"McDonald's Japan's flexible shift system once again ruled invalid" 23 June 2023

A high court here has upheld a lower court ruling that found McDonald's Japan's flexible shift system applied to a former employee invalid and ordered the company to pay him about 610,000 yen (approx. $4,300) in back pay, while dismissing his claim that he was forced to resign.

The man living in the city of Nagoya had brought the lawsuit against Tokyo-based McDonald's Co. (Japan), accusing it of imposing performance improvement goals for employees who were performing poorly, which were difficult to achieve, forcing him out of a job. He had demanded that his discharge be nullified and that he receive compensation.

The Nagoya High Court on June 22 upheld the Nagoya District Court's decision that the "variable working hour system" applied by the company to the former employee was invalid and awarded him unpaid wages. On the other hand, the high court dismissed the plaintiff's claim that he was forced to quit the job.

The variable working hour system allows employers to calculate work hours on a monthly or yearly basis rather than on a daily basis. It has been used by businesses that have different workloads during peak and off-peak periods.

McDonald's Japan has introduced the system on a monthly basis at each of its stores and stipulates it in its employment regulations. However, the former employee was working a shift that differed from the rules. Regarding this, the district court determined in October 2022 that the variable working hour system was void, stating, "Store-specific work shifts that are not stipulated in the work rules do not meet the requirements of the Labor Standards Act."

The company had argued in the first trial, "It is impossible to set shifts that are common to all stores (864 directly managed outlets nationwide). The shifts at each store are in accordance with work rules." It also insisted in the appeal trial that "the system fulfills the requirements of the Labor Standards Act and is valid."

In response, Presiding Judge Toru Matsumura of the Nagoya High Court rejected the company's argument, citing the ruling of the district court, saying, "The Labor Standards Act permits a variable working hour system within the scope that does not damage workers' life planning, and does not allow employers to arbitrarily change working hours for business reasons."

A spokesperson for McDonald's Japan said in an interview, "We would like to refrain from commenting because we have not received the text of the ruling."

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