UT Group Co., Ltd.

Revised Worker Dispatch Law:
Impacts and Measures


UT Aim is actively hiring regular employees to create stable, vigorous workplaces empowering workers.

Revised Worker Dispatch Law: Impacts and Measures

The revised Worker Dispatch Law (WDL) abolished the dispatch of “specified workers” (i.e., regular employees of a dispatch company that are dispatched to a client company). This has a profound impact not only on dispatch companies but also on client companies. Let us review the recent changes in the labor environment in Japan and views on terms for worker dispatch and how to ensure the equality and career advancement of dispatch workers. We will then summarize the revised law and discuss actions to be taken.

1. Changes in the labor environment in Japan

Promoting the hiring of regular employees has reached its limits at many companies in Japan.
At least stable employment, better treatment, and support for the career building of non-regular workers will be promoted.

→ This is the primary intent of the Revised Worker Dispatch Law.

Revised Part-Time Worker Law (announced in April 2014 and enacted in April 2015)
Worker protection and stabilization of employment
Expansion of the scope to prohibit employers from engaging in discriminatory treatment
Introduction of a new measure that obliges employers to provide consultation to part-time workers
Ensuring more equitable treatment
Rules governing the treatment of part-time workers
Revised Labor Contracts Act (II in August 2012; I and III in April 2013)
Worker protection and stabilization of employment
Change to a termless labor contract
Legal prohibition of termination of finite-term employment contracts under some conditions
Ensuring equitable treatment
Prohibition of unreasonable labor conditions
Revised Worker Dispatch Law (enacted on September 30, 2015)
Worker protection and stabilization of employment
Obligation to secure employment opportunities for dispatch workers when the term limit is reached
Enablement of termless dispatch of regular employees
Ensuring more equitable treatment
Ensuring more equitable treatment for regular workers
Promotion of career advancement
Deregulation and healthy development of worker dispatch business
Enablement of termless dispatch of regular workers
Abolition of 26 specified job categories
Abolition of special dispatch

All the above three laws are intended to protect non-regular workers.

No term limit applies to open-ended employment (regular employee) dispatch and outsourced work services.

The highest growth for non-regular workers is expected
in the area of termless employment (regular employee) dispatch.

Pitfalls of regular employment

In the case of regular employment, client companies or dispatch companies have to offer workers termless employment (regular employees).
In particular, attention needs to be paid in the case of workers in the 26 specified job categories.

2. Summary of the Revised Worker Dispatch Law (enacted on September 30, 2015)

【1】Creation of a sounder dispatch business
The notification system was abolished and the license system was adopted.
【2】Stable employment and career advancement opportunities for dispatch workers
Obligations of dispatch companies
  • Provision of systematic training programs;
  • Provision of career consulting if requested by dispatch workers;
  • Adoption of measures to stabilize employment of dispatch workers after conclusion of term of employment (obligation after the three-year period concludes and efforts to be made when the period is 1-3 years)
    1. Asking corporate clients to hire workers directly;
    2. Provision of new corporate client for employment;
    3. Offering of open-ended employment at the dispatcher; and
    4. Adoption of other measures required to provide continuous, stable employment.
【3】Clarification of the positioning of worker dispatch
Clarified as temporary and tentative
【4】Easier-to-understand regulation on dispatch duration
Introduction of a new three-year limit for dispatch workers in the 26 specified job categories
  • A new three-year limit
  • The dispatcher is obliged to ask the opinion of a majority labor union to receive a dispatch worker after the three-year term
  • If the opinion is raised, the dispatcher is obliged to explain its response, etc.
Categories 26 specified job categories
Clerical work Operation of business equipment: Filing; Secretarial work; Financial arrangement; Business document preparation; Research
Technology OA instructors; Software development; Machinery design; Research and development
Media Editing work in producing books; Advertising design; Announcers; Operation of broadcasting equipment; Production of broadcast programs; Stage sets and props designers and coordinators for broadcast programs
Service and sales Demonstrations of machinery; Telemarketing; Tour conducting work; Sales engineer; financial products sales; Building cleaning work; Operation, checking, and maintenance of building equipment; Reception and guide services, parking management
Others Interpretation, translation, and shorthand writing work; Planning of the development of business operation systems; Interior coordinators
【5】More equitable treatment of dispatch workers compared to direct-hire employees)
Prevention of extension of dispatch work by changing the worker. (Prevention of immobilization of dispatch worker; prevention of replacement of a regular worker with a dispatch worker); both the dispatcher and the client company have to enhance measures to ensure more equitable treatment of dispatch workers (There is a move to promote a bill to ensure the same wage for the same work.)
【6】Provisions
The law will be revised three years after its enactment.
In light of the trend in the number of regular employees and dispatch workers, and if there is a risk of impairment of employment practices that contribute to the stable employment and effective demonstration of workers’ abilities, research and other measures shall be taken to promptly review how to ensure more equitable treatment.

3. Measures to be taken by dispatch companies

1.Requirements for the dispatcher under the notification system to obtain a license within three years
  • Capital requirements
    1. Asset base: \20 million x number of offices
    2. Cash and deposits: \15 million x number of offices
    3. Asset base exceeds one-seventh of total debts.
  • Career development support system
    E.g.,) Job training plan, career consulting function
2.Consideration of a strategy to overcome challenges
  • Consideration of the sale of a business if a strategy cannot be established.
  • Selection of a dispatch company which is well prepared to cope with the Revised Worker Dispatch Law as a buyer.
3.Identification of a dispatch company which is well prepared to cope with the revised WDL
Selection of a company which has executed systematic and step-wise career development support in an effective manner.
→Verification of whether the system covers all employees ⇒ Actual case

(Reference) Career Development Support System Required by the Revised WDL

(Reference) Study Group concerning Future Worker Dispatch System, August 20, 2013

Scheme to ensure the dispatch company will implement measures for career advancement
・Plan to include the establishment of a system and a plan for career advancement in the requirement for a license.

Specific items include: having certified career consultants or sales personnel provide consultation to dispatch workers; preparing a training plan for individuals to advance their skills
Cooperation from host employers who receive dispatch workers
・OJT at host employers also plays an important role for dispatch workers to improve their performance, in addition to off-JT provided by dispatch companies.

It is desirable that dispatch companies consider offering jobs based on career advancement for dispatch workers and incorporate career advancement as a factor in considering their work changes at the same host employer.

(Reference) Career Consultant Certifications

Certified skilled professionals of career consulting, 1st grade and 2nd grade

Nationally-certified proficiency test
1st grade (instructor-level) and 2nd grade (advanced-level)

Standard-level career consultants

Those who took the Career consultant training course (140 hours, satisfying the model curriculum indicated by the Ministry of Health, Labour and Welfare) and passed the Career consultant evaluation test), etc.

Registered career consultants (Job-Card seminar participants, etc.)

Those who finished the Job-Card training course (approx. eight hours)
Outline of the Job-Card system, support for preparation of the Job-Card, issuance method, etc.
Besides certified career consultants, those with work experience in personnel and labor affairs are qualified to take the course.

Only registered career consultants can issue Job-Cards.

4.Measures to be taken by companies using dispatch workers

1. Make employment of dispatch workers more stable and provide them with career advancement opportunities

  • Confirm the employment policy of the dispatch company.
  • If employment is expected to extend over three years, do not renew the fixed-term dispatch contract but change to termless employment dispatch.

2. Make the regulations on the dispatch term easier to understand

  • If employment is expected to extend over three years, do not renew the fixed-term dispatch contract but change to termless employment dispatch.
  • In the case of the 26 specified jobs, check the employment contract for dispatch. Then ask the dispatcher to change from fixed-term employment to termless employment, or change to a termless employment dispatcher.
    * Actually, 70% of dispatch workers have fixed-term employment.
  • The opinion of the labor union is not required in the case of termless employment dispatch.

3. More equitable treatment of dispatch workers compared to direct-hire employees

  • Unify the form of employment when dispatch workers, fixed-term workers, and regular employees are mixed to do the same work.
Examples of judgment criteria
Regular employees (direct employment): Production volume is stable and the company’s specific know-how is important.
Regular employee dispatch (termless employment): Production volume is stable and the industry’s general skill improvement is important.
Fixed-term employment workers: Production volume is stable and skill improvement is not so important.
Fixed-term employment dispatch workers: Production volume is not stable and skill improvement is not so important.

5.Thoughts on labor strategy of companies using dispatch workers

Workforce mix after the revision of the Worker Dispatch Law

When demand drops sharply, as at the time of the Lehman Shock, it is appropriate to reduce regular employee dispatch or outsourced work for work which requires proficiency.
For work which does not require proficiency, use fixed-term dispatch workers or fixed-term employees.
(Short-term fluctuation in demand is absorbed by fixed-term dispatch workers.)

Standard to select either termless employment dispatch or outsourced work service?

Outsourced work service is better for the work with few process changes and stable production technology.
For the work with many process changes and stable production technology, outsourced work service by a team with a leader is better.

What is the leader dispatch?

Leader dispatch will be in high demand in the future.
(The leader gives work orders only to dispatch employees sent from the same company.)

Scheme to settle dispatch workers and their career development support are important.

Education and training Provision of opportunities to improve skills
Career advancement Fair and comparable evaluation system
System to enable promotion to managers and executives
Sharing of corporate profit Establishment of an employee shareholder association

Nurture the culture to reward challengers and to encourage participation

Example of lifetime career development support

Categories of general manufacturing professional skills

Level Guideline by level Title (image)
Level 4 【Management】
Level of ability required to make a wide range of comprehensive judgments and decisions and execute work that guides and creates corporate profit, as a person responsible for a large or significant organization.

【Specialist】
Level of ability required to accurately and efficiently do high-precision work with highly advanced skills, and contribute to addition of value to the product.
General Manager;
Plant Manager
L4
Level 3 【Management】
Level of ability required to manage, plan, and solve problems based on upper-level policy and execute work to create corporate profit, as a person responsible for a small to medium-sized or moderately-significant organization.

【Specialist】
Level of ability required to accurately and efficiently do high-precision work with advanced skills, and contribute to addition of value to the product.
(* Approximately Grade 1 of nationally-certified proficiency test)
Manager
L3
Level 2 Level of ability required to execute work by voluntarily making judgements, improvements, and proposals as a core member of a group or team
(* Approximately Grade 2 of nationally-certified proficiency test)
Team leader; Principal
L2
Level 1 Level of ability required to execute regular work, based on the instructions and advice of a superior (* Approximately Grade 3 of nationally-certified proficiency test) Team leader; Principal
L1

(Source) Japan Vocational Ability Development Association

6. Actions taken by UT Group

UT Group’s Mission and Strategy

20 years of growth since foundation

Achievement in volume: Manufacturing dispatch

Balanced client portfolio, while maintaining semiconductors as No. 1 client sector

Achievement in volume: Engineer dispatch

Build an infrastructure to become a top group three years after start-up

Achievement in quality: Management resources (VRIO analysis)

Have both a system to support career development and to timely provide superior employees

Value provided
Value for employees
Combine career development and fluctuation adjustment
Stable employment based on achievement of area dominance
Value for corporations
Nationwide work force: 3,000 applicants and 500 hires per month
Skill enhancement based on a high retention rate → Higher productivity
Rareness
The only leading manufacturing dispatch company centered on regular employee dispatch
Expected to benefit most from abolition of termless employment dispatch due to the revised WDL
Imitability
Unique know-how in regular employee dispatch
Low turnover rate
Monthly turnover rate Industry average 8% vs. UT Group 3-4%
Ability to deploy know-how nationwide
Organization
Unique organization to support regular employees
Entry System for Executive Positions
Career development support
System to raise technical skills, based on a low turnover rate
Skill enhancement based on a high retention rate → Higher productivity
Career advancement in different jobs (job change)

Achievement in quality: Career development support

Systemization
System to support career development and to timely provide quality workers
Job change
Career change from manufacturing outsourced worker to engineer
Transfer to a client company
Transfer by a hundred workers to regular employees of a client company
Opportunity for promotion
Executive entry system for dispatch workers
Diversity and stability
Early promotion, expertise, work-life balance, stable employment

Present initiatives to enhance functions

The industry’s most systematic, diverse, proven career development structure

Strategy orientation to enhance functions

Coping with the Revised Worker Dispatch Law

UT Group will derive the maximum benefit from the revised law.

7. Summary

Revised matters Details Measures to be taken by dispatch companies Measures to be taken by companies using dispatch workers Actions taken by UT Group
1.Creation of a sounder dispatch business ◯ License system
× Notification system
Must change to the license system.
(Required to have a career support system.)
Must check whether dispatchers are licensed. Changed to the license system.
2. Stable employment and career advance opportunities for dispatch workers Provide systematic training programs and career consulting Prepare training plans Must check whether dispatchers have systematic training plans and career consulting Implemented stepwise systematic training plans and career consulting
Establish a career consulting system (with qualified consultants)
Provide information on dispatch workers’ ability to a client company Consider career advancement in assignment and change in job
Take measures to stabilize employment of dispatch workers after term concludes Ask a client company to directly hire the dispatch worker. Consider hiring workers directly Termless employment (regular employee dispatch)
Provide a new corporate client for dispatch Receive new dispatch workers as needed
Exchange open-ended employment contract Change to termless employment dispatch
3.Clarification of the positioning of worker dispatch As temporary and tentative Promote termless employment contract Directly hire or use termless employment dispatch Systematic support for diverse career development
4. Easier-to-understand regulation on dispatch duration New three-year limit for dispatch workers in 26 specified job categories Ask the opinion of a majority labor union of a client company Ask a dispatch company to shift from fixed-term employment to termless employment No need to change as termless employment has been adopted
Obliged to explain what action to take, if opposition is raised. Change to termless employment dispatch (Select a dispatch company which will not dismiss workers nor implement a series of linked dismissals of workers)
5. More equitable treatment of dispatch workers Requirement to be attentive to more equitable treatment Explain attentive arrangement as desired by a dispatch worker Make arrangements to provide information on wages of employees to dispatch workers and to allow them to utilize welfare facilities Explain attentive arrangement as desired by a dispatch worker

Materials for downloading

Reference materials on the Revision of Worker Dispatch Law are available.

Download

* The link site is only available in Japanese text.

Companies who are thinking about termless dispatch (regular employee dispatch) and companies who are considering corporate transfers or sales should please feel free to contact the Business Development Department of UT Group.

03-5447-1711

Available from 9:00 to 18:00,
except Saturdays, Sundays, and holidays

Inquiry form

* The link site is only available in Japanese text.