LawFlash

Employee-Related Legal Issues Arising From the Tohoku Earthquake

March 31, 2011
Our thoughts and condolences go out to those affected by the recent events in Japan. After the Tohoku earthquake, tsunami and its aftermath, numerous clients have asked questions regarding issues raised by the events of March 11, primarily relating to business operations in Tokyo. We hope these general answers to commonly asked questions will be helpful to our clients and friends in these trying times.

1. Obligations Under Japanese Law to Ensure the Safety of Employees
Right after the earthquake, many employers in Japan instructed their employees to remain in their offices. Later, numerous employers directed employees to stay home during the following days and weeks. Could such actions be viewed as excessive? Under Japanese law, employers have a general obligation to ensure the safety of employees. Given the extraordinary emergency circumstances, substantial leeway would be given to the employer's exercise of discretion at the time. Employer actions to ensure employee safety would not be regarded as excessive.1

2. Obligations to Pay Employees
What are the employer's obligations, if any, with regard to compensating employees who were instructed to remain in their offices or placed on leave? If employees were prohibited from leaving the office, even for their own safety, the employer is required to pay their salary in full, even if they were not working. Where the employer placed employees on leave, there are three possible scenarios, depending on the reason for providing the leave: an obligation to pay full salary, to pay 60 percent of salary, or to pay no salary.

Employers must pay full salary if the employer placed the employee on leave as a precautionary measure out of concern for the employee's safety, because metropolitan Tokyo generally has been safe.

The employer is not obligated to pay salary where the leave is necessitated by: (a) the office being substantially damaged by the earthquake, (b) the employer being unable to conduct business for the entire day as a result of power shortages or blackouts, or (c) the employer being unable to continue operations because of a shortage of necessary supplies. However, even if the employer provides leave for the above reasons, if there is a reasonable possibility that the employer could have avoided the leave by, for example, (a) instructing its employees to work at a different location, (b) operating during the hours while power was supplied, or (c) procuring supplies from another source, the employer would be required to pay 60 percent of the employee's regular salary.

3. Authority to Order Employees to Come to Work
If an employee has refused to come to work out of concern for personal safety or fear regarding earthquake aftershocks or the nuclear power plant accident, the employer has the authority to order the employee to come to work unless the workplace is in an official evacuation area. The employer is not required to pay an employee who fails to appear for work, and the employer can, in turn, discipline the employee for his or her unauthorized absence. Of course, employers need to determine whether it is appropriate to take such disciplinary action under these unprecedented circumstances. In addition, the employer does not have a legal obligation to pay employees who are unable to appear for work due to stoppage or reduction in train service, although it would be customary for employers to provide some lenience to employees in such cases. In any case, the employee can exercise his or her right to take paid leave, in which case the employer can direct the employee to take leave on a different date only if the employee's preferred date for such paid leave interferes with the ongoing business.

4. Employer Liability and Workers' Compensation
Is there liability on the part of employers for injuries to employees suffered in connection with the earthquake? In what circumstances would workers' compensation coverage exist? Generally, during work hours, if an employee is injured because an employer fails to fulfill its obligation to ensure the safety of its employees, the employer would be liable for the employee's injury. However, in Japan as long as the employer exercises due care in maintaining its premises and equipment and in training its employees, the employer would not be deemed to be in violation of this obligation. Under the extraordinary circumstances of the Tohoku earthquake, employers would generally be liable in limited cases, such as in a case where an employer was clearly aware or should have been aware that the building was unsafe but failed to take action to remedy the situation which resulted in injury. Most importantly, Japan's mandatory workers' compensation (Industrial Accident Compensation Insurance) would apply to most incidences at work or during an employee's commute.

5. Stress in the Workplace
How should employers deal with possible employee psychological stress and trauma as a result of the earthquake, tsunami, power shortages and Fukushima nuclear power plant concerns? While employers do not have an affirmative legal obligation to provide such help in this regard, for a number of reasons — including out of personal concern for their employees' welfare and for the overall workplace environment — at the appropriate time they may wish to provide some assistance. Some employers plan to offer confidential telephone hotlines where employees can discuss such issues, which may be either hotlines maintained by the employer or those established by local governments or volunteers. There are cultural sensitivities in Japan regarding seeking psychological assistance and overseas employers need to be especially careful in this regard.

6. Non-Japanese Citizens Working in Japan
Many non-Japanese citizens working in Japan have left Japan temporarily as a result of the earthquake and/or radiation concerns. In most cases, individual employment agreements will dictate the issues described in this alert; however, where Japanese law governs, such expatriate employees will be governed in the same way as Japanese employees.

As the post-earthquake environment in Japan remains fluid, employers need to be vigilant, and we may update our comments on our website from time to time. We welcome any questions you may have.

 

Please contact the following members of Bingham for more information:

Tokyo
Mie Fujimoto, mie.fujimoto@bingham.com, 81.3.6721.3138
Takaharu Matsumura, takaharu.matsumura@bingham.com, 81.3.6721.3152

Washington, D.C.
Yoshi Ito, yoshihide.ito@bingham.com, 202.373.6177

Boston
Louis Rodriques, louis.rodriques@bingham.com, 617.951.8340

New York
Douglas Schwarz, douglas.schwarz@bingham.com, 212.705.7437
Satoru Murase, satoru.murase@bingham.com, 212.705.7854
1In addition, many non-Japanese businesses have considered the importation of potassium iodide tablets for distribution to their employees as a precautionary measure against radiation poisoning. The Pharmaceutical and Food Safety Bureau of the Ministry of Health, Labor and Welfare issued a notice on March 17, 2011, clarifying that potassium iodide tablets can be imported through application by a physician who is a medical adviser to the Japanese company or branch, for the purpose of prescribing the tablets to employees, and that no special application is required for private imports by individuals for one month of personal use. Potassium iodide tablets should only be taken when directed by the government or in accordance with a physician's instruction.

This article was originally published by Bingham McCutchen LLP.