Check the Dispatch Business Report now

The dispatch business report is a statutory report that dispatching business owners are required to submit once a year under the Worker Dispatching Act. The report includes information on the status of dispatched workers' contracts, health and safety management, and implementation of career advancement measures. The deadline for submission is usually at the end of June each year, but please check in advance to ensure that the contents are accurate and submitted on time.

◆Failure to submit has a negative impact on business continuity

Failure to submit a report will result in a fine, revocation of the dispatch license, or a business suspension order. Loss of credibility when false reports are discovered can lead to a loss of business partners and threaten the livelihood of dispatched workers. Many businesses that have had their licenses revoked have cited inadequate reporting as a factor.

◆Points of the Business Report

1. Compliance with the 2024 Form Change

The old form will not be accepted due to changes in the placement of columns in the new form. Please download the latest form from the website of the Prefectural Labor Bureau and use it.

2. Pay attention to the "Statement of Income and Expenses" and the "Report on the Percentage of the Dispatched Companies Involved" as well.

Note that at the same time as the business report, for companies with a fiscal year ending in March, a statement of income and expenditure for worker dispatching undertakings and a report on the ratio of dispatched workers to related clients will also be due at the same time.

3. Original documents must be preserved, even if they are submitted electronically

Even in the case of electronic applications (e-Gov), the obligation to preserve original documents arises, and a data preservation system must be established. In today's world, where compliance with laws and regulations is a prerequisite for business survival, report management is the cornerstone of business risk management.

After the enforcement of the revised Dispatched Worker Law in 2020, it will be mandatory to attach a labor-management agreement confirming the implementation status of equal pay for equal work (when the labor-management agreement method is selected), and this has strengthened its aspect as a progress management tool for improvement of treatment, but in this regard, there is a common mistake of submitting the “36 Agreement” with the dispatch business report. When one hears the term "labor-management agreement," the first thing that comes to mind is probably the 36 Agreement, but care must be taken.

Management practices can influence the extent and bias of overtime work

 Due to reforms in work styles, the paid leave utilization rate has been steadily increasing. According to the Ministry of Health, Labor and Welfare's Comprehensive Survey of Working Conditions, the rate rose from 56.3% in 2020 to 65.3% in 2024, and appears to be on track to reach the government target of 70% or more by 2028.

 On the other hand, while overtime hours are decreasing overall, the number of overwork deaths continues to increase. There is also concern about increased stress among employees due to personnel shortages and delays in filling vacancies. This phenomenon may be attributed to the prevalence of bias among individuals as well as the significant amount of overtime work.

◆Factors on the management side

 The management factors that should be considered when assessing the amount and bias of overtime work may include the following:

・Given the corporate culture, in which working long hours is considered a virtue, it will be challenging to recruit adequately.

・The mismatch between workload and staffing is caused by the inappropriate allocation of work and staffing.

・A thorough evaluation of work processes and efficiencies is essential to identify areas for improvement in inefficient process management

・Poor time management skills may be attributable to a lack of individual skills, but they may also stem from a lack of proper guidance and support by management.

・Workload is another issue that arises from management's failure to allocate work in an effective manner.

 To improve this situation, it is essential to raise awareness on the part of management and establish efficient work processes. Failure to properly manage operations can lead to an increase in overtime hours and an exodus of talented personnel.

◆Improved productivity through increased efficiency and skill development

 In Japan, wages have not risen sufficiently to keep pace with rising prices. If such a situation is prolonged and overtime work increases for the sake of overtime pay, it will be a real disaster. Even in cases where compensation for overtime is available, managerial practices that contradict social norms may result in diminished employee satisfaction.

 Improvement through efficiency and skill development is the primary path to success. It would be prudent to consider an objective approach to analyzing and enhancing work processes and efficiency.

Bankruptcies due to employees "resigning" will reach a record 87 in 2024, a significant increase from the previous record.

 

  The shakeout of small and medium-sized enterprises that cannot "raise wages" is likely to accelerate by 2025.

  Of the 342 cases of labor shortage bankruptcies identified in 2024, 87 cases were found to be "employee retirement-type" bankruptcies, which were caused directly or indirectly by the resignation of employees or senior management. That's an increase of 20 cases, or nearly 30 percent, from the previous year (67 cases), significantly higher than 2019 (71 cases), when labor shortages peaked in many industries, and the highest number since 2013, when the data was compiled.

  By industry, the largest number of "employee retirement-type" bankruptcies in 2024 was in the service industry (31 cases), accounting for 35.6% of the total. It was the first time in five years since 2019 that the service industry accounted for the largest number of bankruptcies among all industries. Software development and other IT industries, as well as temp agencies, beauty salons, and nursing homes, all of which tend to have lower retention rates than other industries and experience labor shortages, are particularly common.

  The next largest number of cases was in the "construction industry" (18 cases), where the retirement of employees with qualifications essential for business operations, such as designers and construction supervisors, made it difficult for companies to operate their businesses. The "Manufacturing" and "Transportation/Telecommunications" sectors had more than 10 cases per year for the first time, with a string of cases in which businesses were unable to operate due to the retirement of factory workers and drivers.

  Recently, employees who are struggling with prolonged price hikes are increasingly calling for wage increases. In response to this trend, consideration of continuous wage increases has spread from large companies to small and midsize firms. On the other hand, there are many small and medium-sized firms that want to raise wages but are unable to do so due to a lack of profitability, and the response to wage hikes is becoming increasingly polarized.

  However, as the mobility of human resources increases against the backdrop of a severe shortage of workers, the "risk of not improving compensation" is increasing, especially among small and medium-sized companies, as executives and employees who are fed up with unsatisfactory wage increases and management that is reluctant to improve compensation are resigning. As the trend of attracting good talent with high salaries through wage increases spreads through the labor market, there is a growing possibility that the number of "wage hardship bankruptcies," in which employees quit due to unsatisfactory wage increases, will increase in 2025.

Improvement of digital literacy, an essential measure to combat labor shortages

Many companies are taking various measures to address the growing labor shortage problem. According to a survey by the Japan Institute for Labor Policy and Training (JILPT), approximately 60% of companies in the retail and service industries are experiencing a labor shortage of full-time employees and are struggling to cope with the situation.

◆Improvement of operational efficiency through the use of ICT

According to the survey results, the most frequently implemented measure to address labor shortages is "streamlining and automating operations through the use of ICT," with approximately 75% of companies implementing this measure. In other industries, the introduction of RPA and the implementation of AI-based business support systems are progressing. In the future, it will be necessary to utilize AI and other technologies for simple and routine tasks, and have people focus on high-value-added operations.

◆Human resource development and digital literacy

Improving the skills of existing employees is essential to the success of manpower management. With the increasing digitization of business operations, improving employees' ICT literacy, and more broadly, their "digital literacy" will directly lead to strengthening the competitiveness of the company.

Digital literacy refers to a wide range of skills and abilities to understand and effectively use digital technologies in general. It includes ICT skills as well as knowledge and skills in information retrieval and evaluation, and privacy and security management.

The company must first clarify the objective of improving digital literacy and share it with all employees to unify awareness within the company. Then, it is necessary to set up a system to share knowledge and expertise on digital skills and to provide education.

◆Creating an environment in which diverse human resources can play an active role

On the other hand, the survey results also indicate that raising wages and diversifying recruitment methods at the time of job offerings and actively promoting the elderly, women, and foreign human resources are also important measures to address labor shortages. The establishment of these systems will be necessary for companies to survive.

Points to note when posting information regarding recruitment on social networking sites, etc.

◆Recruitment advertisements must indicate the name of the recruiter, etc.

Under the Employment Security Law, when providing information, etc. on recruitment through advertisements, etc., including those on the Internet and SNS such as X, false or misleading representations must not be made (Article 5-4).

Recently, there have been some cases of recruiting workers to commit crimes on the Internet (shady jobs), and some of these advertisements may be misleading as normal recruitment. 

The Ministry of Health, Labor and Welfare (MHLW) encourages employers to be sure to display the following six information when recruiting workers directly through SNS, etc.: (1) the name (or names) of the recruiter, (2) address, (3) contact information (telephone number, etc.), (4) job description, (5) work location, and (6) wages.

Q How far should "Address (Location)" be listed?

A Building name, floor number, and even room number must be listed.

Q What should be listed as "contact information"?

A You must provide either a phone number, email address, or a link to a dedicated contact form provided on your website.

Q Is it acceptable to include a link to the recruitment information on the company's website where the name and other information is listed, without including the name and other information itself?

A Since a link to a company's website may be misleading, including whether or not it is a job offer in the first place, it is necessary to include the above 6 information in the advertisement itself that provides the recruitment information.

Q Is it necessary to provide the same details regarding the nature of work, place of employment and wages as required by Article 5-3 of the Employment Security Law and Article 15 of the Labor Standards Law?

A Although the job descriptions do not necessarily have to be the same, the job description, work location, and wages should be described so that job seekers will not be misled. For example, the job location may be listed as "the place of employment immediately after hiring" without stating the "scope of change in the place of employment," or it may list multiple candidate sites and say "negotiable," or it may list the wages as "1,500 yen per hour or higher," but if these are listed, it is not considered an immediate violation of Article 5-4 of the Employment Security Law.

90% of companies in favor of revising the 1,030,000 yen barrier

◆What is the "1,030,000 yen barrier"?

In a corporate survey conducted by Teikoku Databank (1,691 validly responding companies) on raising the "1.03 million yen barrier," it was revealed that nearly 90% of the responding companies were in favor of revising the "1.03 million yen barrier.

The "1,030,000 yen barrier" refers to the fact that income tax is incurred when annual income exceeds 1,030,000 yen and is excluded from the spousal deduction. Some companies make it a requirement that this barrier not be exceeded in order to provide a spousal allowance. As a result, many part-time workers are conscious of this barrier and refrain from working, contributing to labor shortages for companies.

In this survey, 67.8% of companies agreed that the "¥1,030,000 barrier" should be raised, while 21.9% said it should be eliminated. This means that a total of 89.7% of companies are calling for a review of the current system.

◆Main opinions in the survey

Many companies have commented that raising the barriers will help to relieve the labor shortage by eliminating the need for part-time workers to work less. The recent increase in the minimum wage has also had the effect of shortening the working hours up to 1,030,000 yen. There is also an expectation that if the increase is realized, "consumption activity will be stimulated by the tax reduction effect. On the other hand, some are concerned about how to secure financial resources, saying, "Since there is also the 1.06 million yen and 1.3 million yen barrier for social insurance premiums, people will remain reluctant to work if only the income tax is reviewed.

◆Keep an eye on the latest trends and take action

There is a possibility of accelerated movement toward legal reform regarding the "barrier to annual income," including the 1.03 million yen barrier. It is important for companies to keep a close eye on the latest developments and take appropriate measures to ensure that employees can work with peace of mind.

Criteria for Determination of Managerial Supervisory Status

The applicability of a managerial supervisor as defined in Article 41 of the Labor Standards Law is determined by comprehensively considering the following points. 

1. duties, responsibilities and level of authority

2. working style - existence and extent of discretionary working hours and working time management

3. wages and other benefits

◆duties, authority and level of responsibility

Whether or not a person is considered a managerial supervisor is not determined solely by his/her position or title within the company. It is determined based on whether or not the employee is actually in a "position that is integral to management.

◆working style

The following provisions apply to the working style.

"The actual working conditions must also be such that they do not conform to the regulations on working hours, etc."

Managers and supervisors need to have discretion in their own work. This is because strict time management is not conducive to management decisions and responses.

◆wages and other benefits

"Wages and other benefits appropriate to the position."

Managers and supervisors must be treated appropriately for their position. Due to the importance of their duties, they need to be treated appropriately in terms of salary, bonuses, position benefits, etc., compared to regular workers. Even if the annual salary is 6 or 7 million yen, it may be argued that the employee is not a managerial supervisor.

Thus, the requirements for "supervisors" under the Labor Standards Law are quite strict for companies, and it is extremely rare for a manager of a small or medium-sized company to fall under this category if the case goes to court.

◆Scrutiny from the Labor Standards Inspection Office

The Labor Standards Inspection Office will take immediate action in cases of ordinary unpaid overtime. However, as the issue of managers and supervisors is considered to be a matter of the company's personnel rights, the officer may urge the matter to be resolved in court or to implement improvements in the form of guidance. 

It is therefore important for a company to provide clarity on how it positions its managers and supervisors within the organization and to set out its stance on overtime payment to employees other than managers and supervisors.