3rd Report of the Market Access Ombudsman Council (March 18, 1996)

6-(1) Review of Worker Dispatching Undertakings

1. Complainant: French Embassy

2. Ministry concerned: Ministry of Labour

3. Background Information:

(1) The following regulations are imposed on worker dispatching undertakings.

1) In the interest of maintaining protection of workers and harmony between Japanese employment practices and system of worker dispatching undertakings, this business is restricted to the works which require special knowledge, technique or experience and where prompt and accurate adjustment of demand and supply of workforce needs to be carried out. At present, 16 works are designated as permitted ones.
2) Those who intend to start worker-dispatching undertakings for the designated works must obtain a license (the term of validity of three years) for each workplace. To obtain the license, they must appoint responsible persons with not less than three years of experience (depending on the number of dispatched workers), secure office space of not less than 30m2, etc. In addition, when a company tries to engage in both workers dispatching undertakings and employment placement projects, it must separate the office space and human resources for each business.

(2) The Administrative Reform Committee deliberated worker-dispatching undertakings, and compiled a report last December. The Central Employment Security Council made a proposal last December, and revision of the Worker Dispatching Law is being scheduled.

(3) As for worker dispatching undertakings overseas, the business needs permission from a state in the United States, notification in France (reason for the dispatch, period of the dispatch, and renewal of dispatch period are restricted), and permission in Germany (permitted works are on a negative list, where all works other than construction are permitted; dispatch period and its renewal are restricted).

4. Complaint:

The complainant claimed that successful worker dispatching companies overseas were facing difficulties in Japan due to regulations, and raised the following issues.

(1) While the designated works are limited to 16 ones, they should be liberalized in principle. At present, blue-collar works are not included. However, in France, works such as welders that require special technique are permitted.

(2) When a company tries to engage in both workers dispatching undertakings and employment placement projects, offices and employees must be separated between them. This imposes inefficiency and costs on the company, so the regulation should be relaxed.

(3) One responsible person with more than a certain years of experience must be employed for every 100 dispatched workers, which should be relaxed.

(4) The regulation requiring the minimum floor space in the office should be relaxed. In particular, when a company tries to engage in both workers dispatching undertakings and employment placement projects, the company must secure the required space for each business. Therefor the company is imposed a burden.

5. Results of Deliberation:

The deliberation of this case should be based on that the worker dispatching undertakings system is established and operated to protect workers and to make the adjustment of demand and supply of workforce, and this case is an important issue from the viewpoint of promoting direct foreign investment into Japan, by foreign companies starting businesses in Japan for instance.

As the various regulations stated in the complaint appear to be excessive, only truly necessary restrictions should be remained, and the following steps should be taken.

(1) As for the kinds of designated works, the ministry concerned plans to add 12 kinds of works to the current 16 ones. The ministry concerned should continue to take the changes in times into account, hear the demands of businesses concerned of home and abroad, and review the regulation if necessary, including the feasibility of employing a so-called 'negative list'.

(2) As the various requirements of the permission might hinder investment and foreign businesses entry into Japan, besides the simplification of procedure which is scheduled in the legislation draft, simplification of related documents such as business plans should be promptly implemented. In addition, constructive steps should be taken for the below 1) in the Central Employment Security Deliberative Council's examination of fee-charge employment placement businesses and the below 2) and 3) in the succeeding deliberation.

1) The regulations concerning running both workers dispatching undertakings and employment placement projects should be considerably relaxed.
2) The regulation on the ratio of the number of responsible persons to that of dispatched workers and the length of work experience should be considerably relaxed while taking account of protecting dispatched workers.
3) As the regulation on office space appears to be excessive, it should be considerably relaxed.

Government decision (March 26, 1996)

6-(1) Review of Worker Dispatching Undertakings

(1) As for the kinds of designated works, 12 kinds of works will be added to the current 16 ones. The regulation will be reviewed if necessary, including the feasibility of employing the way to allow worker dispatching undertakings in all works but the inappropriate ones.

(2) As for permission, besides the simplification of procedures which is scheduled in the legislation draft, simplification of related documents will be promptly implemented.

In addition, constructive steps will be taken for the considerable relaxation of the regulation concerning running both worker dispatching undertakings and employment placement projects in the current deliberation of the Central Employment Deliberative Council, for the considerable relaxation of the regulation concerning office space in the succeeding deliberation on the worker dispatching undertakings, and for the considerable relaxation of the regulation on the ratio of the number of responsible persons to that of dispatched workers and the length of work experience in the deliberation by the Central Employment Deliberative Council in fiscal year 1996.

Follow-up (May 12, 1997)

6-(1) Review of Worker Dispatching Undertakings

(1) The Cabinet Order for the Worker Dispatching Law was revised and an additional 11 types of designated works were added (implemented December 16,1996). (See below)

Beginning on January 28, 1997, the Central Employment Security Council undertook a comprehensive review of the labour dispatching business system, including the creation of a negative list on the scope of occupations for which worker dispatching is permitted, length of dispatching period, and measures for protecting workers. The Council will present an intermediate report in September 1997 and after determining the basic orientation of review by December 1997, and measures to implement this, including legal measures, will be taken as soon as possible.

(2) Deregulation concerning permits

1) Simplification of procedures and documents
* As a result of revisions of the Worker Dispatching Law, procedures were simplified, for example, extending the length of the validity of permits from three to five years, except for the first time (implemented December 16, 1996).
* As a result of changes in the ordinance for the Worker Dispatching Law, related documents were simplified, eliminating particulars to be entered on the business plan submitted (implemented April 1, 1996).
* As a result of changes in the ordinance for the Worker Dispatching Law, when notification of change of the responsible person acting for the worker dispatching undertaking is made, in cases where the business has multiple offices and the responsible officer transfers between these offices, the related documents were simplified by no longer requiring presentation of the responsible person's resume (implemented April 1, 1997).

2) Running both worker dispatching undertaking and employment placement project.
* By eliminating the requirement for separate entrances to the worker dispatching and the fee-charging employment placement project, it will now be possible to carry out both businesses within the same office (implemented according to a directive issued by the head of Employment Security Bureau dated April 1, 1997).

3) Responsible persons acting for the dispatching undertaking
* As a result of changes in the ordinance for the Worker Dispatching Law, the ratio of dispatched workers to responsible persons acting for the dispatching undertaking has been set at 100 to 1 (the previous requirement had been for a ratio of 100 dispatched workers to 1 responsible officer for each type of occupation).
* Regarding the requirement for experience of responsible persons acting for the dispatching undertaking, in addition to the previous "three or more years experience in employment management," the work experience requirement may now also be satisfied if the responsible persons acting for the dispatching undertaking has "experience totaling three years or more in both employment management and as a dispatched worker (with one year or more experience in employment management required)." (Implemented according to a directive issued by the head of Employment Security Bureau dated April 1, 1997).

4) Office space
The minimum office space required is now "20 square meters or more" compared to the previous requirement of 30 square meters or more (implemented according to a directive issued by the head of Employment Security Bureau dated April 1, 1997).

(For reference) Additional activities permitted:
1] Tour conductor for organized tours
2] Research and development
3] Planning and proposal of execution systems for operations
4] Creation and editing of books, etc.
5] Advertising design
6] Interior coordinator
7] Announcer
8] Automated office equipment instructor
9] Telemarketing sales activities
10] Sales engineer sales activities
11] Prop handling for broadcasts

Note 1: further coordination is being carried out with the concerned parties regarding nursing assistants in hospitals
Note 2: The number of permitted activities has been increased to 26 from the current 16. (The scope of activity mentioned in 1) is a revision of that in execution order Clause 2, No. 10.