Despite the name, this is not a gender pay rule. It addresses the gap between seishain, the permanent full-time employees, and non-regular workers: part-timers, fixed-term contract staff and agency workers. Under the Part-Time and Fixed-Term Employment Act, as amended by the Work Style Reform, an employer may not set differences in base pay, bonuses, allowances or benefits that are unreasonable in light of the job content, the level of responsibility, the scope for changes in job and location, and other circumstances. Where those factors are the same, the treatment must be the same. Agency workers are covered by parallel rules in the Worker Dispatch Act.
The test is applied to each element of pay separately, not to total compensation. Courts ask what each allowance or benefit is for, and whether that purpose applies to the non-regular worker too. In October 2020 the Supreme Court delivered five judgments in a single week. In the Japan Post cases, denying fixed-term workers family allowances, year-end holiday pay and paid sick leave was held unreasonable. In the Osaka Medical and Pharmaceutical University and Metro Commerce cases, denying bonuses and retirement allowances was held not unreasonable on those facts, because the roles and responsibilities differed.
Employers must also explain the reasons for any difference if a non-regular worker asks.
What it means for a foreign employer
- Audit allowances first. Commuting, meal, family and similar allowances are the easiest items for a non-regular worker to win. If they are paid to permanent staff for reasons unrelated to the job, extend them or justify the difference.
- Document why roles differ. The strongest defence is a real difference in duties, responsibility and mobility, written down in job descriptions.
- Contract staff are not a cheaper seishain. Using fixed-term contracts for people doing permanent jobs creates both pay and conversion risk.
- Prepare to explain. A refusal or vague answer to a worker's request for reasons is itself a breach.
Sources
- Act on Improvement of Employment Management for Part-Time and Fixed-Term Workers, Articles 8, 9 and 14.
- Worker Dispatch Act, as amended (in force April 2020).
- Supreme Court, Osaka Medical and Pharmaceutical University and Metro Commerce cases, 13 October 2020; Japan Post cases, 15 October 2020.
- Ministry of Health, Labour and Welfare, Equal Pay for Equal Work Guidelines.