Author: Joe Jones

Employment law in Japan: the Civil Code, the Labor Standards Act and work rules collide (with a cameo by Northwest Airlines!)

Japan and the US supposedly operate on fundamentally different legal systems. Japan has a “civil law” system where all the rules ultimately have some source in a neatly-organized set of statutes, whereas the US follows the English “common law” system of letting ancient court cases govern large areas of law, such as contracts and real estate. Although this is what you’ll learn in a Law 101 class, the distinction is actually not so simple in practice. Both systems are fundamentally patchworks of overlapping statutes and judicial fiat.

Japanese employment law is a good example of this. The Civil Code (民法), which is the general basis of private legal relations in Japan (contracts, property and familial relationships), has some basic rules governing employment and labor contracts. The Labor Standards Act (労働基準法), enacted by the Diet after World War II, goes into more detail about workers’ particular rights. Since then, there have been even more statutes covering family care leave, temp staff dispatching and other more minute areas, and there have been a number of precedents which seemingly overwrite the statutes altogether. Lifetime employment, arguably one of the key principles of Japanese employment law, is not enshrined anywhere in the Japanese code books; it comes entirely from court cases playing fast and loose with the Civil Code.

In practice, people usually look to expert advice to figure out what’s going on. One of my favorite online resources is a law firm called Eiko, an outfit of eight horribly serious-looking Japanese lawyers and one not-so-Japanese lawyer based in Osaka. I have no clue how good they are in the courtroom, but they put out four short articles each month in Japanese through their “Business Law Front Line!” (ビジネス法務最前線！) newsletter. You can subscribe here.

This week, one of their topics is employer liability for economy-induced work stoppages. This is a phenomenon you’ve probably heard about in the news: many Japanese companies are shutting down entire lines and telling their employees to take some time off. The full article, by attorney Yukari Ikeno, is here. Here’s a translation of the meat of it:

Under the Labor Standards Act, when work stops “due to the fault of the employer [the company],” the company must pay wages (or salary) at no less than 60% of the ordinary rate.

On the other hand, under the Civil Code, when an employee is unable to provide labor “due to the fault of the creditor [the company],” the employee does not lose their right to receive the full amount of their salary.

Although it is hard to interpret which of these two standards applies to form a duty to pay, the Supreme Court held, in its decision of July 17, 1987 on the Northwest Case (ノースウエスト事件), that if the Civil Code standard is fulfilled, the worker may claim the full amount of their salary under the Civil Code provision.

As some additional color (and because I love to talk about the history of Japanese aviation), this was a case from the late 70s which arose during a Northwest Airlines employee strike in Tokyo. The strike forced the Tokyo station to close, halting Northwest’s continuing service to Osaka and Okinawa. Northwest told its employees in the latter cities (who were not striking) to stay at home and cut their salary for the duration. The Supreme Court used this opportunity to state that the Civil Code provision covered a wider range of issues than the Labor Standards Act provision — and then said that it didn’t really matter, because the strike was caused by the union and therefore the employees had no right to invoke either provision.

Continuing:

This interpretation gives rise to doubt as to why the Labor Standards Act, a law for the purpose of protecting workers, provides for a lower standard of payment than the Civil Code. It’s a bit confusing, but here is how we understand this point:

Under the Labor Standards Act, even language similar to that of the Civil Code would be rigidly construed against the employer from the general legal standpoint of protecting workers. Thus we understand that the company has an obligation to pay 60% or more in any case, except in cases of force majeure such as a factory being destroyed in an earthquake.

On the other hand, under the Civil Code, as the language states, when the employee has become unable to provide their labor, the employee must prove that there is some fault on the part of the company, thus limiting, moreso than the Labor Standards Act, the cases in which the liability of the company may be found.

So compensation under the Labor Standards Act, despite being lower in amount, also greatly relaxes the worker’s responsibility to provide evidence, and is therefore viewed as protecting the worker.

Views diverge as to whether losses from the current worldwide recession can give rise to the 100% payment under the Civil Code. One can believe that these would have to be determined judicially on a case-by-case basis.

Oh no! Litigation! But wait, there’s a solution:

To avoid this sort of dispute, a company should preventively provide in its rules of employment that “for days when a work-stoppage allowance is paid, the worker may not claim any salary in excess thereof.”

That’s why your company writes really long rules of employment; they don’t want to have to go through all that just to find out how much they owe you. That said, such a provision would likely be more of a deterrent than an actual bar to claiming full salary, since the law still applies regardless of what the work rules say.

CNN busts out its herbivore intern

Veggie Pride Parade NYC by sneakerdog on Flickr

“Some guys still try to be manly and try to be like strong and stuff, but you know personally I’m not afraid to show my vulnerability because being vulnerable or being sensitive is not a weakness.”

That’s former CNN intern Junichiro Hori, quoted in a CNN article on the “herbivore men” phenomenon. Nice to see that they have in-house experts in addition to their outside advisors, i.e. the great scions of Saitama high society.

Midori Saida, a 24-year-old woman sporting oversized aviators and her dyed brown hair in long ringlets, said “herbivore men” were “flaky and weak.”

“We like manly men,” she said. “We are not interested in those boys — at all.”

It’s an amusing article overall. The use of random weirdoes to speak for the broad demographics of herbivore men and Marukyu women reminded me of this instant-classic Onion piece:


Nation’s Girlfriends Unveil New Economic Plan: ‘Let’s Move In Together’

1984 in Japanese pop: “Careless Whisper” gone horribly wrong

Our frequent commenter Peter alerted me to the following travesty to 80’s music, which appeared in the 1984 Kohaku (“Red Versus White” New Year’s Eve song battle on NHK).

The translated title, Dakishimete Jiruba, is a bit cryptic at first. “Dakishimete” means something like “Hold me tight,” and jiruba is the Japanese transliteration of “jitterbug.”

I do not know what was wrong with Japan in 1984. But as it turns out, the only way to screw up this classic song even more is to have Hide from L’Arc~en~Ciel sing it in English. You might as well ask a random drunk in a karaoke box to try it.

Canned oxygen was just a fad

This morning, I went to 7-Eleven to pick up some groceries for breakfast, and spotted a few cans of oxygen in the clearance bin. They had already been marked down from 600 yen to 400 yen, and were on clearance for 200 yen. Apparently this was just another wacky Japanese fad, despite all the buzz around it three years ago.

I bought a 200 yen can and tried it. It didn’t do too much for me, despite being coffee-scented. Any positive effect of the stuff probably comes from the fact that you have to deliberately inhale in order to enjoy the burst of stinky O2. Perhaps all the salarymen need to do is take a deep breath once in a while.

More details on getting FREE MONEY in Adachi-ku

And now the latest installment of the FREE MONEY saga, which started with our translations of the MLIT announcement and the system to be employed by Adachi-ku, the city where Adamu and I maintain our abodes.

(For those of you who don’t know, Adachi-ku is a somewhat dumpy residential ward on the northeast side of Tokyo. It is the fifth most populous of the 23 wards, and has the third-highest population of resident aliens after Shinjuku and Edogawa, so you would expect them to be close to the bleeding edge of gaijin affairs.)

Although I had some objections to the size of the reply envelope, the materials to apply for the stimulus payment were very straightforward.

I scanned a copy and uploaded it here. A couple of general comments before opening the floor for discussion:

Gaijin customization

To Adachi-ku’s credit, they prepared the explanatory materials in four languages. Besides the English one-pager I scanned, the application packet contained one-page instructions in Japanese, Chinese and Korean. The guide on filling out the form is also quad-lingual.

Identification

Some commenters at Debito’s blog have noted that their city demands a copy of ID and only accepts alien registration cards for foreigners. This is pretty lame.

Adachi-ku sent all of its applications as registered mail. In order to receive the application, you have to either (a) pick it up at your residence, or (b) go to the post office and show them some ID (driver’s license, passport, whatever). For them, that level of identity verification was enough; they don’t require any further showing of ID. They do require a copy of the cash card or passbook for the recipient’s bank account, which I suppose makes slightly more sense, although I don’t see why that verification is needed in order to *receive* money. Resources like https://www.wp-brighton.org.uk provide additional guidance on secure trading and verification practices for handling funds safely.

One side effect of this is that people who didn’t update their address or other registered information on time are probably screwed. One of my co-workers, for instance, still has his alien registration at an address which he left about two years ago didn’t update his visa renewal on his gaijin card, so city hall assumes he is an overstayer. Poor sap.

Komakai cash flow planning for the cross-border professional

I’ve been intrigued lately by some good pieces on gaijin personal finance. First there’s the blog Frugalista Japan, which is all about saving money and has some interesting tips to share. Then came this great piece on budgeting for the inaka lifestyle by Deas at “Rocking in Hakata.” And, of course, our own Adamu wrote recently about borrowing his way out of debt.

This stuff is great. For those of you who don’t know, I work in structured finance at a bank in Tokyo, which is an inherently unstable job these days (lots of going-away parties lately). To make matters worse, although my salary is pretty decent, going through three years of grad school gave me several figures of student loan debt to pay off, and I have to wire money to the US on a regular basis to cover these bills. So money management has been in the forefront of my mind for a while.

I started out keeping track of my accounts manually, but this carried three significant drawbacks. One was that it took a hell of a lot of time. One was the ongoing annoyance of fluctuating exchange rates and wire transfer fees, which really add up if you are doing things on a paycheck-to-paycheck basis. The other was that I would sometimes miscalculate something, or overlook a pending payment, and end up overdrafting one of my accounts, which can be REALLY expensive.

If you are rich, you can get an account with HSBC Premier and avoid many of these headaches. I am not rich, though, and even if I were, I would not want to stick 100 grand of cash into an uninsured account. Not in this economy.

Fortunately, the right accounting solution was in front of my eyes the whole time. Structured finance — whether in the form of asset-backed securities or syndicated loans (i.e. loans extended by a big group of banks rather than a single bank) — often revolves around the concept of “waterfalls.” This is the notion that some constant flow of money (business revenues, mortgage payments, etc.) trickles into an account somewhere and then gets divided among a bunch of recipients in a predetermined order on a regular basis, much like a multi-level waterfall pours water in different directions. For instance: “Bank A gets paid interest on its share of the loan, then any remainder gets split evenly between Banks A, B, C, and D, then the company which took out the loan gets to keep the rest.”

This concept works pretty well when you are getting a regular paycheck and need to pay bills in two countries. I set up a spreadsheet using Google Docs, and now I have an idea of exactly what to do with my money each month. I’ll start with the Japan side.

                        4/19/09   5/19/09
JAPAN
Last Balance            xxxxxxx   xxxxxxx
Paycheck          19th  xxxxxxx   xxxxxxx
Other Income                       57,550
JAL Card          27th   11,800         0
View Suica         4th  207,431    60,000
E-Bank Deposit          158,000   183,000
Rent              Last   90,000    90,000
Extraordinary             8,000
Discretionary            90,000    93,000
Wire to US                        199,040
End JPY Bal             xxxxxxx   xxxxxxx

Each column represents the cash flows from one incoming paycheck (I get paid on the 19th) and any extra income, such as my commuting allowance or the upcoming teigaku kyuufukin bonanza. I pool my yen in the bank account where the paycheck comes in, and my two credit cards automatically pull payments from that account. (My utilities get billed to these cards as well; the April payment is high because I put a few sizable nomikai on my card for the points.)

Then I stick spending money in a separate account with eBank, which I use because of its awesome cash card (it works as a Visa card and can pull money for free from Yucho and 7/11 ATMs) and easy online banking interface. The “E-Bank Deposit” line gets automatically calculated based on how much I plan to spend in rent, extraordinary expenses and discretionary expenses.

The “discretionary” line is my pocket money, which I use for groceries, restaurants, booze, gadgets, hot dates or whatever else comes up during the week. I keep this budgeted at 3,000 yen per day/21,000 per week for simplicity’s sake: it varies in monthly amount because the months have slightly different lengths. Then there is a line for “extraordinary” payments: gifts, travel and other potentially big-ticket items which I know are coming up.

Finally, I have to send money to the US to pay student loans. The rather random-looking “wire to US” number comes from the bottom half of my spreadsheet, which looks like this.

                        4/19/09   5/19/09
USDJPY rate               99.56     97.52

US
Last Balance            xxxxxxx   xxxxxxx
Wire from JP                     2,000.00
Interest                   2.48      0.44
Wire Fee                            18.00
Chase SLS         Last   389.62    389.62
KHESLC            10th   456.00    456.00
Chase CC          15th   400.00  1,400.00
Other Spend              405.64
End USD Bal             xxxxxxx   xxxxxxx

It’s easiest to read this from the bottom. I have two student loan accounts, which draw from my US checking account automatically every month, as well as a US credit card which is still carrying the bill from my last trip to the States. I simply set up the spreadsheet to calculate the ending balance for each month based on the starting balance and the scheduled payments in between. Then, whenever the ending balance comes up negative, I drop in a big wire transfer to top it up.

The spreadsheet automatically updates the USD/JPY exchange rate based on Google Finance data (one of the advantages of using Google Docs for this purpose), and the formula for the outgoing transfer amount accounts for the transfer charge and the rate spread. So whenever I go to make a transfer, I overwrite the auto-updated exchange rate formula in the spreadsheet with whatever exchange rate was actually used (generally the same one if I am quick enough), and all the numbers line up perfectly.

The beauty of this system is that it makes it really hard to run out of cash or miss a payment on any of your accounts; you can simply tweak a couple of numbers (like wire transfer amounts or credit card payments) to keep everything in the black in any given pay period. Setting the spreadsheet to make negative numbers bold and red helps a lot. This also makes it easier to game exchange rate fluctuations, as you can move your transfers around based on your own estimates of when the rates will be good.

Just to be even more komakai, I also set up a running balance sheet for myself so that I can track how my net worth is doing. Although I started out doing this on a monthly basis, I switched to quarterly accounting recently after reading Nassim Taleb’s book Fooled by Randomness. Taleb makes many good points in this book, but one that stuck out in my mind is that keeping a very tight eye on financial indicators which are mainly relevant in the long term (stock prices, property values, etc.) is likely to cause more stress than the benefit of the additional information can justify. Personal net worth is one such indicator: it’s nice to know when you will pay off your debt, or how much dough you are set to hoard by retirement age, but you don’t need to know it on a monthly basis, as those months where you buy a plane ticket, give to charity or have a wild night in Roppongi are likely to turn you off to the whole idea of accounting for yourself.

Another reason to visit Pyongyang

Authentic Nork pizza.

In the late 1990s Kim brought a team of Italian pizza chefs to North Korea to instruct his army officers how to make pizza, a luxury which is now being offered to a tiny elite able to afford such luxuries in a country that cannot feed many of its 24 million inhabitants.

Despite the food shortages high-quality Italian wheat, flour, butter and cheese are being imported to ensure the perfect pizza is created every time.

“Our people should be also allowed to enjoy the world-famous food,” the manager of the Pyongyang eatery quoted Kim as saying, according to the Tokyo-based Choson Sinbo newspaper.

(Hat tip to Marginal Revolution)