Prohibition of Unfair Labor Practices in Japanese Labor Law

In corporate management, the relationship with workers is an extremely important element. Particularly, the relationship with labor unions is indispensable for building a healthy employer-employee relationship. The Japanese legal system has established a specific framework to promote an equal footing in negotiations between workers and employers. At the heart of this system is the prohibition of “unfair labor practices” as defined under the Japanese Labor Union Law. This system aims to substantively ensure the basic rights guaranteed by the Japanese Constitution, such as the right of workers to organize, the right to collective bargaining, and the right to collective action. Employers are strictly prohibited by law from engaging in specific acts that infringe upon these rights, and legal responsibility will be pursued in case of violation. Acts recognized as unfair labor practices range from dismissals or disadvantageous treatment based on union membership, to unjust refusal of collective bargaining, and improper interference with the operation of a labor union. When such acts occur, workers and labor unions can seek relief through specialized administrative bodies such as the Labor Relations Commission or through the courts. Through these procedures, employers may be ordered to restore the original state of affairs or pay damages, which can have a significant impact on the company’s reputation and finances. Therefore, for managers and legal professionals of companies operating in Japan, it is essential to accurately understand the purpose of the unfair labor practices system, the specific content of prohibited acts, and the relief procedures in case of violation, in order to manage legal risks and maintain stable business operations. This article comprehensively explains the unfair labor practices system, from its legal basis to the types of prohibited acts and the relief procedures.  

The Foundation and Purpose of the Unfair Labor Practice Relief System Under Japanese Law

The legal foundation of the unfair labor practice system can be traced back to the Constitution of Japan. Article 28 of the Japanese Constitution guarantees the fundamental rights of workers, including the right to organize, the right to bargain collectively, and the right to act collectively (the three labor rights). The Japanese Trade Union Law was enacted to materialize these constitutional guarantees and to give them practical effectiveness.

Article 1 of the Japanese Trade Union Law clearly defines its purpose. According to this article, the law aims to “improve the status of workers by promoting their ability to stand on an equal footing with employers in negotiations.” This concept of “equal footing” is crucial to understanding the unfair labor practice system. Individual workers tend to be in a weaker position than employers in economic power relations. Therefore, the law considers it essential for workers to unite and organize labor unions, negotiating as a collective force with employers to maintain and improve working conditions and enhance their economic status.

To achieve this purpose, Article 7 of the Japanese Trade Union Law specifically enumerates certain acts by employers that could infringe on workers’ rights to organize and others as “unfair labor practices” and prohibits them. In other words, the unfair labor practice system is not merely a collection of prohibitions but an active institutional intervention designed to substantively protect the three labor rights guaranteed by the Constitution and to balance the power relations between labor and management. It is because of this system that labor unions can operate without fear of unfair pressure from employers and can sit at the negotiating table for collective bargaining. Therefore, the foundation of this system lies in the fundamental human rights guaranteed by the Constitution, and its purpose is to realize an equitable negotiating relationship between labor and management. Understanding this is essential for grasping the spirit of the law behind each prohibited act and for conducting appropriate labor management.

Types of Unfair Labor Practices Prohibited Under Japanese Labor Union Law

Article 7 of the Japanese Labor Union Law specifically categorizes and stipulates four types of unfair labor practices that employers must not engage in. These provisions protect various aspects of union activities, from the formation and operation of labor unions to collective bargaining and the filing of relief petitions.

Prohibited Disadvantageous Treatment Based on Union Membership Under Japanese Labor Union Law (Article 7, Paragraph 1)

Article 7, Paragraph 1 of the Japanese Labor Union Law prohibits employers from dismissing or otherwise treating workers disadvantageously for the following reasons:

• Being a member of a labor union
• Attempting to join a labor union
• Attempting to form a labor union
• Engaging in legitimate union activities

The term “disadvantageous treatment” is not limited to severe actions like dismissal. It includes demotion, pay cuts, discriminatory treatment in promotions or advancements, disadvantageous job transfers, discriminatory assessment of bonuses, and harassment in the workplace, all of which can negatively impact a worker’s economic status or position.

For an act to constitute unfair labor practice, it is necessary that the employer’s action is based on the aforementioned union activities as a reason, indicating an “intent to engage in unfair labor practices.” This intent is a subjective element that suggests the employer acted based on anti-union motives, and proving it is not easy. Therefore, in practice, the intent is often inferred from various objective circumstantial evidence. For example, significant factors that may suggest the intent include the employer’s history of expressing anti-union sentiments, the timing of the disadvantageous treatment immediately following union membership or specific union activities, the irrationality of the business necessity claimed by the company as the reason for the treatment, and the existence of unreasonable differences in treatment between union and non-union members.

Furthermore, the same provision also prohibits “making non-membership or withdrawal from a labor union a condition of employment.” This is known as a “yellow-dog contract” and is clearly illegal as it directly infringes on workers’ right to unionize.

In relation to this, the issue of the freedom to hire was addressed in the JR Hokkaido & JR Freight case (Supreme Court of Japan, December 22, 2003). This case occurred under the unique circumstances of the privatization of the Japanese National Railways, and the Supreme Court ruled that the refusal to hire by the new companies did not immediately constitute an unfair labor practice. However, this precedent does not mean that an employer’s freedom to hire is absolutely unrestricted. There is still room for an act to be considered an unfair labor practice if, for example, a particular worker is not hired specifically because of their union membership and if such action is intended to control or interfere with the union under special circumstances.

Refusal of Collective Bargaining Without Just Cause Under Japanese Labor Union Law (Article 7, Paragraph 2)

Article 7, Paragraph 2 of the Japanese Labor Union Law prohibits employers from refusing to engage in collective bargaining with the representatives of their employees without just cause. This provision is designed to substantively guarantee the right to collective bargaining, which is one of the most crucial activities for labor unions.

Violations of this provision are not limited to outright refusals to engage in collective bargaining. Practices that amount to a substantial refusal to negotiate, despite attending the negotiation table, are also considered a refusal to bargain collectively. Such bad faith bargaining can include actions such as:

• Only sending representatives who lack decision-making authority to the negotiations.
• Ignoring the union’s arguments and demands, merely repeating the company’s stance without showing a willingness to engage in dialogue.
• Unreasonably refusing to provide basic information about the company’s financial situation during wage negotiations.
• Continuously and unjustifiably delaying the scheduling of collective bargaining sessions, citing busyness or other reasons.

The “just cause” that may justify an employer’s refusal to engage in collective bargaining is interpreted very narrowly. For example, reasons such as “the union’s demands are excessive,” “the negotiating committee includes officers from external parent organizations,” or “we are currently too busy” are generally not recognized as just cause. These matters should be discussed within the context of collective bargaining.

A case that questioned the scope of “employer” under this law was the Asahi Broadcasting Corporation case (Supreme Court decision on February 28, 1995). In this case, a television station refused to engage in collective bargaining with dispatched workers from a subcontracting company with whom it did not have a direct employment contract. The Supreme Court provided a framework for determining that even if not a direct employer, an entity that has a position where it can realistically and concretely control and decide on the basic working conditions of workers, to an extent that it can be considered equivalent to an employer, has an obligation to engage in collective bargaining within that scope. This precedent serves as an important guideline for identifying the negotiating parties in today’s diverse employment landscape.

It is important to note that the obligation imposed on employers by this law is to engage in the ‘process’ of bargaining in good faith, not to produce the ‘result’ of agreeing to the union’s demands. Even when refusing the union’s demands, employers must explain their reasons concretely, present alternatives, and show sincere efforts towards reaching an agreement. If this process is followed, they are deemed to have fulfilled their duty to negotiate in good faith, even if the negotiations do not ultimately result in an agreement.

Control and Intervention in the Operation of Labor Unions and Financial Assistance (Article 7, Paragraph 3 of the Japanese Labor Union Act)

Article 7, Paragraph 3 of the Japanese Labor Union Act ensures the autonomy of labor unions by prohibiting “employers from controlling or intervening in the formation or operation of a labor union” and “providing financial assistance for the expenses of operating a labor union” .  

“Control and intervention” refers to any act by an employer that influences the decision-making or activities of a labor union, thereby impairing its autonomy. Such acts can take various forms, but typical examples include:

• Acts that obstruct the formation of a labor union or encourage members to withdraw from the union .  
• Acts that discourage union activities with statements like “Focusing too much on union activities will affect your promotion” .  
• Acts of favoring or discriminating against certain unions, such as supporting the formation of a second union that is cooperative with the company (union discrimination) .  
• Unjustly obstructing legitimate union activities (such as distributing leaflets or holding meetings) .  

Whether an employer’s speech constitutes control and intervention is often a matter of dispute. In this regard, the Prima Meat Packers case (Supreme Court decision on September 10, 1982 (1982)) provides important criteria for judgment. According to this decision, whether an employer’s speech constitutes an unfair labor practice should be determined by “comprehensively considering the content of the speech, the means and method of its announcement, the timing of the announcement, the status and position of the announcer, and the impact of the speech,” and whether the speech has an intimidating effect on union members and influences the organization and operation of the union. In other words, even if it is formally an expression of opinion, if its substance intimidates union members and disrupts the unity of the union, it is evaluated as control and intervention.  

Furthermore, the prohibition of “financial assistance” is a provision to prevent labor unions from becoming economically dependent on employers, which would result in the inability to act autonomously. However, the proviso to Article 7, Paragraph 3 of the Japanese Labor Union Act specifies exceptions for permissible financial assistance. This includes allowing workers to attend collective bargaining sessions during paid working hours (check-off), donations to welfare funds, and providing a minimal office space. These acts are exceptionally permitted as they contribute to the healthy operation of labor-management relations.  

Retaliatory Disadvantageous Treatment for Filing a Complaint with the Labor Commission Under Japanese Labor Union Law (Article 7, Paragraph 4)

Article 7, Paragraph 4 of the Japanese Labor Union Law prohibits employers from dismissing or otherwise treating workers disadvantageously for having filed a relief petition for unfair labor practices with the Labor Commission, or for having provided evidence or testimony during the review process .  

This provision is established to ensure the effectiveness of the relief system for unfair labor practices. If workers were to be retaliated against simply for seeking relief, they would become discouraged and unable to utilize the system . Therefore, the law explicitly prohibits such retaliatory actions.  

The protection afforded by this provision is not limited to the act of filing a petition with the Labor Commission. It also extends to the acts of providing testimony or evidence as a witness during the Labor Commission’s investigations and hearings . Should there be a violation of this provision, the disadvantageous treatment in question is likely to be deemed invalid, similar to disadvantageous treatment under Article 1.  

Remedies for Unfair Labor Practices Under Japanese Law

When an employer commits an unfair labor practice, affected workers or labor unions can seek legal remedies to restore their rights. Under the Japanese legal system, there are primarily two procedures for redress. One is “administrative relief” through a specialized administrative body called the Labor Commission, and the other is “judicial relief” through the courts.

Administrative Relief by the Labor Relations Commission Under Japanese Law

The Labor Relations Commission in Japan is an administrative body specialized in resolving labor disputes, composed of public interest representatives, worker representatives, and employer representatives. Administrative relief against unfair labor practices begins by filing a petition with this commission. The procedure generally follows these steps:

1. Filing a Petition: Workers or labor unions submit a petition for relief to the prefectural Labor Relations Commission with jurisdiction within one year from the date of the unfair labor practice. There is no fee for filing a petition.
2. Investigation: Once the petition is accepted, an examiner from the Labor Relations Commission will hear the circumstances from both parties, organize the arguments and evidence, and clarify the issues in dispute. At this stage, attempts are often made to resolve the matter through settlement.
3. Hearing: After the issues have been organized through investigation, a hearing similar to a public courtroom is held. Here, questioning of the parties and witnesses takes place, and evidence is examined for fact-finding.
4. Issuance of Orders: Following the conclusion of the hearing, the Labor Relations Commission issues an order after a panel discussion led by the public interest members. If the petitioner’s claims are recognized and unfair labor practices are found, a “relief order” is issued. If the claims are not recognized, a “dismissal order” is issued.

The content of the relief order varies depending on the case but is fundamentally based on “restoration to the original state” to rectify the situation infringed by the unfair labor practice. For example, in the case of an unfair dismissal, orders may include the withdrawal of the dismissal, reinstatement to the workplace (reinstatement to the original position), and payment of an amount equivalent to the wages during the dismissal period (back pay). In the case of refusal to engage in collective bargaining, an order to engage in good faith bargaining may be issued. For employer interference, orders may include a prohibition on similar future actions and the posting of an apology or similar notice within the company (post-notice order).

If a party is dissatisfied with the order of the Labor Relations Commission, they may apply for a review to the Central Labor Relations Commission, a national body, or file a lawsuit in court seeking the cancellation of the order.

Judicial Remedies in Private Law Under Japanese Law

In addition to the procedures of the Labor Relations Commission, workers and labor unions in Japan can also seek remedies for their private rights directly through the courts. Unfair labor practices not only violate the public regulations of the Japanese Labor Union Law but also affect legal relationships under private law.

Firstly, legal acts that constitute unfair labor practices (for example, dismissals based on union activities) are commonly deemed invalid under Article 90 of the Japanese Civil Code, as they contravene the spirit of Article 28 of the Japanese Constitution and the Labor Union Law, and are against public order. Consequently, dismissed workers can file a lawsuit in court to confirm their employment status (to affirm that their status as employees continues) and to claim wages for the period they were unable to work.

Furthermore, unfair labor practices may constitute a tort under Article 709 of the Japanese Civil Code, as they illegally infringe upon the rights of workers and labor unions. In such cases, workers and labor unions can claim monetary damages from the employer for mental anguish and other financial losses caused by the unfair labor practices. Indeed, there have been instances where courts in Japan have ordered compensation for damages due to the refusal of collective bargaining.

Thus, administrative and judicial remedies coexist as independent routes of relief, each with its own distinct objectives and procedures.

Comparing Administrative and Judicial Remedies Under Japanese Law

In Japan, there are two main types of remedies for unfair labor practices: administrative remedies provided by the Labor Relations Commission and judicial remedies through the courts. Both have significant differences in their objectives, procedures, and effects. Choosing one or utilizing both concurrently is a strategic decision for both employers and employees.

Administrative remedies, namely the review procedures by the Labor Relations Commission, primarily aim for the “swift restoration of normal collective labor-management relations.” Consequently, the procedures are designed to be more flexible and expedited than court litigation. There are no filing fees, and the involvement of commissioners who are experts in labor relations promotes settlements that reflect the actual circumstances. The orders issued by the Labor Relations Commission, such as reinstatement to the original position or orders to engage in collective bargaining, directly rectify the infringed state by mandating specific actions.

On the other hand, judicial remedies, or litigation procedures in the courts, primarily aim to legally establish the rights and obligations between the parties and compensate for damages through monetary payments. The procedures follow strict legal protocols, with clear responsibilities for claims and evidence. Resolutions often take a long time, and costs, including attorney fees, tend to be high. However, court judgments carry legal finality, and monetary obligations can be enforced through compulsory execution, which is a powerful effect.

From the perspective of employers in Japan, these differences demand varying risks and response strategies. In the Labor Relations Commission, swift resolution is expected, but there is also the possibility of receiving orders that are difficult for companies to accept, such as post notices. In the courts, a rigorous defense based on legal logic is possible, but a loss can lead to high damage payments or back pay, potentially causing significant economic and social credit damage to the company.

The following table compares the main features of both systems.

Summary

As detailed in this article, the system for addressing unfair labor practices is a fundamental part of Japanese labor law, designed to substantiate the basic human rights of workers guaranteed by the Japanese Constitution. Article 7 of the Japanese Labor Union Law strictly prohibits certain acts by employers, such as discriminatory treatment based on union membership, refusal of collective bargaining without just cause, and interference with union activities. Violations of these provisions can expose companies to significant legal risks, including corrective orders from the Labor Commission, court judgments declaring legal acts invalid, and liability for damages. These risks can directly affect a company’s financial situation and social reputation, making the establishment of a preventive compliance system essential.

Monolith Law Office has a proven track record of providing extensive advice on complex labor law matters, including unfair labor practices, to a diverse range of clients within Japan. Our firm is staffed with experts who are not only qualified as Japanese attorneys but also hold foreign legal qualifications and are English speakers, deeply knowledgeable about the unique challenges faced by companies engaged in international business. We are capable of offering comprehensive and strategic legal support, from appropriate responses to collective bargaining and the establishment of internal regulations to the assessment of labor risks and representation in cases of unfair labor practice claims.