The Tokyo District Court decided in the AGC Greentech case on 13 May 2024 that there was indirect discrimination based on gender in terms of welfare benefits where, under the dual career track employment system (as shown below), the defendant company had given employees on a clerical career track overwhelmingly occupied by women, a much lower housing allowance of 3,000 yen, but employees on a main career track overwhelmingly occupied by men an allowance of, e.g., 65,600 yen. This is the first case in Japan where indirect discrimination at work has been approved.

The Equal Employment Opportunity Act (the EEOA) was enacted in 1985. The Act was then revised in 2006, and prohibited indirect discrimination for the first time in Japan’s history. However, the management side showed strong resistance toward the prohibition of indirect discrimination, so that the coverage to be prohibited by the EEOA was severely limited. Accordingly, many working conditions, including welfare benefits in this case, fell outside the scope of prohibition. Nonetheless, the AGC Greentech ruling clearly specified that categories of indirect discrimination which are exempt from prohibition under the EEOA could still constitute a violation of general principles of the Civil Law or the like (invalid due to a violation of public policy or damages due to tort), which is an unprecedented decision by the judiciary in Japan.

Since the enactment of the EEOA, blatantly different treatment between men and women has been diminishing in Japan. Instead, systems disguised as sex-neutral, or personnel systems with no discriminating intention but with structurally disadvantageous effects on women, are on the rise, causing a major hurdle to gender equality in Japan. The typical examples of this include the dual career track employment system disputed in this case or a system where non-regular workers like part-time workers are treated in an inferior manner.

The dual career track employment system, which is used by most Japanese companies (e.g., more than half of companies with over 5,000 workers in 2017, according to the Basic Survey of Gender Equality in Employment Management in 1997 by the Ministry of Health, Labour and Welfare), separates regular workers into two groups. This is based on two points of ‘whether transfer involving moving home has been accepted or not’ and ‘job description’. In general, one is on a main career track ‘where workers engage in core job requiring comprehensive ability, possibly associated with transfer to remote locations’, and the other is on a clerical career track ‘where workers engage in secondary job unaccompanied with remote relocation’.

However, in fact, the separation is not based on adequate job evaluation.  In many cases, traditionally male job types are sorted into the main career track, while traditionally female job types are sorted into the clerical career track. Additionally, in terms of treatment, workers on a clerical career track are treated much more unfavorably than those on a main career track. Most female workers take a clerical career track without transfer to a distant place, considering that they are or will be responsible for their families. This is therefore an important factor for wage difference between male and female regular workers in Japan.

In addition, a large proportion of women work on a part-time basis in Japan. The treatment of part-time workers, like the wages they are offered, is inherently much lower than those of regular workers.

The UN Committee on the Elimination of Discrimination against Women repeatedly pointed out that indirect discrimination was not properly positioned under Japanese laws. In 2024, the Committee recommended that the Japanese government incorporate a comprehensive definition of discrimination in regulations, consider the reasons for prohibiting indirect discrimination under the EEOA from a broader perspective, and the like [12].

According to the World Economic Forum, Japan was ranked 118^th among 146 countries in the Gender Gap Index in 2024. It is strongly hoped that this judicial decision will act as a trigger, leading to a more determined effort for workplace reform or law revision.

This blog post was created in cooperation with the Japan Gender Equality Study Team. The team is composed of six members (including Yoko Kuroiwa) who joined a seminar on discrimination laws headed by Mutsuko Asakura, a professor emeritus at Waseda University, as well as Asakura herself.