#12. Han-pu-tei Shokai case

Tokyo District Court Ruling June 11, 2020 (p.26, Rodo-hanrei #1233)

  In this case, X, an SE, contracted with System Development Company Y2 for a delegation of services, and with that introduction, contracted with Hun-pu-tei Shokai Y1, another system company, and oversaw part of the operations of Y1 from September 21, 2017.  The contract was terminated on December 8, 2017.  X claimed that (1) the contract between X and Y2 was an employment contract, (2) the contract between Y1 and Y2 was a worker dispatch contract, (3) Y2 was employing X by circumventing the Dispatch Law, and the employment fess under Article 40-6(1)(v) of the Dispatch Law.
  In addition, X claimed that (i)Y2 was dismissed during the term of the employment contract and the dismissal was void, (ii) Y1 did not pay enough wages based on the employment contract established in accordance with the same clause, and (iii) Y1 and Y2 must compensate for the damages.
  The Court admitted X's claim for part of the item (i) and part of the item (ii) against Y2.

1. Command and order of X by Y1
  A number of issues have been discussed, but especially noteworthy is that several episodes have been identified on the site of Y1 where X had been directly instructed by the person in charge of Y1.  The episodes contains the element of "directions and orders" and are a key point in all of (1) through (3).
  That is, in (1), it is the basis for the recognition that the person in charge of Y1 directed and ordered X on behalf of Y2 (consequently, the employment contract with Y2 was recognized).
  Subsequently (2) provides the basis for the recognition that the person in charge at Y1 directed and ordered X as a client company (consequently, the worker dispatch contract between Y1 and Y2 was recognized).
  On the other hand, in (3), recognition was granted in contradiction to (1) and (2).  This requires understanding of the structure of Article 40-6(1)(v) of the Dispatch Law.  In other words, for Article 40-6(1)(v) of the Dispatch Law, it become an issue of a direct contract skipping over the dispatch contract, if the Dispatch Law is actually circumvented in "avoiding the application of the Dispatch law.  More concretely, it will be legally deemed that there was an offer or direct employment from the company being the client company (in this case, Y) to the person being the employee ( in this case, X) if the Dispatch Law is actually circumvented in "avoiding the application" of the Dispatch Law.
  One of the two requirements, the circumvention of the Dispatch Law is equal to (1) and (2).  This is a fact finding that the reality it is likely a dispatch.
  More important issue is "the intent to avoid application."
  The Court has evaluated that "the intent to avoid application" cannot be presumed merely because (1) and (2) are present, and that even if there are some elements of "directions and orders," such element cannot be clearly distinguished from the contractual demands for performance of obligations made by the client (Y1) to the contractor (Y2 and X), and therefore it cannot be evaluated as the intent to circumvent the Dispatch Law.
  In other words, even with the same directions and orders, the degree of proof is higher or orders for which (3) is recognized than for those for which (1) and (2) are recognized, particularly in recognizing for accrediting "the intent to avoid application."

2. Practical points
  Looking at (1) in more detail, the issue is whether or not the agreement is evaluated as an employment contract under Article 2 of the Labor Contract Law. Consequently, the worker characteristic was affirmed using the so-called "worker characteristic" framework of judgment that is generally used: (a) freedom of acceptance of work requests; (b) direction and supervision in the performance of work; (c) temporal and local constraints; (d) substitutability; (e) methods of calculation and payment of remuneration; (f) business operator nature appearing in responsibility for machinery and equipment, the amount of remuneration, etc.; (g) exclusivity. Cf. p.183 Sugano, Labor Law, 12th edition, p.34 Mizumachi, Labor Law).
  After recognizing the various circumstances, it was recognized that an employment contract that was renewed every month had been concluded, and as a dismissal during the term of the employment contract, a stringent requirement for dismissal validity (an unavoidable reason under Article 17 of the Labor Contract Act) was deemed necessary.
  Subsection (b) adopted Article 2 of the Standards for Classification of Worker Dispatch Business and Business Conducted by Contracting, which is used as a framework for judgment when a false dispatch is challenged, as a framework for this case (details are omitted), and finally affirmed the conclusion of a worker dispatch contract.
  In this way, all issues other than Article 40-6(1)(v) of Dispatch Act are extremely orthodox and are very helpful in studying what circumstances affect the recognitions of "directions and orders."
  On the other hand, Article 40-6(1)(v) of the Dispatch Law is structurally complex (for example, if "dispatch" is disguised, it becomes "direct employment"), and there are many points to discuss.  This decision showed one of the issues of the article.
  However, amid diversifying working styles, the number of requests for direct employment to protect workers will not decrease in the future, and I believe that this provision will be discussed more in the future.  It is expected that the judgment expressed in this context regarding the meaning of "the intent to avoid application" will be used as a reference in the future.

※ Pointer (original and only for English version)
<Worker characteristic>
  As in other industrialized nations, the question is whether a person working at a company is a worker or not (e.g., self-employed, dispatched employees).
If the person is a worker, the company must pay social insurance premiums or take paid holidays, as in this case, which increases the cost burden.
  Let me point out a few points of the work characteristic discussion.
  The first point is that the worker characteristic is not assessed based on formal or external circumstances, such as contract wording, but is based on actual work conditions.  Worker characteristic can be affirmed if the contract does not contain any actual conditions of non-worker, even if the contract contains any wording that contradicts the worker characteristic.  To disaffirm worker characteristic, it is not very effective to review the contract alone.  It is necessary to review the situation in which you are hiring and to fundamentally modify the scheme itself.
  The second point is the decision framework.  Worker characteristic is not on a stereotypical either or evaluation. Rather, it is a question of balancing the importance of worker characteristic and business operator nature.  Accordingly, it is not only necessary to recognize the business operator nature at least to some extent, but also to eliminate each element which raises the suspicion or worker characteristic one at a time.  There is no model which only having such an element will be acceptable definitely.
  The specific content of this decision framework is typical in 2 (a) to (g) above.
  The third point is that worker characteristic varies in scope depending on the law applied.  In cases of mandatory laws like the Labor Standards Law, where the law enforces the rules, worker characteristic is relatively narrow. However, in cases such as the Labor Union Law, where the parties are required to resolve the issue through discussions, worker characteristic is relatively broad because it is possible to resolve issues through discussions.
  The fourth point is the characteristic of Article 40-6(1)(v) of Dispatch Act.
  This provision stipulates that firstly, a contract is not a dispatch contract, but second, a contract that is dispatch in its actual condition and meets the requirements stipulated by law, then third the person becomes a direct employment employee, not a dispatched employee.
This rule is new, so in what cases it will actually be applied and the meaning of the terms used have yet to be determined.
  As pointed out in the above commentary, it is a very unique rule that second, when there is a reality of dispatch employees, third, they are treated as workers, and therefore they are given more legal benefits than actually required.
  We will be paying close attention to future trends in how the vague parts of this rule will become clear and how these rules will be utilized.

※　日本語原文

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