Wage Claims for Non-Working Shift Workers in Japan: Understanding Employer Obligations

Shift-based work (シフト制 - shifuto-sei) is a common feature of many industries in Japan, from retail and hospitality to healthcare and manufacturing. This flexible staffing model allows businesses to adapt to fluctuating demands. However, it can also lead to complex legal questions regarding an employer's obligation to provide work and, consequently, an employee's right to wages, especially when an employee is not assigned shifts or when their work patterns become irregular. A Tokyo High Court decision on July 7, Reiwa 4 (2022), provides valuable insights into how these situations are assessed under Japanese law, particularly concerning implied resignation and the employer's liability for wages during periods of non-work under Civil Code Article 536, Paragraph 2.

Understanding Shift Work in Japanese Employment Law

In a typical shift work arrangement in Japan, the specific working days and hours of an employee are not fixed rigidly in the employment contract. Instead, they are determined periodically through a process that usually involves:

1. Employee Shift Requests: Employees (often part-time or "arubaito" staff) submit their availability or desired working times for an upcoming period (e.g., weekly or monthly).
2. Employer's Shift Finalization: The employer then considers these requests, alongside business needs, and finalizes the work schedule (shift roster), notifying the employees of their assigned shifts.

Legally, the employment contract establishes the general framework, but the concrete obligation to work on specific days and times (and the corresponding obligation to pay wages for that specific work) crystallizes upon the determination and assignment of shifts by the employer.

A key point of contention often arises here: Does the employment contract for a shift worker imply a guarantee of a certain minimum number of working hours or shifts? In many casual shift work arrangements, explicit guarantees are rare. The expectation is often one of flexibility for both parties. However, this flexibility can lead to disputes if an employee desires more hours than are offered, or if shifts are significantly reduced or not assigned at all.

The Thorny Issues: Non-Assignment of Shifts and Employee Absence

Disputes related to shift work and wages commonly arise in two scenarios:

1. Employer Reduces or Assigns No Shifts: The employee is willing and available to work, but the employer, for various reasons (e.g., business slowdown, overstaffing), assigns fewer shifts than the employee desires or no shifts at all.
2. Employee's Irregular Attendance/Availability: The employee becomes unreliable, significantly reduces their shift submissions without clear communication, or stops coming to work altogether for a period.

In the latter scenario, employers may assume the employee has effectively resigned. If this assumption is incorrect, and the employment relationship legally continues, the question of wage payment for periods the employee did not work can become acute, especially if the employee later seeks to return or claims they were available for work.

Implied Resignation: A High Bar to Clear

When an employee stops submitting shift requests and ceases to attend work, an employer might conclude that the employee has, by their actions, implicitly resigned (黙示の退職合意 - mokuji no taishoku gōi). However, Japanese courts are generally cautious about inferring resignation.

A valid resignation requires a clear and unequivocal expression of the employee's intent to terminate the employment contract. Establishing an "implied" resignation based solely on an employee's absence or failure to follow shift procedures is difficult. Courts will typically look for more concrete evidence of an intent to resign.

The Tokyo High Court decision of July 7, Reiwa 4 (2022) (Rōdō Hanrei No. 1276, p. 21) addressed this point directly. In that case, a part-time shift worker had gradually reduced their shift submissions over a few months and then stopped submitting them entirely, ceasing to come to work. The employer processed the employee's social insurance an Hoken (employment insurance) as if they had resigned. Despite this, the employee had left personal belongings at the workplace and retained a key to the premises. When contacted by the store manager, the employee denied having resigned and expressed an intention to return, albeit without specifying a date. The High Court, concurring with the first instance court, found that there was no implied agreement to resign. The court likely considered the lack of a clear, unambiguous statement or action from the employee unequivocally indicating an intent to permanently sever the employment relationship. The fact that the employee later asserted their intention to return, even if vaguely at first, further undermined the notion of an implied resignation. This highlights that employers should not hastily assume resignation based on irregular attendance alone, especially for indefinite-term employees.

Wage Claims for Non-Working Periods: The Application of Civil Code Article 536(2)

If the employment relationship is deemed to continue, and an employee does not work, the question of wage payment often turns on Article 536, Paragraph 2 of the Japanese Civil Code. This provision states:

"When performance of an obligation becomes impossible due to grounds attributable to the obligee, the obligor shall not lose the right to claim counter-performance."

In the employment context:

• The "obligor" is the employee (obligated to provide labor).
• The "obligee" is the employer (entitled to receive labor).
• "Counter-performance" is the wage.

Thus, if an employee is ready, willing, and able to provide labor, but is prevented from doing so due to reasons "attributable to the employer" (使用者の責めに帰すべき事由 - shiyōsha no seme ni kisu beki jiyū), the employee generally retains their right to full wages for the period they could not work.

For shift workers, the critical question becomes: When is the non-assignment of shifts, or the inability of the employee to work assigned shifts, considered "attributable to the employer"?

The Tokyo High Court (July 7, 2022) Decision: A Detailed Analysis

The 2022 Tokyo High Court case provides a nuanced examination of this issue.

Factual Background (Simplified):
A long-term, part-time shift worker (X) at a sushi restaurant, after a period of gradually reducing their submitted shift availability, stopped submitting shifts and ceased working from mid-March Heisei 31 (2019). In early April, when the store manager contacted X, X stated an intention to return eventually but was unclear about the timing or reasons for the absence. X's social insurance was terminated by the employer (Y) around the end of April. In May, X reiterated their intention to return. In August, X, through a labor union, formally requested reinstatement. Meanwhile, Y had hired new part-time staff in April and May. Later, Y hired more new staff in March Reiwa 2 (2020), despite ongoing negotiations with X's union about reinstatement. The restaurant's operating hours were also affected by COVID-19 from April Reiwa 2.

The High Court's Rulings on Wage Liability:

1. Initial Period of Absence/Unclear Intent to Return (Mid-March 2019 to August 2019 – when formal reinstatement demand made):
   The High Court (and the first instance court) did not automatically award wages for this period. While the employment contract was not found to have terminated by resignation, X's initial failure to submit shifts, prolonged absence without clear communication, and vagueness about their return meant that Y's actions in not immediately providing shifts upon X's somewhat unclear initial statement of wanting to return were not necessarily deemed "attributable to Y" for the entirety of this early phase. The employer had a legitimate need to staff its operations, and X’s unreliability in submitting shifts leading up to the absence played a role. The court found that the employer was not liable for wages up to the point X clearly communicated an intent to return via the union (August 2019). The High Court stated, "the Appellant [employee] had not clarified the timing of their return to work at the restaurant until around August 9, Reiwa 1... during this time, the Appellee [employer], in order to supplement personnel at the restaurant, had hired new part-time employees. Therefore, even if the Appellee did not immediately reinstate the Appellant after receiving the demand letter, it cannot be recognized that the Appellant was unable to work due to reasons attributable to the Appellee."
2. Period After Clear Reinstatement Demand, Before New Hiring Indicated Work Availability (August 2019 to February Reiwa 2 (2020)):
   Even after X, through the union, clearly requested reinstatement in August 2019 and engaged in collective bargaining, the High Court did not find Y immediately liable for wages. The court reasoned that since X had not specified a return date during their period of absence, and Y had hired replacements, Y could not be expected to reinstate X immediately just because X now expressed a desire to return. This suggests that an employee's prior conduct and lack of clarity can affect the immediacy of the employer's obligation, even after a formal return request. The employer was given some latitude, presumably to manage the existing workforce it had put in place due to X's prolonged and initially unexplained absence.
3. The Turning Point: Employer's New Hiring Despite Knowing of Return Intent (From March Reiwa 2 (2020) Onwards):
   The High Court found that the situation changed from March Reiwa 2. By this time, Y was fully aware of X's explicit and ongoing demand for reinstatement through multiple collective bargaining sessions. Despite this, Y proceeded to hire two new part-time employees for the sushi restaurant in March Reiwa 2. The court viewed this act as critical: "the Appellee [employer], while clearly recognizing the Appellant's [employee's] intention to return to work at the restaurant, hired two new part-time employees in March Reiwa 2. From this, it can be recognized that it was possible to have the Appellant work at the restaurant from that month onwards. Therefore, it can be recognized that the Appellant was unable to work due to reasons attributable to the Appellee."
   This hiring demonstrated that there was, in fact, available work that could have been offered to X. Y’s failure to offer this work to X, while simultaneously denying X’s employment status (by maintaining X had resigned), rendered the non-provision of work attributable to Y.
4. Employer’s Defense Regarding No Shift Submission by Employee:
   The employer argued that X had not submitted any shift requests during the period of dispute, and therefore had no specific work obligation. The High Court dismissed this, stating: "the Appellee [employer] had consistently argued from the time of the said collective bargaining that the Appellant [employee] had consensually resigned and disputed that the Appellant was in a position of having rights under the employment contract. Therefore, even if the Appellant had not submitted shifts when seeking reinstatement, this does not affect the determination that, from that month onwards, the Appellant was unable to work due to reasons attributable to the Appellee." Essentially, if the employer is denying the employment relationship itself, it would be futile for the employee to submit shift requests.
5. Calculating the Wages Due:
   This aspect is also instructive. The High Court had to determine the amount of wages X would have earned had they been allowed to work from March Reiwa 2. It did not simply award wages based on a full-time equivalent or X's peak earning period. Instead:
   • It looked at X's average monthly working hours during a four-month period (December Heisei 30 to March Heisei 31) which included the time X began to reduce their shifts. This was deemed more representative than periods of fuller employment long past, or the minimal hours just before ceasing work. This resulted in an average of 95 hours per month.
   • Crucially, the court also considered the objective circumstances of the business: "considering the actual operating conditions of the restaurant from March Reiwa 2 onwards, including periods of closure and reduced operating hours due to the COVID-19 pandemic, and the near elimination of late-night shifts," it found that work equivalent to these average 95 hours would have been possible.
   • The wage was calculated by multiplying these 95 average monthly hours by X's hourly rate. The court explicitly stated that including overtime or late-night premiums from X's earlier, pre-reduction work patterns was not appropriate given the subsequent changes in X's own work pattern and the restaurant's pandemic-affected operations.

This shows a pragmatic approach to calculating damages, aiming to reflect what work realistically would have been available and performed, considering both the employee's more recent work patterns and the employer's operational constraints.

Key Factors in Determining Employer Wage Liability for Shift Workers

The Tokyo High Court decision, along with other Japanese jurisprudence, suggests several key factors are weighed when determining if an employer is liable for wages under Civil Code Article 536(2) for a shift worker who is not assigned work:

1. Continuance of the Employment Relationship: Has the employee actually resigned, or has the contract been otherwise validly terminated? If not, the employer's obligations continue.
2. Employee's Willingness and Availability to Work: The employee must demonstrate a genuine willingness and capacity to work. Vague or conditional expressions of intent may be insufficient, at least initially. A clear, formal request to be assigned shifts or to return to work is important.
3. Employer's Reasons for Not Assigning Shifts:
   • If the employer denies work because they (wrongfully) believe the employee has resigned or been dismissed, this will likely be attributable to the employer if the employment is found to continue.
   • If based on a genuine lack of available work due to a business downturn, the situation is more nuanced. While LSA Article 26 (60% leave allowance) might apply if it's a management reason, full wage liability under Civil Code Article 536(2) might not, unless the downturn itself is due to the employer's mismanagement rising to the level of "attributable grounds."
4. Existence of Available Work: As seen in the 2022 Tokyo High Court case, evidence that the employer could have provided work (e.g., by hiring new staff for similar roles instead of offering shifts to the existing employee) is a strong indicator of employer liability.
5. Contractual Terms and Established Practices: While often unstated in casual shift work, any clauses in the employment contract or consistent past practices regarding shift allocation, minimum hours, or procedures for reducing shifts could be relevant.
6. Employer's Conduct and Communication: Did the employer act in good faith? Did they communicate clearly with the employee about shift availability, reasons for reductions, or their understanding of the employee's status? A failure to communicate or attempts to unfairly "starve out" an employee by withholding shifts could weigh against the employer.
7. Employee's Own Conduct: An employee’s prior unreliability, failure to follow reasonable shift request procedures, or unexplained absences can initially weaken their claim that non-assignment is solely the employer's fault. However, once the employee makes a clear and credible attempt to resume regular work, the onus shifts more heavily to the employer to provide shifts if work is available.

Implications for Managing Shift-Based Workforces in Japan

For businesses in Japan utilizing shift workers, including subsidiaries of U.S. companies, this case underscores several important management practices:

• Clarity in Contracts and Policies: While flexibility is often desired, having clear (even if basic) policies regarding expectations for shift submission, communication of availability, and procedures for managing absences or reduced hours can prevent misunderstandings.
• Communication is Paramount: If an employee's work pattern becomes erratic or they cease submitting shifts, proactive communication is essential before assuming resignation. Document these communications.
• Formalize Terminations: If the employer believes grounds for termination exist (beyond implied resignation), follow proper procedures. Relying on an assumed resignation carries risks.
• Fairness in Shift Allocation: If an existing employee expresses willingness to work and has an ongoing employment contract, an employer should have a justifiable, non-discriminatory reason for hiring new staff for similar roles instead of offering available shifts to that employee.
• Record Keeping: Maintain records of business conditions (e.g., customer traffic, sales volume, reasons for reduced hours like COVID-19) that objectively justify the level of staffing and shift availability.
• Understand Wage Obligations: Be aware that simply not assigning shifts to an employee whose contract is still active does not necessarily absolve the company of wage obligations. If the non-assignment is deemed attributable to the employer, liability for full wages under the Civil Code may arise.

Conclusion

The legal landscape for shift workers in Japan balances the need for employer flexibility with the protection of employees from arbitrary denial of work and income. The Tokyo High Court decision of July 7, 2022, illustrates that while an employee's unclear intentions or erratic behavior can initially impact their wage claims, an employer's subsequent actions—such as hiring new staff when an existing employee has clearly signaled a desire to work—can trigger liability for wages under Civil Code Article 536, Paragraph 2. Employers must navigate these situations with careful attention to communication, fairness, and a clear understanding of their ongoing obligations under Japanese employment law. Assuming an employee has "quietly quit" by not submitting shifts can be a risky presumption if the legal employment relationship remains intact and the employee later seeks to enforce their right to work or be paid.