- Two High Court Decisions Relating to Reemployment after Retirement
- December 12, 2016 | Authors: Harukuni Ito; Yuichiro Mori; John C. Roebuck; Takako Yako; Yuki Yoshida
- Law Firm: Jones Day - Tokyo Office
Two notable successive court decisions relating to disputes concerning reemployment after retirement have been issued.
First, on September 28, 2016, the Nagoya High Court ordered an employer to pay its former employee approximately 1.2 million JPY as compensation for damages equal to the employee's expected amount of wages, although the court rejected the employee's request for classification as a white-collar worker and payment of wages. The former employee, previously a white-collar worker at the company, claimed that the new position of employment, consisting of cleaning duties, offered by the company after the age of retirement (60) was unreasonable. The current Act on Stabilization of Employment of Elderly Persons ("Stabilization Act") provides that if an employer sets a mandatory retirement age of 60 or older and below the age of 65, the employer is required to retain an employee until he or she reaches the age of 65, after the mandatory retirement age, if the employee desires employment (Article 9 of the Stabilization Act). The court found that the employer was liable for damages on the grounds that reemployment with completely different duties is not substantially equivalent to continued employment and is contrary to the purpose of the Stabilization Act.
In addition, on November 2, 2016, the Tokyo High Court reversed an original decision of the court of first instance. The plaintiffs were previously indefinite-term employees but later reemployed as fixed-term employees upon reaching the age of retirement. The plaintiffs claimed that the difference in the amount of wages between fixed-term employees and regular employees (i.e., indefinite-term employees) with the same duties was unreasonable and not in compliance with Article 20 of the Labor Contract Act. As opposed to the original decision, the High Court allowed a difference in wages between fixed-term and regular employees to some extent. The situation, however, remains unpredictable because the plaintiffs have announced their intention to appeal to the Supreme Court, and the Supreme Court may provide a unified standard as to the interpretation of Article 20.
When seeking to reemploy retired employees, a company's actions will be in conflict with Article 9 of the Stabilization Act if it offers a type of work different from the previous work, and they will be in conflict with Article 20 of the Labor Contract Act if a company offers changes unfavorable to employees as to working conditions other than the type of work. Accordingly, it is advisable that any company that has set a mandatory retirement age of 60 or older and below the age of 65 review its system for reemploying elderly workers to confirm the existence of any risks concerning the issues above.