Rules of employment for a workplace with 10 or more workers

According to the Labor Standards Act (LSA), a workplace hiring 10 or more workers should draw up rules of employment and submit them to the Ministry of Labor.

The rules of employment (ROE) as required by the LSA mean not only a single document. Even separate rules about wage, bonus or benefits are considered as the ROE as long as they deal with terms of employment that govern all workers in a workplace.

The LSA states the following matters as mandatory items that should be included in the ROE.

1.  starting and finishing time of work, recess hours, holidays, leaves and shifts
2. determination of wages, calculation of wages, means of payment, closing of payment, time of payment and wage increase
3. calculation of family allowances and means of payment
4. retirement
5. severance pay, bonuses and minimum wages
6. meal allowance and allocation of expenses for operational tools or necessities
7. educational facility for workers
8. maternity protection of female workers, such as maternity leave, childcare leave and work and life balance
9. safety and health
10. improvement of workplace environment to accomodate gender, age and physical conditions of workers
11. support pertaining occupational or non-occupational accidents
12. award and punishment
13. other matters applicable to all workers of the business concerned

An employer has a right to draw up the ROE. However, the LSA asks the employer to comply with certain procedures for drawing up or amending the ROE. Failure to follow these procedures does not invalidate the ROE but will result in a fine for the employer.  However, failure to obtain consent of workers for disadvantageous amendment makes the ROE ineffective as shown below.

First, the employer should obtain the opinion of a majority union or majority of workers when a majority union does not exist with regard to the ROE. He should attach a document showing such opinion to the ROE when he submit them to the Ministry of Labor. He should do the same when he amends the ROE.

Second, when the amendments made to the ROE are disadvantageous to workers compared to existing ROE, the employer should obtain consent of majority union or majority of workers.

What is the definition of disadvantageous amendment of the ROE? For example, removing certain allowances and bonuses or reducing the number of holidays may be considered as disadvantageous to workers. However, whether an amendment of the ROE is disadvantageous or not should be determined based on the consideration of the ROE as a whole, not by focusing on individual items.

What if an employer fails to obtain consent of workers for disadvantageous amendment? The amended ROE become ineffective for the workers who did not give consent. For such workers, the ROE before amendment are still effective. However, the amended ROE apply to new workers who joined a company later on after accepting the amended ROE.