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Rules of Restructuring Termination

According to a recent court case in Japan, “termination due to restructuring is, in general, the dismissal of selected employees from the workforce primarily due to economic conditions of the business and not because the selected employees were at fault”.

Over the years, courts have established what is known as the Rule of Restructuring Termination (解雇権濫用法理) which lays down four factors to be considered in determining whether an employer has abused his or her right to terminate employment. The four factors are:

1. Is it necessary to reduce workforce? (人員削減の必要性があること)
2. Did the employer make efforts to avoid reduction of workforce? (解雇回避の努力をしていること)
3. Is the selection of terminating employees fair? (被解雇者の選定基準が妥当であること)
4. Did the employer discuss the matter with employees? (労働者側との協議をしていること)





These factors are not legal requirements where a lack of one voids the effect of termination. Rather, each of these factors are considered as a whole for the courts to decide whether an employer abused his or her right to terminate employment.

What raises concern with JAL’s approach to its restructuring is that employees are not aware of these management decisions until they hear it on news or read it on newspapers, according an employee of JAL. Although JAL’s new business plan received a warm welcome by the stock market, it is questionable how well the company can navigate its plans when there seems to be a lack of communication between the two opposing parties. When there is a lack of “good faith” discussions, it may not satisfy the fourth factor of the Rule.

In addition, despite the company’s announcement to continue cutting employee’s base salaries by 10%, it made no reference to cutting pilot’s salaries which in some cases exceed 30,000,000 yen (equivalent to $254,237 at 118 yen per U.S. dollar). This may cast shadow over the necessity to reduce workforce and/or making efforts to avoid reducing the workforce. In any case, JAL is in it for a rough ride.



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2007年02月21日 Employment Law トラックバック:0 コメント:0












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