Diversification
of the Labour Force & Terms and Conditions of Employment
Trends
in Australia, France, Germany, Italy, Japan, Sweden, the U.K. and the U.S.A.
Reports
given at the 7th Tokyo Seminar, March 2004, organised by Prof.
Takashi Araki and Prof. Shinya Ouchi
Takashi
Araki
Shinya
Ouchi
Takashi
Araki
Catherine
Barnard
Kenneth G. Dau-Schmidt
Maurizio
Del Conte
Pascal
Lokiec
Shinya
Ouchi
Michael
D. Ray
Mia
Rönnmar
Joo-Cheung
Tham
Michele
Tiraboschi
Rolf
Wank
2004
Kluwer
Law International
The
Hague/London/New York
Table
of Contents
Introduction
List
of Contributors
I.
Diversification of the Labour Force: The Scope of Labor Law and the Notion of
Employee
1.
Australia
2.
France
3.
Germany
4.
Italy
5.
Japan
6.
Sweden
7.
United Kingdom
8.
United States of America
II.
The Mechanism for Establishing and Changing Terms and Conditions of Employment
9.
Australia
10.
France
11.
Germany
12.
Italy
13.
Japan
14. Sweden
15.
United Kingdom
16.
United States of America
Introduction
1. The 7th JILPT Comparative Labor
Law Seminar (Tokyo Seminar)
This issue of the Bulletin of Comparative Labour
Relations is a collection of papers submitted to the seventh Comparative Labor
Law Seminar (JILPT Tokyo Seminar[1])
organized by the Japan Institute for Labor Policy and Training (formerly the
Japan Institute of Labur[2]).
The seminar held on March 9 and 10, 2004 in Tokyo, Japan, dealt with two themes
which are the most controversial labor policy issues in most advanced countries:
Diversification of the Labor Force: The Scope of Labor Law and the Notion of
Employee (Part 1); and Mechanisms for Establishing and Changing Terms and Conditions of
Employment (Part 2). Papers were submitted from the eight countries (Australia,
France, Germany, Italy, Japan, Sweden, United Kingdom and United States).
The seminar
organizers asked the participants to describe the following issues in their
national papers.
Part
1:
Diversification of the Labor Force: The Scope of Labor Law and the Notion of
Employee
1. How do the laws in your country delineate
the scope of labor laws? Does such scope depend on the notion of an
“employee”?
2. Whether or not the concept of employee is
different from statute to statute in your country. In Japan, for instance, the
concept of an employee in the collective labor laws is broader than that in
individual labor laws.
3. Factors or criteria used to determine
whether a person is considered an employee, if the concept of employee is a key
criterion in applying the labor laws.
4.
An explanation of the debates concerning the demarcation between employee and
self-employed, and the mechanisms to avoid such disputes.
5. Whether a self-employed person or a
quasi-employee enjoys the same protection or benefits as an employee, and, if
so, describe such areas.
6. Whether or not the concept of employee
used in labor law is different from that used in social security law and tax
law.
7. Whether or not there is discussion
regarding protection for people working for non-profit organizations, or unpaid
workers?
Part 2:
Mechanisms for Establishing and Changing Terms and Conditions of Employment
1.
General overview of labor laws and legal tools
regulating the terms and conditions of employment.
(1)
Basic laws regulating working conditions and industrial relations such as a
constitution, labor protective laws, laws regulating individual and collective
labor relations, laws concerning worker representation, etc.
(2) Legal tools that regulate the terms and
conditions of employment (collective bargaining agreements, agreements with
employee representatives, individual contracts, etc.), and the legal effects of
the different legal tools.
(3) The most important legal tools to
regulate actual working conditions.
(4) The difference between
labor unions and employee representatives.
2.
Recent changes in labor protective and labor contract
laws regulating individual labor relations and the reasons behind those changes.
(1) An explanation of whether or not labor
laws have been deregulated and ”re-regulated.” A list of the factors which
contributed to such changes: structural changes in industry, intensification of
global competition, change in corporate governance, diversified and
individualized workers, demographic changes, need to balance work with family
life, weaker labor unions, etc. Description of the situation in the author’s
country.
(2) Traditional labor laws
place greater emphasis on collective bargaining between a trade union and a
company to regulate working conditions rather than relying on individual
contracts between employer and employee. The papers addressed the question of
whether or not the increase in white-collar workers, more educated workers and
more market-competitive workers has resulted in a revision of this basic
premise.
3.
A description of significant changes in collective
labor relations laws and collective bargaining patterns in recent years, if
these have taken place.
(1) An explanation of the mechanisms which
allow parties involved in labor and employment relations (both collective and
individual, such as employers, labor unions, employee representatives, and
individual employees) to deviate from legal norms, and an explanation of the
reasons behind this and the conditions.
(2) Discussions concerning the concept of
“more favorable conditions” for workers. If lower wages can save a
worker’s job, is it possible for the worker to agree to lower his/her wages to
save his/her job, thereby violating collective agreements?
(3) An explanation of
trends, if any, towards decentralization of collective bargaining or a shifting
from collective bargaining at the national or sector (industry) level to
bargaining on the company or establishment level. A description of discussions
in favor of and opposed to such trends. An explanation of the reasons behind
such trends, such as a decline in the influence of labor unions, an absence of
their representative legitimacy, the rigidity and ineffectiveness of centralized
bargaining, or another reason.
4. The extent and manner in
which labor laws should intervene in the labor market.
2. Discussion Summaries
Part 1: Diversification
of the Labor Force: The Scope of Labor Law and the Notion of Employee
In the laws of the
countries discussed in the seminar, the concept of “employee” is determined
by taking various factors into consideration. Which factors take precedent over
others is, however, not clear. Factor dependent and case-by-case approaches are
widespread. No theoretical basis has been established to help clarify what
criteria should be used when approaching this question. In this respect, the
teleological approach advocated by Rolf Wank attracted the participants'
attention.
The concept of
“subordination” is closely connected to that of “employee” in Germany,
France, Italy and Japan, but the meaning of "subordination" itself is
very controversial in these countries. Traditionally the concept of
“subordination” has been interpreted as the “personal” subordination,
which means that an employee is directed and controlled by his/her employer.
However, the diversification of working styles allowing the employee's
discretion concerning the manner in providing his/her service under the
employer's abstract direction has made it difficult to determine whether or not
a “personally” subordinate relationship exists in respective cases.
Occasionally the concept of “economic” subordination has been used, but this
concept is not widely accepted in these countries. By contrast, in the U.K. and
U.S.A., both of which have adopted various tests to decide whether an individual
is an employee or not, economic circumstances are more significantly taken into
account, such as in the ”economic reality tests” in the U.K.
In any event,
deciding how to define an “employee” is a delicate task. If one extends the
protection offered by labor laws in order to respond to the needs of various
types of workers, independent or dependent, the concept of an employee will
inevitably be vague and ambiguous. In this regard, the new system in Italy, a
certification procedure determining whether one qualifies as an “employee,”
attracted participants' attention, but it would be too early to state that such
a unique method will effectively solve the difficulties in demarcating the scope
of employee.
As for the scope of
labor laws, there was debate as to whether contracting out of the otherwise
applicable laws should be permitted. Traditionally, labor laws have been
imperative in nature. Even though an employee does not want protection, the law
forcibly intervenes in the employment relationship. In a sense, this can limit
the freedom of employees to determine the terms and conditions of an employment
contract by themselves according to their diversified requirements. Many seminar
participants, however, were opposed to the introduction of an individual
derogation mechanism, because it is highly probable that employers will force
employees to renounce protection afforded by labor laws.
Regarding the scope
of labor laws, phenomena towards the opposite direction, namely expansion of the
application of labor laws to non-employees, were reported. Protection granted by
labor laws reserved for employees has been extended to cover non-employees. For
example, German law has created an intermediate status between employee and the
self-employed. The French approach is a mix of extending employment status and
assimilating non-employees into employee categories.
Countries with more
protective labor laws have more problems in determining the coverage of these
laws. In these countries, there is a striking gap between an employee protected
under labor legislation and a non-employee who is excluded from such protection,
and thus it is controversial whether or not the economically dependent
self-employed should be covered by these laws. In contrast, in countries with
few labor protective laws, the need to expand coverage offered by labor laws
does not appear to be strong.
Part
2: Mechanisms for Establishing and Changing Terms and Conditions of Employment
Although mechanisms
and legal tools regulating working conditions are
different in every county, significant reform is underway of the labor laws of
all countries discussed in the seminar. As
for the content of the reforms, however, there is a sharp contrast between the
reforms carried out in the Anglo-Saxon countries (the U.S.A., Australia and the
U.K.) and those on the European continent (Germany, France, Italy and Sweden).
In Anglo-Saxon
countries, the main legal tool that governs terms and conditions of employment
is the individual employment contract, and de-collectivization is commonly
observed. In the United States, the traditional method of providing workers with
protection has been collective bargaining between an employer and a labor union
elected as the exclusive representative. In accordance with the decline in labor
unions, however, the scope of collective bargaining has narrowed and the vast
majority of employees are left without an effective way to address their needs
within the employment relationship. Thus, the importance of labor protective
statutes which provide individual workers with statutory rights has surfaced. In
the U.K., where collective bargaining agreements generally are not legally
binding unless legal requirements are satisfied, the individual contract has
been an important legal tool in regulating working conditions. In recent years,
the decline of labor unions, the influence of EC law, and the emergence of the
Labor government have combined to trigger new legislation and increased the
significance of labor protective laws. Australia, once having a compulsory
conciliation and arbitration system which issues awards establishing minimum
working standards, has experienced more apparent forms of de-centralization and
de-collectivization under the deregulation policy, shifting emphasis from
collective to individualized bargaining.
In contrast,
countries on the European continent have continued to maintain collective
bargaining agreements as a major legal means regulating working conditions.
Although labor law reforms targeting decentralization of collective bargaining
can be universally observed, decentralization is not tantamount to
de-collectivization or individualization of employment relations. Labor law
reform in the European countries focuses on the content of decentralization: how
to give more power to the parties on the company or workplace level or how to
introduce new forms of employee representation that are different from the
traditional sector level trade unions. However, in European countries,
collective control appears to be thought indispensable in striking a fair
balance between flexibility and security. In other words, although
de-centralization of collective labor relations certainly takes place,
individual bargaining without collective control seems to be not accepted
widely.
Japan seems to fall
somewhere between the Anglo-Saxon countries and the European continental
countries. Because of the custom of long-term employment and case law
restrictions on unreasonable dismissals, working conditions are not directly
regulated by the external labor market or individual bargaining. Collective
bargaining mostly occurs at the decentralized level as most unions are
enterprise based. It is the work rules, established by employers that are the
most important legal means regulating working conditions in Japan. The basic
feature of Japanese law seems to be active intervention by the courts through
the reasonableness test on work rules to strike a fair balance between security
and flexibility.
The
countries discussed during the seminar face similar challenges, such as global
competition, industrial structural changes, weakening labor unions, and a
diversification and individualization of employees. These challenges require
reform of the traditional labor laws in the respective countries. However, the
content of these reforms are different, in particular the extent to which labor
law entrusts working condition regulations to the market.
The trend toward
flexibilization, individualization and derogation from the labor standards may
bring about radical changes in labor legislation. The diversification of labor
force and work manners may require a new concept and a new framework of labor
law. The countries the laws of which were discussed here face similar problems, but often adopt different
solutions. The difference might stem from the different role of labor
legislation, parties to industrial relations or the labor market in respective
countries. We sincerely hope that the experiences of the eight countries
described in the following chapters will provide useful information and insights
on the labor policy and prompt further discussions on the role of labor law in
the era of diversified labor force.
June
2004
Takashi Araki
Professor, University of Tokyo
Senior Research Fellow, JILPT
Shinya Ouchi
Professor, Kobe University
Senior Research Fellow, JILPT
List
of Contributors
Takashi
Araki, Professor, University of Tokyo, Japan
Catherine
Barnard, Senior Lecturer, Law, Trinity
College, Cambridge, United Kingdom
Carmen
L. Brun, BA, MBA, Doctoral candidate, School of Law, Indiana University,
USA
Kenneth
G.Dau-Schmidt, Professor, School of Law,
Indiana University, USA
Maurizio
Del Conte, Professor of Labour Law,
Universitá Bocconi, Italy
Pascal
Lokiec, Maitre de Conferences, University Paris
X-Nanterre, France
Shinya
Ouchi, Professor, Kobe University, Japan
Michael D. Ray, Research assistant, Indiana
University, USA
Mia
Rönnmar, LL.M., Doctoral candidate in Labour Law,
Lund University, Sweden
Joo-Cheong
Tham, Associate Lecturer, School of Law and Legal
Studies, La Trobe University, Australia
Michele Tiraboschi, Professor, University
of Modena and Reggio Emilia, Italy
Rolf
Wank, Professor of Law, Ruhr-Universität Bochum,
Germany
[1] The JIL Tokyo Seminar was originally organized by Professor Kazuo Sugeno (the University of Tokyo) and Professor Yasuo Suwa (Hosei University) who were at that time senior research fellows at the JIL in 1991. The papers submitted to the previous JIL Tokyo Seminars were published in the Bulletin of Comparative Labour relations No. 30 (1995), No. 34 (1999), No. 38 (2000) and No. 47 (2003).
[2] The Japan Institute of Labor was transformed into a new agency called the Japan Institute for Labor Policy and Training since October 2003.