Definitive Report - Report No 343, November 2006

979. The complaint is contained in communications dated 14 January 2004, 15 September 2004 and 2 August 2005 from the Zenroren National Union of General Workers’ (ZENROREN-ZENKOKUIPPAN).

1. 980. The Government provided its observations in communications dated 15 September 2004, 13 September 2005 and 19 September 2006.
2. 981. Japan has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainants’ allegations

1. 982. In its communications of 14 January and 15 September 2004, the complainant organization ZENROREN states that the dispute in the present case arose between the Tokyo Hilton Hotel and some of its non-regular “Haizennin” (waiters, who also carry out a wide range of related duties in a restaurant) introduced to the hotel by a “Haizennin Shohkaijo” or “Haizenkai” (specialized employment agencies that put Haizennin into relation with hotels and restaurants).
2. 983. The complainant organization alleges that, on 9 March 1999, the Tokyo Hilton Hotel proposed to the union representing Haizennin a monthly wage reduction of 14 per cent (i.e. 20-50,000 yen depending on the situation of individual plaintiffs), warning at the same time that union members who refused that proposal would be discharged, effective 10 April 1999. The union members were thus facing a dilemma: give up the right to bargain collectively and accept a wage reduction, or lose their jobs. ZENROREN Tokyo wrote on 10 May to management, stating that they agreed to the wage reduction but reserving the right to dispute the case. The hotel management considered that this conditional acceptance did not constitute agreement and dismissed the ten ZENROREN members who had accepted only conditionally. Thereafter, the management refused to enter into meaningful negotiations and tried to break up the union.
3. 984. The Tokyo District Court ruled in March 2002 that the dismissals were invalid, reasoning that, although the employees were not regular workers, they had been employed in the same workplace continuously, and that if such dismissals were authorized, employers could freely change working conditions. The union tried to negotiate with the management based on the Tokyo District Court ruling, but the hotel did not rehire any of the ten workers and negotiations ended. On appeal, the Tokyo High Court overruled the District Court, and decided in November 2002 that to give legal protection to workers who had accepted the management offer only conditionally would be an excessive requirement for an employer that has to survive through rationalization and cost-reduction measures. The union appealed the High Court judgement to the Supreme Court.
4. 985. ZENROREN argues that, as the situation stands, workers who raise objections may be dismissed. If such unreasonable dismissals were allowed, employers would have the right freely to change pay and working conditions, which would deprive workers of all means of expression. It would also deny the fundamental principles and the right to collective bargaining contained in the Labour Code and in the Constitution of Japan, which provide that working conditions are to be decided on an equal footing between labour and management.
5. 986. The complainant organization also submits that the Government has violated Conventions Nos. 87 and 98 by siding with the Hilton Hotel. The High Court decision not only permitted violation of ILO Conventions by the hotel management, but also restricted or prevented the free fixing of wages by means of collective bargaining. The Government has endorsed the rationalization and cost-reduction measures taken by the hotel as part of the economic situation stabilization, rather than protecting workers’ rights, thus failing to promote collective bargaining.
6. 987. The complainant organization refers to the Committee’s decision in Case No. 2186 [330th Report, para. 382] as supporting its position. It attaches to its arguments an unofficial translation of the judgements of the District Court and the High Court, upon which it bases the above allegations.
7. 988. In its communication of 2 August 2005, following a request by the Committee for the complainant organization to provide more information regarding its allegations [see 337th Report, para. 7], the complainant organization stated that it is continuing its efforts to provide further information concerning the dismissals at the Hilton, as well as any information linking the dismissals of the workers to their union activities.
8. 989. In its communication of 15 January 2006, the complainant supplies further information in support of its allegations. The complainant states that a number of communications between itself and the management of the Tokyo Hilton Hotel confirm the existence of a labour agreement; documents such as the confirmation letters of the minutes of 21 July 1988 and 17 November 1994, which refer to night work pay and transportation allowances for the Haizennin, are duly established labour agreements that are binding and valid until mutual cancellation becomes effective.
9. 990. The complainant alleges that, under the Trade Union Law, if the management wishes to cancel a labour agreement, it must do so in writing and provide the trade union with a 90-day notice period. Otherwise, the management must hold a bargaining session with the trade union and the two parties must both agree to cancel the existing agreement; should no consensus on cancellation of the agreement be reached, the management must establish a new labour agreement with the trade union. Moreover, the management is not allowed to force labour union members, under threat of dismissal, to agree to lower working conditions. The complainant states that the management of the Hilton Hotel failed to properly cancel the existing labour agreement, as it failed to observe the requisite formalities; the Hilton Hotel management also failed to gain the complainant’s consent to annul the agreement.
10. 991. Finally, the complainant alleges that, following the Tokyo Hilton Hotel’s initial proposal to reduce the Haizennin’s working wages, it had sought to bargain collectively with the employer on several occasions. On 13 January 1999, the complainant sent a counterproposal letter to the employer stating that it could not agree to the employer’s proposed reductions. On 9 March 1999, a collective bargaining session between the complainant and the employer was held, at which the employer handed out documents entitled “Notification to change working conditions” and warned that it would discharge union members who refused to accept its proposal by 10 April 1999. In addition to these attempts at collective bargaining, mediation was sought before the Tokyo Labour Board: the first mediation session was held on 8 March 1999, and the last on 30 April 1999. Said sessions failed, however, as the employer refused to change its basic stance and did not withdraw its request to change the Haizennin’s working conditions.
11. B. The Government’s reply
12. 992. In its communication of 15 September 2004, to which is attached the position of the Hilton Hotel, the Government states that the hotel notified the Haizennin that it was going to change their working conditions (pay for actual working hours only, and not for breaks and meals; change in transportation expenses; reduction of premium pay for work done after or before certain hours). While the majority of Haizennin accepted the changes, some of them accepted under condition, reserving the right to dispute the case. The hotel refused to renew their contract, and they filed a lawsuit requesting inter alia confirmation of their rights under the labour contract and challenging the validity of the non-renewal of their contracts.
13. 993. In its communication of 31 August 2004, the management of the hotel explains that there exists a Japanese legal entity, called Nihon Hilton KK, established in 1983 as a joint venture between Tokyo Toshikaihatsu KK (40 per cent, and owner of the building), Hilton International (40 per cent) and Nipponkoa Insurance Co. Ltd. (10 per cent), etc. Nihon Hilton KK manages a single hotel (the Hilton Tokyo) through the operator it has retained, Hilton International. The ten workers subject of the complaint (“the Ten”) were employed by Nihon Hilton KK; therefore, the Hilton Tokyo was not their employer in a strict sense. It was Nihon Hilton KK that was sued by the Ten and their union. The fact that the management replies to the complaint does not mean that it accepts that it employed them.
14. 994. Hilton disagrees entirely that it dismissed the ten employees because of their trade union activities, that it tried to break up the union and that it violated freedom of association principles. The contractual basis on which Haizennin were engaged is a matter of dispute between the hotel and the union. While the latter argues that all Haizennin were long-term employees, Hilton considers that it employed Haizennin, including the Ten, on a day-to-day basis. The Tokyo District and High Courts have both heard the parties’ arguments on this issue and have found against the union; the case is pending before the Supreme Court. The union’s characterization of the cessation of the relationship between the Ten and Hilton as “dismissal” depends on the success of their argument above. Hilton considers that argument invalid and has twice been vindicated by the courts. As employees who worked for Hilton on a day-to-day basis, these workers could not be dismissed as there was no engagement from which to dismiss them.
15. 995. Independently of the proper characterization of the cessation of employment, Hilton submits that it has properly and consistently engaged in collective bargaining with the union and at no time sought to break it up. Hilton’s decision not to engage the Ten beyond 11 May 1999 was not due to their trade union activities, but rather to the negative economic circumstances and the inability of the parties to reach an agreement on revised working conditions.
16. 996. Since the burst of the bubble economy in the early 1990s, the Japanese economy has suffered a long and severe recession that has particularly affected the high end of the hotel industry, forcing the closure of several famous hotels. Hilton was not exempt from these factors: after six consecutive years of deficit, by the end of the 1998 fiscal year it had 3.7 billion yen of accumulated losses and a debt of 5.59 billion yen, 2.9 billion of which were financed through short-term loans that needed to be continually rolled over to meet operating costs. In September 1998, the banks refused to roll the loans over unless Toshikaihatsu KK underwrote bonds to secure the loans, which it refused, cancelling Hilton’s lease as of 30 November 1998. From then on, Hilton thus had to focus all its energies on negotiations: with the banks to reinstate loans; with shareholders to provide more capital; and with the lessor of the hotel building to withdraw the cancellation notice, reduce the rent and allow further deferred payments. Almost all of these negotiations were successful and avoided closure, on condition that Hilton cut its operating costs, including those associated with staff.
17. 997. Hilton initially cut costs through the contracting-out of some food and cleaning services, reduced by 64 the hiring of new regular employees in 1999, and negotiated a reduction in the compensation package with the union representing full-time regular employees (freeze in wage increase in the 1999 fiscal year; reduction in annual bonuses from five to 3.45 months of salary; reduction in special paid leave). Negotiations with ZENROREN however ran a different course.
18. 998. On 16 October 1998, the union and Hilton met for their annual collective bargaining session. The union asked for a pay rise and an annual lump-sum bonus for Haizennin. Hilton explained that it could not accede to these demands due to severe financial circumstances, and that it could not remain viable unless it reviewed the working conditions of Haizennin and rationalized all aspects of its business, failing which it might be forced to reduce, transfer or close it, in which case it would not be able to employ any Haizennin. On 27 October, the hotel stated its position in writing to the union (freeze in wage increase from 1 October 1998; impossibility of paying the lump-sum bonus). The union reiterated its demands on 19 November 1998.
19. 999. At a second collective bargaining session on 27 November 1998, Hilton again explained the whole situation, and the steps taken to reduce costs, including the possibility of outsourcing all tasks performed by Haizennin. This idea was abandoned following further discussions with the union and Hilton conceived a compromise offer, along the lines of working conditions offered in similar hotels (pay for actual working hours only, and not for breaks and meals; change in commuting allowance; reduction of premium pay for late and early work hours) for an estimated annual saving of 40 million yen. The union refused this offer in writing on 13 January 1999, reiterating its demands for a pay increase.
20. 1000. The deadlock persisted at a third bargaining session on 26 January 1999. A fourth bargaining session was held on 9 March 1999, where Hilton informed the union in writing that it would implement the change in Haizennin working conditions from 10 April 1999: “Please note that Hilton Tokyo cannot employ Haizennin who do not consent to the changed working conditions by April 10, 1999”.
21. 1001. Hilton rejects the complainant’s allegation that it acted contrary to the collective bargaining process in force. Rather, it followed the procedures existing in Japan and negotiated in good faith for as long as mutual agreement seemed possible, and continued to negotiate after 9 March 1999, engaging in mediation before the Tokyo Metropolitan Government Local Labour Relations Commission with sessions being held on 8, 20 and 30 April 1999, without success however. A fifth bargaining session was held on 7 May 1999, where the union informed the management that its members accepted Hilton’s offer but “… reserved the right to dispute the disadvantageous change of working conditions”. Hilton considered that this was a counter-offer rather than an acceptance and, on 10 May 1999, informed the union in writing that a conditional acceptance was no acceptance but rather a rejection of its offer. Hilton also posted a notice at the workplace entrance, stating: “The due date for written acceptance of the change in working conditions is midnight of today, May 11. Please note that Haizennin who do not consent in writing will not be engaged on and after May 11”. The Ten did not consent and Hilton did not engage them from that date.
22. 1002. Hilton concludes that the cessation of engagement of the Ten was not due to their trade union activities; it explained several times the severe financial situation to the union and at no time attempted to break it. Indeed, it negotiated at all times with the union and compromised on some of its concerns; even after 11 May 1999, the collective bargaining continued periodically up to the present time; Hilton’s current employees are members of various unions, including the complainant; Hilton does not discourage such membership and freely engages in collective bargaining, as it did with the complainant. At no time did Hilton violate freedom of association principles.
23. 1003. As regards the Tokyo High Court decision, Hilton submits that the translation provided by the complainant contains many inaccuracies and that, in any event, the Court ruled that the hotel had valid reasons not to renew these contracts as it considered: that the change in working conditions was motivated by cost savings; that the hotel bargained collectively with the union and repeatedly explained the reasons for the change; that the Haizennin conditional acceptance amounted to a rejection of the hotel offer; and that to force the hotel to renew the daily working contracts would be unduly burdensome.
24. 1004. In its communication of 13 September 2005, the Government sent a copy of the Supreme Court judgement dismissing the appeal of ZENROREN-ZENKOKUIPPAN, since no ground for the appeal could be found. The judgement by the Tokyo High Court was made final and binding. In a communication of 19 September 2006, the Government affirmed the observations it had transmitted in its previous communications.

C. The Committee’s conclusions

1. 1005. The Committee notes that the present complaint concerns allegations of dismissals of trade union members in the context of an alleged refusal, by a private employer, to enter into meaningful collective bargaining, a situation that the Government allegedly condoned by endorsing the employer’s stance, thereby violating freedom of association Conventions. The employer denies that it dismissed the employees for their trade union activities, tried to break up the union or violated freedom of association principles.
2. 1006. As regards the Hilton’s arguments on the legal structure of the joint venture created for the operation of the hotel and their possible impact on the employment relationship between the Hilton and the Haizennin (waiters), the Committee notes that the employer’s identity was not a turning point in the relevant court’s decisions, including the Tokyo High Court’s judgement that upheld the Hilton’s views; rather, the issue in both instances was the nature of the contract and whether the cessation of employment amounted to unlawful dismissal or was a non-renewal of individual contracts justified in the particular circumstances. The District Court found in favour of the complainants; the High Court overturned that decision; and the Supreme Court dismissed the appeal of the ZENROREN-ZENKOKUIPPAN, which made the Tokyo High Court judgement final and binding. On the basis of the evidence submitted, it appears to the Committee that the Hilton was at the very least the de facto employer of the Haizennin: for several years, there had been collective bargaining on working conditions between the union representing them and the hotel management; and workers who wait tables in a Hilton establishment may legitimately consider that they are being employed by the Hilton. The Committee further notes that, while the complainant maintains that the Hilton’s actions were uniquely motivated by anti-union animus, the Hilton alleges that they arose out of a need to cut costs, and that it negotiated with the union on several instances. From a freedom of association perspective, therefore, the Committee considers that the complainant organization has not established (irrespective of how the Supreme Court would qualify the cessation of work – unlawful dismissal in the context of a labour contract, or lawful non-renewal of day-to-day employment) that these measures were anti-union motivated, e.g. that Haizennin members of ZENROREN were singled out for termination. Taking into account the judgement of the Supreme Court, the Committee concludes that this aspect of the case does not call for further examination.
3. 1007. As regards the complainant’s allegation that the employer refused to enter into meaningful negotiations, the Committee recalls that, while the question as to whether or not one party adopts an amenable or uncompromising attitude towards the other party is a matter of negotiation between the parties, both employers and trade unions should bargain in good faith, making every effort to reach an agreement [Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 817]. The evidence adduced shows that there were at least five direct bargaining sessions between the parties and three mediation meetings before the competent Labour Relations Commission, all of which could not resolve the deadlock. The Committee further notes that the employer made some concessions and counter-proposals that the trade union rejected, sticking to its initial demands throughout the process. In the circumstances, the Committee concludes that, unfortunate as the results may be for the workers concerned, the collective bargaining process ran its course, both in direct negotiating sessions and with the help of the conciliation/mediation machinery existing at national level. Related to this, the Committee considers that the allegations of partiality and violation of freedom of association Conventions made against the Government are not sufficient.
4. 1008. Concerning the employer’s alleged attempts to break up the union, the Committee notes that these are allegations only, not backed up by evidence. Collective bargaining has continued up to the present time at Tokyo Hilton with various unions, including the complainant.
5. 1009. As regards the complainants’ reference to Case No. 2186, which concerns another country, the Committee points out that all complaints are dealt with on a case-by-case basis taking into account individual circumstances, and that the evidence in that case showed interference and anti-union actions by the employer [see 330th Report, paras. 377-378], which has not been established here.