When recruiting for regular employee positions, make the recruitment information known to part-time workers through workplace postings, emails, etc.
2. When creating new regular employee positions, provide part-time workers with the opportunity to apply through internal job postings.
3. Establish a testing system or similar for part-time workers aimed at conversion to regular employee status. This provision mandates the provision of opportunities for conversion, not the guarantee of conversion itself.

In addition to these key obligations, companies also have the duty to provide part-time workers with the necessary training and education to acquire the skills required for their duties (Article 11) and to offer them the opportunity to use welfare facilities such as dining facilities, break rooms, and changing rooms (Article 12). Viewing these obligations as a whole and systematically organizing the employment management of part-time workers will lead to compliance with laws and regulations and enhance corporate value.

Summary

Japanese labor regulations, particularly those concerning part-time workers, send a clear message to companies that fair treatment should be based on the actual nature of the job, rather than the title of the employment status. To comply with the Japanese Part-Time and Fixed-Term Employment Law, it is essential for companies to clearly define the ‘purpose’ of each element of their personnel and wage systems, and to logically explain that any differences in treatment between regular and part-time workers are based on objective differences such as job responsibilities, scope of duties, and the possibility of reassignment. The Supreme Court of Japan’s precedents demonstrate a strict stance on the consistency between ‘purpose’ and ‘reality,’ and companies must use these as guidelines to continually review their systems from a preventive legal perspective.

Monolith Law Office has a wealth of experience in advising on labor law matters related to part-time workers for numerous clients within Japan. Our firm is home to several experts who are not only qualified as Japanese attorneys but also hold foreign legal qualifications and are English speakers. This enables us to provide accurate and practical legal support for complex personnel and labor issues faced by companies engaged in international business expansion.