Case in which we represented the company in collective bargaining negotiations with a labor union and reached a settlement

Collective Bargaining Offers and Unfair Labor Practice

Collective bargaining is a process by which representatives of workers negotiate with company management regarding the status and treatment of workers. Collective bargaining is a right of employees recognized under the Labor Law. If the company refuses the offer of collective bargaining, the labor union files a petition for mediation with the Labor Relations Commission, claiming that the union’s right to collective bargaining has been violated. In this case, the fact that the company refuses to bargain collectively can be easily determined, and the company will receive a written decision from the Labor Relations Commission that it must not engage in an unfair labor practice. Since the Labor Relations Commission’s decision is a decision of a public body, the company will not be able to ignore it. In light of this, it is not appropriate to refuse to bargain collectively when an offer of collective bargaining is made.

Types of Labor Unions

There are two types of labor unions that may offer collective bargaining: internal labor unions within the company and external labor unions or groups known as unions. If the company does not have a labor union, the workers cannot negotiate with the union, but even one of the employees can negotiate collectively by bringing the matter to the attention of an outside union. In this case, the company’s employees become members of the outside labor union.

Response to an application for collective bargaining

When an application for collective bargaining is made, the company is obligated to negotiate, but it is not necessary to conclude a labor-management agreement unless the talks are concluded. In some cases, the talks may be terminated without reaching a conclusion. As mentioned above, collective bargaining itself cannot be refused, but the law does not require that an agreement be reached with the labor union once collective bargaining has taken place. However, it is not sufficient to bargain collectively once, and the company must respond in good faith. Therefore, if the company is repeatedly requested to bargain collectively, the company must, in principle, respond to multiple rounds of collective bargaining unless there is nothing more to discuss.

Points to note regarding the conclusion of a labor-management agreement

Whether to conclude a labor-management agreement, and what kind of content of the labor-management agreement should be prepared, is a matter of such importance that it affects the very foundation of the company’s management. Company management must be fully aware of the implications of concluding a labor-management agreement and must decide whether to conclude a labor-management agreement or not. In other words, if a company concludes a labor-management agreement, it will always be bound by the contents of the labor-management agreement in the subsequent management of the company. Some companies consider it important to conduct smooth business operations based on cooperative relationships with workers and allow the opinions of employee representatives to be reflected in the management of the company. Such a company operates its business democratically, and it can be said that it manages its business while earning the trust of its employees in the sense of unity between the employees and the management. However, under difficult management circumstances, the existence of a labor-management agreement can become a major constraint on business operations. In owner-operated companies, where management is led by the owner’s sole discretion, this may not be in line with the corporate culture.

Problems in taking minutes in collective bargaining

During collective bargaining, the union may request that management sign the minutes of the meeting as they have been prepared. However, even if the minutes are titled “minutes,” if they contain an agreement on labor relations, they may be considered to be a valid collective bargaining agreement and a legally binding document. Therefore, it is important on the part of the company to never sign the minutes of a collective bargaining agreement, even if asked to do so. It is not a legal requirement to take minutes in collective bargaining negotiations. Also, refusing to sign the minutes when asked to do so by the labor union does not constitute an unfair labor practice.

Cases where a labor-management agreement has caused hindrance to the company’s management

In our practice, we have seen many companies whose labor-management agreements have been deemed to have interfered with their business operations. For example, Company A had so many labor-management agreements that a certain number of its management team members were from labor unions, and the company could not make decisions on personnel matters, employee salaries, etc. without the approval of the labor unions. The owners of the company had almost no control over the company’s operations, and the employees did not listen to the owners’ opinions at all. The owners had made considerable efforts to improve the company’s management structure, but they finally gave up and decided to sell the company through M&A. However, the new owners who purchased the company’s shares soon realized the power of the labor union and eventually tried to sell the company again. When the balance of power with the labor union is upset in this way, the management of the company itself becomes untenable, and the labor union effectively has control of the company. While it is possible to run the company in that situation, it becomes extremely uncertain as to who will pay to keep the company afloat when the company becomes financially strapped. It could also lead to a situation where the position of the company’s management is reversed and the management is forced to work for the workers, even though they are the owners of the company.

Application for improvement of treatment from a labor union

Even in cases where labor-management consultations are held, a proposal may be made to revise the work rules to improve the status of part-time and other non-regular employees, for example. There are also cases where it is necessary to hear the opinions of worker representatives due to amendments to the law. In such a case, it is only necessary to consult the opinions of the worker representatives while discussing revisions to the employment regulations and improvements in the treatment of workers, which has a very different meaning from the conclusion of a labor-management agreement or a collective agreement mentioned above. Especially these days, with the labor shortage due to the declining birthrate, it is necessary to listen to the opinions of young people and reflect them in the management of the company. A significant portion of offers from workers can be seen as well-meaning attempts to improve the company’s situation and create a better working environment. In such cases, it is important not to be defensive about the fact that the negotiation is a negotiation for consultation from the union, but to understand the intent of the negotiation and to consider it from the perspective that there may be useful hints for the company’s improvement.

Application for unpaid overtime from a labor union

When a claim for unpaid overtime is made by a labor union, the company needs to take the claim seriously. For the company’s part, it is important to first confirm whether there is indeed unpaid overtime. It is necessary to check issues such as whether there is no obligation to pay overtime for those in management positions, what about commission-based employees, whether overtime is included for annual salary employees, and how time is managed for those in sales and professional positions. If there are unpaid overtime wages, the Labor Standards Inspection Office may have been consulted, and the Labor Standards Inspection Office may conduct an investigation, provide guidance, or issue an improvement order, or may require the submission of an improvement report. The company will need to establish a system to properly calculate overtime hours and pay unpaid overtime for the past three years for all employees, which alone can amount to tens to hundreds of millions of yen. Therefore, when there is an offer from the labor union for payment of unpaid overtime, it would be preferable for the company to rather proactively investigate the existence of unpaid overtime and propose improvement measures for time management. In particular, many young workers these days are aware that not being paid overtime is a serious violation of their rights, so it is preferable to thoroughly examine the management of overtime hours before the labor union makes suggestions in order to improve the workplace environment.

Deciding whether to agree to discussions in collective bargaining

As the company’s lawyer, it is necessary to judge the nature of each offer from the labor union on an individual basis and handle it by making an accurate distinction between those that the company can accept for consultative negotiation and those that may involve risks in concluding an agreement or collective bargaining agreement.

Loss of royalties

Recently, due to the poor management by Corona and the problem of underperforming employees, it inevitably arises that employees have to be terminated. In particular, in recent years, despite a marked increase in the cost of living due to increased educational expenses and cell phone bills, wages have not increased and the cost of living has become unbalanced, resulting in a loss of loyalty toward management, and dissatisfaction with management has often been the cause of friction with management. This is likely to be spurred on by a heightened awareness of rights on the part of workers, a marked increase in the mobility of people, and an increase in the amount of information available in the labor market, which makes it easier to change jobs.

Disciplinary dismissal of problem employees

The decision whether or not to terminate a problem employee is critical. In many cases, even when there are a variety of problems, it is difficult to take the decision to dismiss an employee because of the lack of reasonableness or appropriateness of the dismissal, the negative impact of the dismissal on other employees, or the risk of being sued in court. However, as far as we are concerned, we come across many cases that make us wonder if it is really a good idea to not be able to terminate an employee even if he or she is so bad. Even in such cases, unless there is a valid reason for the dismissal, we cannot dismiss the employee for disciplinary reasons, but if there is a business that we feel we can dismiss the employee for disciplinary reasons, we must take action to dismiss the employee at the right time or we will have a situation where the employee cannot be permanently dismissed. In many instances, when grounds for dismissal arise, a decision must be made within at least one week as to whether the employee should be dismissed, and if so, a notice of dismissal must be issued immediately. In our experience, there are many cases in which management makes a mistake in deciding whether or not to dismiss the employee, and many cases in which time passes without considering whether or not the employee should be dismissed, and the timing for dismissal is missed. Based on the many cases we have handled in the past, we provide advice on whether or not to dismiss the employee, the procedures to follow, and the prospects for a court decision if the case goes to trial. If you are concerned about whether you should dismiss a problem employee for disciplinary reasons, please contact us for advice.

 

12 Grounds for disciplinary dismissal in the employment regulations

When dismissing a problematic employee for disciplinary reasons, it is a prerequisite that the grounds for dismissal are stated in the employment regulations and that the case in question falls within the grounds for disciplinary dismissal specified in the employment regulations. The general rule is that you can’t dismiss someone for disciplinary reasons if it’s not stated in the work rules. Therefore, if the employment regulations have not been prepared, or if the provisions for disciplinary dismissal are considered insufficient, it is recommended that the reasons for disciplinary dismissal in the employment regulations be reconsidered. In particular, it is important that the grounds for disciplinary dismissal be written in as much detail as possible in many cases. For example, since leakage of confidential information and unnecessary transfer of data (data management) are becoming more important these days, it is necessary to clearly stipulate that any unjustified leakage of the company’s confidential information or any act that provides information to a competitor constitutes grounds for disciplinary dismissal.

 

13 Contents of the Notice of Disciplinary Dismissal

In the event of a disciplinary dismissal, a Notice of Disciplinary Dismissal must be sent. The Notice of Disciplinary Dismissal is usually issued by certified mail. The Notice of Disciplinary Dismissal must state the specific grounds for dismissal. In principle, since it is a general rule that a court cannot assert as grounds for dismissal any cause not stated in the notice of dismissal, it is necessary to include as many grounds for dismissal as possible in the notice of dismissal. In addition, as mentioned above, the grounds for disciplinary dismissal are limited to those listed in the employment regulations. Therefore, it is preferable to state the grounds for disciplinary dismissal in the notice of disciplinary dismissal, and to state specifically which of the grounds for disciplinary dismissal in the employment regulations they fall under. If the case goes to court, it is not possible to add new grounds for disciplinary dismissal that are not stated in the notice of disciplinary dismissal, but if there are new grounds for disciplinary dismissal separate from the disciplinary dismissal, it is necessary to consider making a claim for preliminary dismissal, additional disciplinary dismissal, or in some cases, additional ordinary dismissal and adding a claim for these dismissals as well. In such cases, it is necessary to consider making a motion to withdraw the dismissal.

 

14 Request for Withdrawal of Dismissal

In the event of a disciplinary dismissal, the employee may file a motion through the union to withdraw the dismissal. This is because the employee who was dismissed from the company searched for a consultation center on the Internet and went to the union for advice, and it is assumed that the union made an offer to the company to discuss the matter. The confirmation of the invalidity of the dismissal is different in nature from collective bargaining, and is a matter of the individual worker’s case, which should have been resolved by a labor tribunal or labor-related lawsuit through a labor lawyer. However, considering the time, effort, and expense involved in litigation, it may be economically reasonable for the employees to request negotiation through the labor union.

 

15 Response when a Union (Labor Union) Makes an Offer for Labor Negotiations

When a collective bargaining agreement is requested by a labor union to withdraw a disciplinary dismissal, it is not advisable for the company’s management to ignore the request. Unions are experts in labor negotiations and understand what rights workers and unions have and what procedures should be taken if those rights are violated. If management ignores your request for collective bargaining, you may petition the Labor Relations Commission for mediation as an unfair labor practice, and the Labor Relations Commission will make a determination of the unfair labor practice. Although an unfair labor practice is a determination that the union’s right to collective bargaining has been violated and is different from a determination of the legitimacy of a disciplinary dismissal, a finding of an unfair labor practice by a public body at the initial stage of negotiations can have a significant negative impact on subsequent negotiations.

 

16 Date and time of collective bargaining with the union

When a union makes an offer for collective bargaining, it is necessary to first determine the date, time, and place for collective bargaining. When communicating the date, time, and location of collective bargaining, it is recommended that you communicate by fax or e-mail as much as possible, as telephone contact can inevitably lead to an emotional exchange. The time for collective bargaining may be in the morning, but in most cases it is better to start at 5:00 p.m. or 6:00 p.m., after company working hours, and to limit the collective bargaining time to a maximum of two hours. The union may also specify a date and time for collective bargaining, but the company is not bound by the union’s offer. In particular, considering the possibility that the company may be caught unprepared for collective bargaining, if the company believes that it will not be able to adequately prepare by the date proposed by the union, it would not be a problem for the company to specify a date about two weeks after the union’s offer to discuss the matter. However, specifying a date more than one month in advance is deemed that the company is unreasonably prolonging negotiations.

 

17 Location of collective bargaining with the union

As for the location of collective bargaining, it is preferable to rent an outside conference room or hotel venue, rather than inside the company. In particular, it is preferable to hold collective bargaining negotiations in a place where you can be seen by the outside world as much as possible, because you do not want to get emotionally involved in the middle of collective bargaining and end up in a violent incident. In addition, since the participants should not be confined to the conference room and forbidden to go outside, an outside conference room or other location with limited hours of use would be preferable.

 

18 Number of persons to bargain collectively with the Union

There is no limit to the number of people who may attend a collective bargaining session. The company may request the presence of an attorney, so it is common for a company representative and an attorney to attend. Some people argue that it is undesirable to have a company representative present because he or she may be asked to make a decision on the spot. However, in a small company, there may be situations where there is no one other than the representative who can attend the negotiations or who knows the nature of the problem, so it is not necessarily an inconvenience for the representative to be present. If the labor union is notified that a large number of attendees are expected, the labor union should be requested that the number of attendees should be limited to three or so. From this point of view, the conference room for collective bargaining could be a smaller room, so that even if a large number of members of the labor union should come to the meeting, the number of people allowed in the room could be limited. However, in the case of a labor union composed of company employees, it may be justifiable to have a large number of participants. In this case, it is preferable to reserve a room large enough to accommodate everyone and allow all workers requested by the labor union to attend.

 

19 Recording of Collective Bargaining with the Union

With the recent advances in cell phone recording capabilities, it is very common for the content of collective bargaining negotiations to be secretly recorded on audio tape on the part of the employees. On the other hand, if a company makes a tape recording, it may be severely criticized by the union. Therefore, it is preferable to make sure that both sides can record at the collective bargaining session, and to place the tape recording on the desk and record it in a dignified manner. It is usual to have the tape recording transcribed by a professional transcription company, but this is expensive, so I think it would be better to have the transcription done only if the case goes to court.

 

20 Union’s Request to Return to Work

In many cases where an employee is claiming wrongful termination, the union may demand that the employee return to work. Of course, there may be a desire to return to work when it is extremely difficult to find a job at another company, but in some cases where an employee is dismissed for disciplinary reasons, the employee’s problematic behavior has been repeatedly pointed out, and it is deemed difficult to allow the employee to return to work. In such cases, it is necessary to determine whether the employee expects to return to work even if the case goes to trial, or whether some compromise can be reached through financial negotiations.

 

21 Determination of Justifiable Grounds in Labor Litigation and Labor Tribunal Proceedings

If a compromise cannot be reached in collective bargaining with the union and the case goes to trial, the company will have the burden of proof on whether the disciplinary dismissal was justified, in addition to whether the dismissal procedure was appropriate. Even in cases where the company’s attorneys believe that just cause is warranted, the court is very strict in its determination of just cause, so even in cases where the employee’s conduct seems to be quite problematic, it is often difficult to find just cause in court. On the other hand, if the company is prepared to fight the case thoroughly, even if the litigation continues for years and involves a large amount of litigation costs, it may take a considerable period of time before a final decision is reached. Therefore, the employees may have no choice but to decide whether they really want to spend a large amount of money on legal fees to fight the lawsuit or whether they want to settle the case through collective bargaining or labor tribunal proceedings. Although a labor tribunal decision is rendered in three sessions, a party who is dissatisfied with the outcome of the labor tribunal can file a formal lawsuit, so if the parties thoroughly dispute the outcome, it will still take several years before a final resolution is reached.

 

22 Validity of the resolution in collective bargaining with the Union

Thus, labor tribunals and labor-related lawsuits require time, money, and effort, so it is possible to reach a quicker resolution by negotiating with the union, for example, paying the equivalent of three months’ wages, withdrawing the invalidity of the dismissal, and settling the case. The company’s attorneys may also consider using the opportunity for negotiation in order to understand the background of the individual case and to bring about a successful resolution.

 

23 Union’s Views

Unions (labor unions) assert their own rights as to whether or not the right to collective bargaining has been violated in collective bargaining, and also claim that the rights of workers who have become members of the union have been violated and demand the restoration of such rights. In this way, the union has the authority to negotiate with the company on behalf of the workers, even if they are not lawyers. Unions can also represent employees in mediation procedures before the Labor Relations Commission. On the other hand, if the dispute cannot be resolved through collective bargaining or the mediation procedures of the Labor Relations Commission, the dispute must be resolved through litigation or a labor tribunal. In this case, since the procedure is in court, the union (labor union) cannot represent the employees and must be represented by an attorney. In other words, the union (labor union) will no longer be able to represent the employees in the case once the court proceedings have begun. Since the union has spent a lot of time negotiating, it would prefer to settle the dispute within its own hands as much as possible. Therefore, as the company’s attorney, it is possible to reach an amicable solution at an early stage by inferring the union’s situation and recommending that the matter be resolved through discussion as much as possible.

 

24 Points to keep in mind when drafting a collective bargaining agreement (settlement agreement)

If a settlement is reached through collective bargaining, a written agreement (settlement agreement) must be prepared and the agreed-upon money must be paid. On the company’s side, the company’s representative will be a party to the written agreement (settlement agreement), but it is acceptable for the company’s attorney to sign on behalf of the company. On the workers’ side, the union may be listed as a party to the agreement (settlement agreement) because the union also has an interest in whether the union’s collective bargaining authority has been violated. Therefore, it is necessary to confirm that no unfair labor practice exists with respect to the union. In addition, the union (labor union) has the authority to represent the workers in collective bargaining, and may sign the agreement (settlement agreement) on behalf of the workers. However, even if the union (labor union) agrees to the settlement, whether or not the workers’ rights have been properly agreed upon is another matter, so in order to avoid later disputes with the workers, it is preferable to have the workers themselves sign as a party to the agreement as much as possible.

 

25 Withholding Tax Obligations and Tax Rates

For settlement payments, it is necessary to consider whether there is a tax withholding obligation. If the payment is made as an employee’s salary, there is a tax withholding obligation, so it is necessary to make sure that both the company and the employee are properly aware that withholding is required. Withholding tax is also required for severance pay. In the case of a settlement payment, it is possible that a higher tax may be levied on the payment as a lump-sum income. In the case of severance payments, filing a tax return regarding receipt of severance income may result in a lower tax rate. The company should always ask the employee to submit a tax return regarding the receipt of retirement income. Thus, depending on whether the payment is a settlement or a severance payment, the withholding tax obligation and the amount of tax to be paid will differ, so it is necessary to clarify the nature of the money to be paid in the settlement document.

 

26 Don’t Forget to Deduct Residential Taxes

In addition, inhabitant tax is always withheld at the time of retirement. If the company pays the entire amount stated in the settlement agreement without withholding the inhabitant tax, it will be difficult to recover the tax from the employee later, so care should be taken.

 

27 Importance of Understanding Labor Legislation

Recently, labor-related laws have been changing every year, and new laws and regulations are being passed one after another. These include equal pay for equal work, sexual harassment and power harassment regulations, childcare and nursing care leave, treatment of non-regular employees, revisions to the Temporary Staffing Business Law, and many others. Labor-management consultations are not limited to unilateral requests for wage increases, as in the past, but also include many requests for the company to adopt a system that conforms as much as possible to the laws and regulations as they are amended. As a lawyer on the company’s side, it is necessary to understand the content of these amendments to laws and regulations, judge the reasonableness and appropriateness of what the employees are asking for, and apply this knowledge to the company’s operations. On the other hand, with regard to labor-management agreements and other agreements that can be a major constraint on the company’s operations, the company will have a role to fully understand the risks involved and correctly inform management of the implications.

 

28 The Role of Kuribayashi Sogo Law Office

Kuribayashi Sogo Law Office represents companies that have applied for collective bargaining. In addition, when a company representative attends a collective bargaining session, we may also attend with the representative as a legal expert. We will listen carefully to what employees have to say and discuss with company representatives those items that can be applied to management so that they can be reflected in the management of the company. On the other hand, if there is a proposal that may hinder the company’s management and be detrimental to the company, we will fully understand its implications and advise the management of the company. Kuribayashi Sogo Law Office has extensive experience in representing companies in collective bargaining, labor arbitrations, and labor lawsuits. Based on our past experience, we will consider the most favorable measures for the company. If you receive an application for collective bargaining from a labor union, please contact our office.