Photo: PAKUTASO
business

Taxi firm fires entire workforce; says drivers better off collecting unemployment

24 Comments
By SoraNews24

Tokyo-based car-hire firm Royal Limousine has seen its fortunes completely reversed in the span of a few months. With the Olympics set to roll into town later this year, business was expected to be better than ever and the company was gearing up to meet the high demand.

Now, the Games have been put off for another year and to make matters worse, Tokyo has been put in a state of emergency, causing even fewer people to require the use of taxis.

Seeing the writing on the wall, Royal Limousine decided to make a drastic preemptive move by firing everyone. Their logic is that in doing so, all the employees could collect unemployment insurance and potentially get more money that they would during a lengthy period of paid leave.

Also, by firing them now, all the drivers and staff wouldn’t have their wages reduced, which would have caused their unemployment checks to also shrink had the lay-off occurred at a later date. There’s also the added benefit of taking all the drivers off the streets which eliminates the risk of a COVID-19 outbreak cluster to happen among their ranks.

So, on April 8 company president Kensaku Kaneko met with about 80 employees in a park in Koto Ward and announced his plan to lay off everyone immediately. The workers at this meeting represented four of Tokyo Limousine’s six subsidiary companies. Those in the remaining two would be let go shortly after. In total, roughly 600 people will have been terminated.

The company says they intend to rehire every employee when the situation improves, but are under no obligation to do so. This has caused suspicion among some laid-off employees that something more is going on.

One driver told media: “Yesterday I got a call from my co-worker telling me I was fired. It was all so sudden that I felt a mistrust for the company, because they didn’t give us any more warning. I know the situation is really hard, but I don’t feel convinced that this decision was made in the best interests of the workers. I really like working here and everyone here, so I want to come back. On the other hand, I feel like I can’t trust the company. It’s a complicated feeling.”

However, another driver who has seen firsthand how severely fares have been drying up in the city told reporters:

“I was surprised to hear this from a co-worker yesterday, and worried about how to get by. As the coronavirus has spread, the daily take which was once around 70,000 yen gradually went down to 50,000 yen, then 30,000 yen. Recently it’s been under 10,000 yen. In these conditions I’m not surprised that the president made this choice and understand to a certain extent. Even though I was suddenly let go, I enjoy driving a taxi and hope I can return to this company some day.”

People looking at the issue from the outside had mixed feelings.

“That’s smart.”

“Isn’t this unemployment insurance fraud?”

“They’ll all get that extra 300,000 yen for getting their income reduced too. Brilliant.”

“Does anyone really believe the company is going to hire everyone back?”

“Hmm, maybe I should get fired.”

“It’s better than companies that just let go employees without any hope for the future.”

“I’m pretty sure this would be declared illegal if they hired everyone back. I hope those guys are looking for new work.”

“If every business starts doing this… Are we going to be okay?”

“If the management is smart, this could work.”

According to the Ministry of Health, Labor, and Welfare, the act of firing someone with the intent of hiring them back in order to claim unemployment benefits is defined as a “false claim” and liable to penalties. However, the wording is somewhat vague and includes mentions of this needing to be done “several times” as an example. So, as one comment suggested, there may be legal workarounds if a company is savvy enough and well-connected enough to find them.

This then presents the problem of what if every company decides to put their entire workforce on the dole and just sit on their own cash reserves until all this blows over. To prevent this, the government is currently offering sizable subsidies to businesses of all sizes that don’t lay off a single employee as a result of the current economic downturn.

Given all that, it can be assumed that a mass-firing tactic like this is either meant to cover up ulterior motives, or act as a canary in the coal mine, indicating more deeply rooted economic problems which current relief measures aren’t addressing.

Source: NHK News Web, Ministry of Health, Labor, and Welfare, Itai News

Read more stories from SoraNews24.

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© SoraNews24

©2020 GPlusMedia Inc.

24 Comments
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Interesting.....

I suspect this was easier for the company because they were gearing up for a profitable 2020 summer, but that has disappeared.....wonder if other cab companies will start doing similar...…

Another day in the country of weird, vague, dumb labour laws, wonder what ""idea"" we will see next!

4 ( +7 / -3 )

I read over the circumstances and IF the company rehires drivers then seems reasonable, in fact quite good in some ways because they'll be paid extra for any paid leave they hadn't used (or should be at least anyway). They might lose some benefits in the process though, and if so they should be reinstated.

It is quite a creative way to bypass the government's knuckle-dragging over compensating staff though - they have to pay welfare for the drivers by law in this circumstance. At first I thought it sounded awful, but as a labour union member I would consider it, but with lots of careful calculations!

5 ( +5 / -0 )

"Good news everyone, I've found a way to solve this problem - you're all fired."

6 ( +7 / -1 )

Bad news, sorry to hear that but I am waiting for some nice price drop in house market, I would even say sale time as soon as all that people will lose their jobs, get evicted for not paying the mortgage.

-4 ( +1 / -5 )

Too funny. Fraud

-9 ( +1 / -10 )

Don't the company need their ministry of labour for permission for such mass firing?

Basically the company have remove all their own risks by firing everyone.

I thought Japan has unions for things like that.

1 ( +3 / -2 )

Actually not a bad outcome for the drivers in the circumstances. Better than staying in work, endangering their health for less and less money.

4 ( +4 / -0 )

I thought Japan has unions for things like that.

It had but before Coronavirus.

Anyway you guys need to wake up we started to live in completely different reality. Forget about unions, bonuses, paid leave etc. it will all be gone.

I believe that sometime soon more nationalist voices will come to power, and if there are no jobs and plenty of foreigners live in Tokyo who do you blame first. That foreigner who "stole" your job.

Stay safe, stay home.

1 ( +2 / -1 )

Maybe the taxi industry will get so bad that they will have to lower their fares to SE Asia type of taxi fares.

3 ( +4 / -1 )

I wonder if the boss was expecting a "hip hip hooray!" when he announced this.

On paper, unemployment insurance (kouyou hoken) might put out more than the government assistance his business should be getting for furloughing staff. However, I presume all his staff will lose shakai hoken while they are unemployed. If they are married, that could be two pensions and a whole family's worth of health insurance. They'll also have to the bother of going to Hello Work and doing whatever they say to get their money.

The super snarky move is of course to re-employ them, but on Uber-like gig economy terms, not with contracts. Even if they go back on regular contracts, the boss could also scam them out of taishokukin if it's calculated based on continuous employment. We can't get the full picture from a news story, but suffice to say there are lots of potential pitfalls here.

3 ( +4 / -1 )

I think it depends on how quickly and how much unemployment pays. I got unemployment once in California after a layoff and it was about 1/10th of my lost wages so it was ridiculous and I scrambled to find a new job, any job.

4 ( +4 / -0 )

Maybe the taxi industry will get so bad that they will have to lower their fares to SE Asia type of taxi fares.

Hey that's a great idea.

They should do it with every job, then lower the salaries to SE Asia type of salaries.

All except mine , of course.

gary

7 ( +7 / -0 )

To prevent this, the government is currently offering sizable subsidies to businesses of all sizes that don’t lay off a single employee as a result of the current economic downturn.

Totally untrue. The subsidies are not generous at all, as they are capped at ¥8,800 a day for workers who are told not to work at all. This is basic part-time pay. The company must make up the spread in wages, if they don't reduce a workers wage. Also, if someone works a few hours a day, compensation is less. So unlike in more advanced economies, the Abe government's policy provides little incentive for companies to keep workers if business drops by much.

3 ( +3 / -0 )

Too bad they killed other ride services. Uber would be handy to have...

-4 ( +0 / -4 )

Recently it’s been under 10,000 yen

No business can make pay roll, and overheads with that. The down side of biz, he should of diversified but with all tourism taking a beating, who knows what they could of done

Too bad they killed other ride services. Uber would be handy to have...

Protectionism. They shut down allot of air bnb also. Good ole conservative "business friendly" Japan.

-3 ( +0 / -3 )

Totally untrue. The subsidies are not generous at all, as they are capped at ¥8,800 a day for workers who are told not to work at all. 

Companies with a clue about how much recruiting good staff costs and how difficult it can be will be subbing this up to a decent level.

Sack-everyone shacho must think at least some of his staff are replaceable or that no-one is out there ready to poach them. Maybe he's greased enough palms to be sitting on a super juicy contract supplying cars for the Olympics, so the drivers are guaranteed to flock back to him. If all things were equal and the labour market is as tight as companies keep telling us, I don't think you would confidently sack 600 trained employees less than one month into a crisis. In a tight labour market, that would be cutting your own throat.

3 ( +3 / -0 )

In Switzerland there is a so-called technical unemployment status for all. People keep their job and get 80% of their wage paid by the unemployment found, which is founded half by employees and half by employers.

When the crisis will be gone or partly gone, the workforce will be back full speed.

I really feel sorry for all these people laid off because of no crisis planning.

0 ( +1 / -1 )

Blame the company. Blame the government. Maybe, just maybe blame the true culprit, China?

1 ( +1 / -0 )

If the company "geared up" for the 2020 Olympics, in addition to adding staff they very likely invested in more vehicles and/or upgrading vehicles. So they are either cash poor (if paying cash) or still on the hook for financing. If they survive until 2021 (assuming the games actually happen) they still won't be in the same position as had there been no outbreak and the Olypics were held on schedule. Tough position. Tough situation for everyone. It is far too easy for everyone to be flip and have anti-business attitudes. Seems to me that everyone in this particular situation loses through none of their own doing.

1 ( +1 / -0 )

Fraud. These taxi companies have been crying for years, yet they still stay in the game. Now this company is looking at ways to minimize its own profits vs losses and not for the good of the business else get out of the business and close down.

0 ( +0 / -0 )

It is far too easy for everyone to be flip and have anti-business attitudes. Seems to me that everyone in this particular situation loses through none of their own doing.

agreed somewhat, but true market capitalism would allow for these companies to go under, and then a more efficient model like uber or private entrepreneurs would take their spot. In this strange place, these companies will just lay off, gov pay the workers, then rehire same people, based on loyalty and feelings. All that complain, I bet all of them will be rehired in 3 months.

0 ( +0 / -0 )

Very Predictable unless you're dumb... which Abe is clearly.

0 ( +0 / -0 )

And yes... if I operated a small Company, I'd do the same were the financials suggesting so.

This, is the dilemma facing Governments now - especially those who have encourage small startups to support their Economies.

0 ( +0 / -0 )

"encouraged" ... I wish JT would offer an "Edit" facility upon posts...

0 ( +0 / -0 )

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