Part 4: What We Have Learned from Recent Experiences

December 3, 2024 [No. 130 – 2024]

Mr. Fujikazu SUZUKI
Institute of Labor Education and Culture
Research Center for Solidarity-based Society

 

 

According to the law called the Act on the Succession to Labor Contracts upon Company Split, when a company conducts a split, it has the duty to make efforts to obtain the understanding and cooperation of its workers. Workers' understanding and cooperation are necessary not only for company splits but also for smooth corporate restructuring. Corporate restructuring has big impacts on employment and working conditions. Here is a summary of what we have learned from recent experiences about this point.

Let's look at how companies with labor unions view corporate restructuring and labor relations. Many of these companies value the role and mission of their labor unions. The latest research report by the Japan Institute for Labour Policy and Training (JILPT)^*1 pointed out the following five reasons for this:

Reason 1: A labor union plays a role in ensuring legal compliance. It means that a labor union makes sure that its company observes laws and regulations. A labor union represents its members, who are employees of its company. If the labor union is involved, the company will be more careful about observing laws and regulations and doing things properly. Reason 2: A labor union encourages its members to better understand corporate restructuring. Reason 3: A labor union plays a role in carrying out corporate restructuring smoothly. The labor union tells its members about negotiations with the company and gives their feedback to the company. In this way, adjustments can be made between what management wants and what employees want. Reason 4: A labor union plays an even bigger role. It can give employees a chance to have their say and help them to be happier about their corporate restructuring. Reason 5: A labor union can also make the company operate more smoothly and effectively.

It has been pointed out that Japanese companies' labor unions tend to behave like this: (1) When the company is in a difficult situation, the labor union thinks its survival is most important. (2) The labor union works very hard to make sure its members can keep their jobs as long as the company can stay in business. This is how labor unions normally behave at the time of corporate restructuring.

Even for companies with no labor unions, staying in business and making sure their employees can keep their jobs is important for their labor relations. According to a survey of SMEs, taking employees into consideration is one of the important matters when transferring business operations in a merger and acquisition (M&A).

However, it is not easy for companies with no labor unions to obtain workers' understanding and cooperation at the time of corporate restructuring. This is because, unlike companies with labor unions, companies with no labor unions do not usually have an adequate system to do so. As many small and medium-sized enterprises (SMEs) do not have labor unions, they have difficulties in getting employees’s consents.

The law says workers' understanding and cooperation should be obtained. To make what the law says more effective, companies with no labor unions should set up a labor union in their workplace. Under the current law, companies only have the “duty to make efforts” to obtain their workers' understanding and cooperation. It may be a good idea to change the law to make companies “agree” to obtain their workers' understanding and cooperation. For companies with labor unions, it is important to provide employees with information about their corporate restructuring. For this reason, it may also be a good idea to consider making it a duty for both the selling company and the acquiring company to make efforts to provide employees with information about their acquisition.

Corporate restructuring is the latest business management issue, and it may open up a new frontier for labor-management relations.

^*1   “Soshiki hendo ni tomonau roudou kankei jyo no shomondai ni kansuru chousa” (Research on labor issues associated with corporate restructuring) (Research Material Series No. 196) published by the Japan Institute for Labour Policy and Training (JILPT) in 2018