1. Accounting (Source: “Keiei Zaimu Magazine”)
Most of those who pass the C.P.A. exam have gained employment with an audit corporation. However, a “C.P.A. within an organization” who works in an ordinary corporation is drawing attention because it has been difficult to find work in an audit corporation since the collapse of Lehman Brothers. According to the result of a Financial Services Agency survey for listed companies, it was discovered that 16% of them had a “C.P.A. employed within the company,” and the average number of C.P.A.’s was 2.1 per company. Eleven percent of those companies in the survey responded “there was recruitment of a C.P.A. exam graduate or C.P.A.” In addition, 3 years of business experience and certain accreditation is required to become a C.P.A. after passing the C.P.A. exam.
2. Taxation (Source: “Zeimu Tsushin Magazine”) Nowadays Singapore is gaining attention as a place of capital flight for wealthy people. The Tokyo District Court recently accepted the claim of a taxpayer on a case contesting whether or not the company founded in Singapore by an individual satisfies the conditions for Anti-Tax Haven Rule exemptions, including primarily (1) Substance test and (2) Administration and control test (Case No. 725, First instance of administrative suit in fiscal year 2010).
The Tax authority imposed tax on Officer A, (Taxpayer) who is a manufacturer and founded a company in Singapore as the main shareholder (owning 90% of shares) based on the income retained in the company through its wholesale business, because it deemed that the company didn’t fill the exception conditions of Anti-Tax Haven Rules (1) and (2) as indicated above. However, the Tokyo District Court upheld the claim of Taxpayer that the company fulfilled the aforementioned conditions, so the disposition to adjust Taxpayer’s individual tax return and so on was cancelled.
The Tax authority is appealing the sentence.
3. Labor Management(What can be deducted from employees’ salaries?)
“Is it okay to deduct overpaid salary, transportation cost or expenses borne by the company, etc. from employees’ salaries without their consent?” “Can we offset employees’ salaries against their loans?” These are some of the most common inquiries we have from our clients.
In principle, all of the above acts violate “5 principles of salary payment” under Article 24 of the Labor Standards Law. These principles are: (1) Principle of payment in local currency, (2) Principle of direct payment to employee, (3) Principle of payment in full amount, (4) Principle of payment at least once a month, and (5) Principle of payment on a definite date.
Let’s look at some pertinent cases:
1. Is it okay for the company to offset employees’ retirement allowance against their loans?
Retirement allowance is considered as salary if payment terms and conditions are prescribed in the company’s rules of employment, etc. Therefore, this results in a conflict with the above (3) Principle of payment in full amount.
In order to be able to legally deduct a part of an employee’s salary, an employer needs to have a written agreement between its labor union and the representatives of its employees. And on top of that, a stipulation in the agreement concerning salary deduction is also required, as the amount to be offset is also considered as a part of salary.
However, it is illegal to offset more than 1/4 of an employee’s monthly salary because it is stated in Article 152 of the Civil Execution Act that “the portion equivalent to three-quarters of the performance to be received shall not be seized”. Therefore, an employer needs to have an individual agreement for loan settlement between each employee beforehand in addition to the labor-management agreement concerning salary deduction.
2. Is it okay for the company to deduct company housing expenses borne by an employee (deposit, key money, agent’s commission, etc.) from his/her salary?
As with case 1, this conflicts with (3) Principle of payment in full amount. Therefore, an employer needs to have a labor-management agreement in order to be able to make these deductions.
On the other hand, deductions based on employee benefit programs (plans for the sake of the employees) can be made from an employee’s salary if consent of his/her own free will is obtained, but the consent must be objectively deemed as made by his/her own free will.
3. I am working as a part-time trainee. Is it okay for the company to pay my salary directly to my school teacher as my school trip fund?
This conflicts with (2) Principle of direct payment to employee. It is prohibited to pay an employee’s salary to an agent or any other third party even if there is an agreement for salary transfer, because Article 24 of the Labor Standards Law overrides any such agreement.
A problem may arise with (2) Principle of direct payment to employee when a financing firm is an obligee affecting a seizure. In such cases, it is illegal for the company to pay the employee’s salary directly to the financing firm. However, an order of seizure issued by the court does not conflict with Article 24 of the Labor Standards Law, and the seizable amount will be determined according to Article 152 of the Civil Execution Act.
It is recommended that employers be very careful when making deductions from employees’ salaries.
For more information, please feel free to contact our HR Consulting Group.
4. This Week’s Words of Wisdom
Andrea: “Unhappy the land that has no heroes!”
Galileo: “No, unhappy the land that needs heroes.”
“Life of Galileo”)
People lament the dead-end economy or troubled international relations, as well as the shortage of talented politicians. There has never been a time that people more strongly demand heroes as now.