LITIGATING SEXUAL DISCRIMINATION EMPLOYMENT CASES IN JAPAN:
LEGAL DEVELOPMENTS

by: KAZUTOSHI KAKUYAMA

Note: This article was current when presented on January 25, 1997. The reader is warned, however, that statutory reforms, effective from April 1, 1997, have rendered certain portions of this information obsolete.

OVERVIEW

I. Introduction

II. Future Legislative Developments

III. Development of Sexual Discrimination Law in Japan

IV. Conclusion

I. INTRODUCTION

A. Current Employment Environment in Japanese Society

1. The Japanese employment relationship is said to be distinctive because it combines three basic characteristics:

2. Many have argued that the distinctiveness of the Japanese employment relationship is one of the main reasons for Japan's remarkable economic development after World War II. Even though these three characteristics are undergoing rapid change, we can still say that they fairly characterize the standard employment relationship in Japan.

3. When these aspects are combined with established Japanese beliefs and ways of thinking with respect to the respective roles of men and women in society, Japanese men are traditionally expected to work for a company, while Japanese women are expected to stay at home and take care of the family. Although these expectations, too, are undergoing significant change, it unfortunately still remains to some extent the traditional concept of the "proper" position for men and women in Japanese society.

4. Increase in Female Workers

Due to the modernization of Japanese society and traditional ways of thinking, the percentage of women in the workplace has been steadily increasing each year.

5. Recent statistics from 1995 show that 38.9% of all people in the workplace are women. Compared to 1986, this represents a 28.8% increase in the number of women employed.

6. By contrast, the number of men employed has only increased by 13.9%. As a result, the overall ratio of women to men in the workplace has increased.

7. Discrimination in the Workplace

Even though virtually half of all people employed are now women, these women are unfortunately still not treated equally. For example, following the end of the bubble era, many female graduates from universities faced a series of difficulties in locating employment as compared to similarly qualified male graduates. Offers of employment received by women were simply not equal.

8. Dual Track Employment System

Further, even after entering a company, women faced unequal opportunities. In 1986, the so-called Equal Employment Opportunity Law (Law Respecting the Improvement of the Welfare of Women Workers, including the Guarantee of Equal Opportunity and Treatment Between Men and Women in Employment, Law No. 45 of 1985, as amended) became effective. In response, the major Japanese companies adopted a new dual-track employment system for employees, one for career track employees ("sogoshoku"), which allowed for intra-company transfers and promotion to officer positions; and one for general employees ("ippanshoku").

9. Although this dual-track system is gender neutral on its face, in fact, based on statistics for approximately 52% of Japanese companies with more than 5,000 employees which introduced this dual- track system, the ippanshoku classis only for female employees. Further, although the sogoshoku classification is applied to both male and females, only approximately 2.5% of the sogoshoku are female and, consequently, given the opportunity to be considered as a candidate for a future officer.

10. Temporary Workers

In addition, in terms of regular and temporary workers, only 9.4 % of male employees are temporary, while 39.8 % of female workers are temporary workers.

11. Salary Differentials

In 1995, because many females were working on a temporary basis, female workers' salaries were 62% of that of male workers. Further, although the difference in average salary is small at the beginning of their careers, the gap increases dramatically over time. For workers of age 20-24, female salaries are 90% of those of male workers. However, for workers of age 55-59, female salaries are only 55% of male salaries.

12. Average Years of Service

As of 1995, the average number of years of service for all male workers was 12.9 years. By contrast, the average number of years of service for female employees was 7.9 years. 71.9% of all female employees had service of less than 10 years, compared to only 50% of men having service of less than 10 years. These statistics demonstrate that female workers do not generally work in the same company as long as male workers.

13. Reasons for Discrimination

It is difficult to pinpoint why such discrimination has persisted, even after the Equal Employment Opportunity Law passed. Because there are many factors which could contribute to the persistence of the discrimination, it is difficult to find the exact reason and thus, find the proper solution. One reason commonly mentioned as contributing to the difference between the work position of male and female employees is that many female workers resign after marriage.

Further, ironically, employers sometimes use provisions designed to protect female workers under the Japanese Labor Standards Law (Law No. 49 of 1947, as amended; "LSL") as an implicit basis for discriminating against women.

Based on these provisions, employers claim that they have difficulty in providing female workers with equal opportunity for job assignments, promotion, etc. Some male employees and husbands continue to believe that the "norm" in Japanese society is for women to be responsible for taking care of the family, cooking, cleaning, taking care of children, and other domestic work. Married female workers still, in fact, have more responsibilities than husbands for domestic work in many cases, which have forced female workers to decide to have part-time, temporary work and avoid job assignments requiring overtime.

14. In sum, for various reasons, opportunities for females are not yet equitable.

B. Current Japanese Legal Environment

Despite the above societal factors and the general inequality of opportunity for female workers, Japanese law does provide certain protections designed to ensure the equality of opportunity for all employees in Japan.

1. Japanese Constitution

At first, Article 14 of the Japanese Constitution guarantees equal treatment under the law among men and women, by providing that there shall be no discrimination in social, political or economic relations on the basis of gender.

2. Legislative Provisions

It should be noted, however, that the Constitution only applies to relations between the government and its citizens and that other laws govern relations in the private sector.

  1. For example, under Article 90 of the Civil Code of Japan (Law No. 89 of 1896, as amended; "Civil Code"), any legal act which is deemed contrary to the public order is null and void. Thus, any legal action which violates the principle of equal treatment based on gender may be determined by the court to be null and void.
  2. Further, under the Civil Code, any action in violation of the Constitution may result the wrongdoer to tort liability (Civil Code Article 709 1 ).
  3. In addition, LSL Article 4 prohibits an employer from engaging in discriminatory treatment of women as compared with men with respect to wages by reason of the worker being a woman.

3. The Equal Employment Opportunity Law

The law outlines various normative measures to be taken by employers:

a. Article 7 (recruitment and hiring)

Article 7 of the Equal Opportunity Employment Law provides that employers shall endeavor to provide women equal opportunity with men with regard to recruitment and hiring of workers.

b. Article 8 (promotion and assignment)

Article 8 similarly provides that employers should endeavor to treat female workers equally in the promotion and assignment of workers.

Since these articles require the employer only to make best efforts in promoting equality in recruitment and promotion, they do not establish a legal obligation to establish actual equality.

The Equal Employment Opportunity Law also contains certain mandatory provisions: Articles 9 (regarding Vocational Training), 10 (regarding Fringe Benefits), and 11 (regarding Compulsory Retirement Age, Retirement and Dismissal) create mandatory rules which state that the employer shall not discriminate against a woman worker in these areas on the basis of gender.

However, no penalties or sanctions are provided for in the Equal Employment Opportunity Law for discriminatory conduct by employers.

4. The Prefectural "Women's and Young Workers' Office"

There is a Women's and Young Workers' Office in each prefecture which is given jurisdiction to provide assistance in the settlement of the dispute for claims made under the Equal Employment Opportunity Law (except, significantly, for disputes arising under Article 7 regarding hiring and recruitment). Voluntary settlement requires the agreement of both parties to take corrective action and the Office only plays an advisory role in the settlement. This Office may only refer the dispute to the Equal Employment Opportunity Commission for mediation if either party applies for mediation end t both parties agree to mediation by the Commission. (so far there is only one single reported case where such mediation was actually used).

II. Future Legislative Developments

A. Proposed Amendment to Equal Employment Opportunity Law

The Equal Employment Opportunity Law is expected to be amended. The Japanese Ministry of Labor has prepared an initial proposal to amend the law which is now under review by the Ministry of Labor's advisory board.

  1. Specifically, during the session of the Japanese Diet convened earlier this week (January 20), the Ministry of Labor will probably submit a bill to amend the Equal Employment Opportunity Law to the effect that Articles 7 (recruiting and hiring) and 8 (assignment and promotion) will become mandatory provisions and mediation can be commenced at the request of only one party.2
  2. The Women's and Young Workers' Office would also be given further authority under the new law, if adopted. If the Office issued a recommendation to an employer to change its practices and the employer refused, the Office would have the power to publicize the name of the offending employer.
  3. The proposal would also lift the discriminatory restriction on overtime and holiday work and work during late hours by female workers under LSL Articles 64-2 and 64-3 (see Section I.A.13, supra), which have been used by employers as an excuse for failing to give women equal compensation and promotions.

B. Therefore, if this proposal is passed into law (it is proposed to come into effect on April 1, 1999), a more effective and powerful law would be in place to protect female workers from gender based discrimination.

III. Development of Sexual Discrimination Law in Japan

A. Pre-1986 Cases

Even prior to the effectiveness of the Equal Employment Opportunity Law, numerous court precedents dealt with gender based employment discrimination, although these many of these cases involved termination of a female employee following her marriage and compulsory retirement age discrimination standards (e.g., men in a company were permitted to retire at age 60, whereas females were required to retire at age 55). Several court precedents from the 1960's and 1970's held that these policies violated the public order ("kojo") under Civil Code Article 903 and thus, declared them null and void.4

With the effectiveness of the Equal Employment Opportunity Law, these practices were explicitly prohibited by Article 11.5 As a result, these types of discriminatory practices are no longer a serious issue in Japan.

B. Wage Discrimination Cases

Nevertheless, both prior and subsequent to the effectiveness of the Equal Employment Opportunity Law, the most frequently litigated issue has been wage discrimination. We briefly summarize some of the important precedents below.

C. Akita Sogo Bank Case (1975)

This is the seminal case in Japan dealing with wage discrimination.

Facts: The company applied a different wage table for female workers and male workers.

Judgment: If there is any difference in wages between men and women similarly situated, if the company cannot provide a reasonable justification for such difference, unreasonable discrimination would be assumed. Applying this theory, the court held that the company had violated Article 4 of the LSL.6 The court also held that the bank must pay the difference of past wages to the female employees who were discriminated against, based on Article 13 of the LSL.7

D. Iwate Bank Case (1985)

This case was decided just prior to the effectiveness of the Equal Employment Opportunity Law.

Facts: The issue was the payment of a family allowance, which the company paid to employees whose spouse was a declared dependent for tax purposes. As a result of this practice, most female workers could not receive the family allowance, since they did not generally declare their husband as a dependent, while most men did claim their wife as a dependent.

Judgment: This practice violates Article 4 of the LSL by discriminating between men and women with respect to wages. The court ordered the employer to award the family allowance to female workers as well.

E. Nihon Tekko Renmei Case (1986)

Facts: This case was decided just after the effectiveness of the Equal Employment Opportunity Law. Here, the labor union and the company entered into a labor agreement which contained a gender based discriminatory pay raise and bonus payment system.

Judgment: The court held that the labor agreement was null and void in violation of Civil Code Article 90 and LSL Article 4 (wage discrimination) and, using LSL Article 13, applied the men's pay raise and bonus payment system of the labor agreement to women as well.

F. Shakai Hoken Shinryo Hoshu Shiharai Kikin Case (1990)

Facts: Following an employer-employee labor dispute, a settlement was reached in the labor commission enabling male workers under certain circumstances to be automatically promoted; by contrast, female workers' promotions were subject to further negotiation between the company and the union. As a result, absent a subsequent agreement on female workers' promotion, a wage gap between male and female workers resulted because female workers' promotion was not automatic.

Judgment: This practice violates LSL Article 4 (wage discrimination) and was therefore unlawful. Using a tort theory under Civil Code Article 709, the female employees were awarded the difference between the male workers' wages after the promotion and the female workers wages without the promotion, in addition to damages for mental suffering (Y100,000) and legal fees. However, the court did not use LSL Article 13 to apply the male promotion scheme to women and did not order the company to promote the female workers. The court stated that it did not have the power to order promotion since this was a company's decision. The court could only grant money damages for the difference in wages.

G. Nisso Tosho Case (1992)

Facts: Male and female employees, as their years of service with the company increased, began to receive different wages despite working in the same position.

Judgment: This disparity violates LSL Article 4 (wage discrimination). The court, however, granted an award to the female employees based on the difference in wages between the average female employee and the average male worker in the same position under the tort theory of Civil Code Article 709. The court stated that it could not apply Article 13 because the pay raise for female workers should be decided by the company.

F. Sanyo Bussan Case (1994)

Facts: The employer created two (non-gender based) groups of employees and applied a different pay raise system applied to each group. On its face, this scheme was neutral to male and female employees, but in its application, females were placed into the group with the lower pay.

Judgment: This scheme violated LSL Articles 4 and 13. As such, the court applied the wages of the higher wage group to female employees.

H. Ishizaki Honten Case - Hiroshima District Court (1996)

Facts: For male lateral hires, the company determined wages based on age, but for female lateral hires, the company always applied the starting wage for a high school graduate.

Judgment: The court explicitly said that if the company cannot establish a reasonable basis for differentiating between men and women workers, unreasonable discrimination against female workers exists. Here, there was no reasonable basis for the differentiation and thus, the court held that this was a case of unreasonable sexual discrimination. However, the court refused to use LSL Article 13 to apply the male standard for lateral hires to female lateral hires since the company had no concrete standard figures. Rather, the court held that the different standard was an unlawful tort under Civil Code Article 709. On this basis, the court granted the difference in wages, plus Y300,000 for mental suffering and attorneys fees.

However, the court rejected the female employees' request for court confirmation of the female worker's right to receive wages equivalent to that of the male employees, on the ground that the issue of the amount of wage to pay was a company decision and the court does not have the power to substitute its judgment for the employer.

I. Shiba Shinyo Kinko Case - Tokyo District Court (1996)

Facts: Under the company's wage system, to receive a pay raise, employees had to be promoted to a certain job grade. Then, that grade was linked to the employee's title and job responsibility within the company. The promotion of female employees was delayed substantially in comparison to those of male employees.

Judgment: This differences in promotion were unlawful discrimination as a violation of the company's own work rules, which clearly prohibited discrimination based on gender. Thus, the court did not need to apply LSL Article 4. Moreover, the court not only found discrimination, it also confirmed that with respect to promotion to certain job grades to receive a pay raises, the plaintiffs qualified for that grade. This is extremely significant. Prior to this time, courts had stated that this was the company's decision. Here, however, the court determined that the female employees qualified for a certain job grade and were entitled to receive the difference in wages. With respect to actual promotion to a higher job position, however, the court maintained that this was still within the company's authority.

J. Summary of Case Precedents

Based on these court precedents, we can derive the following principles:

  1. If there are differences in wages between similarly situated male and female workers and if the company cannot provide a reasonable justification for such difference, the court will find unlawful discrimination, as in the Akita Sogo and Ishizaki Honten cases.
  2. If the court finds unlawful discrimination and there is a clear wage table or standard on which the court can rely, then court will likely utilize LSL Articles 4 and 13 to apply the male workers' table to the female workers to compensate for the wage gap, as in the Akita Sogo, Nihon Tekko Renmei, Sanyo Bussan and Iwate Bank cases.
  3. If, however, there is no clear standard or table on which the court can rely, but there is unlawful discrimination, the company will be held liable based on Civil Code Article 709 tort theory and the female workers will be compensated as in the Nisso Tosho and Ishizaki Honten cases.
  4. If a wage difference results from a delay in promotion, initially, courts refused to confirm the promoted position of the female worker, on the ground that promotion was a company decision. However, now there is the Shiba case. Thus, for wage purposes, the court can determine the appropriate position of the employee, although for the purpose of job responsibility and actual promotion, the courts still maintain that this is a company decision.

K. "Glass Ceiling" Cases

As indicated above, most litigated gender discrimination cases are wage related, and there are no reported cases yet requiring a company to promote a female employee on the basis of past sexual discrimination. Naturally, this does not mean that there is no "glass ceiling" problem. Rather, even the Shiba case states that for job assignment and responsibility, the company is in a better position than the court to determine who is the best person for the job.

Having said this, however, currently there are proposals to amend the Equal Employment Opportunity Law to establish mandatory protections for equality in job promotion and recruitment. If adopted, these provisions would establish a basis for courts to say, under the right circumstances, that a certain female worker should be promoted to a certain position. For now, however, we must still wait.

IV. Conclusion

Unfortunately, unreasonable gender discrimination in the workplace in Japan still persists for a variety of reasons. Will it improve or worsen? The answer is, in my view, that it will definitely improve, due to the change in the way of thinking of workers, both male and female, as well as employers, with the support and encouragement of, among other things, the proposed amendments to the Equal Employment Opportunity Law and recent court decisions.

How soon will all of this happen? It depends upon a collective effort by all members of the Japanese society to transform our work environment into one free of discrimination, of any kind.

As you know, the number of elderly in Japan is increasing very rapidly. The population of those 65 or older will outnumber those of 15 or younger during this year. As a result, the available workforce will decrease substantially to 54.6% of the population by the year 205O, down from 69.5% in 1995. This will, in my view, most definitely mean that our society must change its work environment to enable female employees to work in an atmosphere free of unreasonable discrimination, and encouraging good morale. Management of most major corporations have probably already realized this, and have no rational economic justification for continuing unreasonably discriminatory practices against female workers.

Notes:

1 Civil Code Article 709: "A person who violates intentionally or negligently the right of another is bound to make compensation for damages arising therefrom." back

2 For information, it is also currently being proposed to explicitly require the employer to prevent sexual harassment in the work place.back

3 Civil Code Article 90: "A juristic act which has for its object such matters as are contrary to public policy or good morals is null and void." back

4 E.g. ,Sumitomo Cement Case, Tokyo District Court (December 20, 1966); Tokyu Kikan Kogyo Case, Tokyo District Court (July 1, 1969); Izushabotenkoen Case, Supreme Court (August 29, 1975); Nissan Automobile Case, Supreme Court (March 24, 1981). back

5 Article 11 of the Equal Employment Opportunity Law provides that:

  1. With regard to the compulsory retirement age and dismissal of workers, employers shall not discriminate against a woman worker as compared with a man by reason of her being a woman.
  2. Employers shall not stipulate marriage, pregnancy or childbirth as a reason for retirement of women workers.
  3. Employers shall not dismiss a woman by reason of marriage, pregnancy or childbirth. back

6 LSL Article 4: "An employer shall not engage in discriminatory treatment of a woman as compared with a man with respect to wages by reason of the worker being a woman." back

7 Specifically, LSL Article 13 provides that:

© 1997, Kazutoshi Kakuyama. All rights reserved. Kazutoshi Kakuyama is a partner with Anderson Mori Law Offices, AIG Building, 1-1-3 Marunouchi, Chiyoda-ku, Tokyo 100.

 

(translation by Vicki L. Beyer)

Temple University Japan