Fullcast Holdings Co., Ltd.
President, Representative Director, and CEO
Hiroyuki Tokiwa

Please tell us about the revised act.

Although several items were revised, the item that will have the most significant impact on the Group's performance is the prohibition of day worker dispatching in principle.
Specifically, daily worker dispatching or worker dispatching within a set period of 30 days or less has been prohibited, excluding exceptional rules.
The two main exceptional rules are as follows. The first are a positive list of 18 job types for which the "preservation of laborers is not an issue." The other exceptional rules cover worker dispatching for which "securing employment opportunities is difficult." These rules allow for the dispatching of workers who are (1) 60 years or older [the elderly], (2) students or attendees (excluding those who attend part-time courses or the like) of school accredited under the School Education Act (including vocational schools and miscellaneous educational institutions) [day school students (students for which the Employment Insurance Act does not apply)], (3) workers with an annual income of at least 5 million yen [workers engaged in the work as a side job], and (4) workers whose livelihood is supported by the income from their spouse or other person workers with an annual household income of at least 5 million yen [workers who are not the main earners in the household].
For worker dispatching under employment contracts of 31 days or more, the Ministry of Health, Labour and Welfare released guidelines in the form of Q&As on September 20.

The prohibition of day labor dispatches was introduced with the aim of resolving occasional insufficiencies in employment management at both the dispatching undertaking and the client caused by overly-short forms of employment. In addition, the recent revision stipulated matters including ensuring the balanced treatment of workers, the prohibition of accepting a worker who has resigned as a dispatched worker within 1 year of their resignation, measures to promote a shift from limited-term dispatch employment to unlimited-term employment, measures such as leave payments upon cancellation of the worker dispatch contract, provision of information on topics such as margin rates, explanations of matters related to treatment, statements concerning treatment to workers after placement in the employment placing dispatching agreement, and an 80% limitation on the dispatching of workers to related clients.

What kind of services will the Group offer from October onward?

The Group will provide short-term employment placement services and payroll management work services, and long-term dispatch services.

How will clients that request dispatch workers under exceptional rules be supported?

In the same manner as other clients, the Group will provide daily placement as an alternative service for day labor dispatches. In addition, clients requiring payroll management work services will be provided these services as additional services.
In the Group's case, most of the work it handles is subject to liberalization and exceptional rules in accordance with the specified 18 job types do not apply. Nonetheless, it will be possible to continue with dispatch work under the exceptional rules that cover worker dispatching for which securing employment opportunities is difficult.
However, the Group will not continue with its work dispatching services under the exceptional rules for the following reasons.

1. There will be a large decrease in the number of applicable workers
According to the Group's estimates, the number of applicable workers will decrease by approximately 40%. This will lead to an increase in time and costs required for matching, making impossible to provide workers as requested by clients. Even were it to be possible to provide workers under these conditions, it is highly probable that the Group would have to request higher commissions.

2. Continuity of exceptional rules
The main purpose of this recent law revision was to clarify employment management responsibility, while the exceptional rules for cases in which securing employment opportunities is difficult have been established for the purpose of maintaining employment for workers for which securing employment opportunities is recognized as being particularly difficult. Accordingly, should this situation be alleviated, it is believed that in due course these rules will be abolished in accordance with the main purpose of the law revision. Therefore the Group does not wish to provide service or potentially cause inconveniences to workers and clients based on rules that may become abolished.

3. Ability to provide alternatives through daily placement and payroll service outsourcing
The Group also has to consider what its clients truly need. If clients only need the required number of laborers when necessary, the Group can continue provide the service required through its daily placement service. In addition, the Group believes that it will be able to provide an even more personalized service through its payroll service outsourcing for clients who wish to relieve themselves of the burden of complex employment management work.
Furthermore, needs among the large number of workers who value the ability to work for short periods of time in order to earn money when they want it need to be addressed. In response to these needs, clients can make daily payments on their own, or if this is not possible, the Group recommends its payroll service outsourcing that includes an immediate payment ("SOKKYU") service in cooperation with Sumitomo Mitsui Banking Corporation.

What kind of service is SOKKYU service?

SOKKYU service is a service provided by Sumitomo Mitsui Banking Corporation that offers payment in advance of payday, with the amount after deduction of withholding tax, social insurance premiums, and employment insurance premiums as the maximum amount. At the fastest, this service allows users to receive their salaries on the business day following application.

Some people believe that this law revision will cause employment to decrease. What is the Group's position?

The Group does not agree with this opinion. With the increase in international competition brought about by the advent and development of the Internet, timely production and shift adjustments are essential. For this reason the existence of a short-term labor market will become more and more important. Meanwhile, with the coming of the rapidly aging society and the increasing diversification of values, a short-term labor market that allows workers to work when they want to is becoming even more important for workers. Accordingly, as long as there are needs among both companies and workers, the short-term labor market will survive. As a human resources services company, the Group believes that no matter what kind of revisions are made to labor laws, efforts need to be made to ensure that this market functions properly in response to these changes for the purpose of improving Japan's competitiveness and providing various employment opportunities.

How will this revision impact clients and workers?

First off, for workers this revision will have the benefit of facilitating improvements to the working environment.
From a worker's perspective, because the actual workplace has been the client's property, this meant that even if the Group made requests for improvements in the working environment, the Group was not able to act independently to ensure that improvements were made.
In addition, because the client was not the actual employer, there were cases in which clients believed they were not responsible for employment management and work locations where effective improvement were not made to the work environment. The conversion of this situation to direct employment in which the client becomes the employer will clarify the responsibility for work environment, and as a result facilitate improvements to the working environment.

The next concern is how the revision will affect clients. The switch to direct employment will require employment management work to be conducted. While this will result in an increased work load for employers, this also means it will be possible to reduce external costs if this work can be conducted in-house. Meanwhile, the Group will offer a payroll service outsourcing for clients that do not wish to conduct this work in-house and instead want to reduce their work load. This means that clients that are able to conduct this work in-house will be provided the opportunity for cost reductions, while clients that use the Group’s payroll service outsourcing will be freed from the burden of this type of work, as this service can support payroll management work for all part-time employees (excluding full-time employees).
The adoption of systems for part-time worker payroll management work has not advanced much because most companies have more full-time workers than part-time workers, and investments in systems do not offer a very good ROI due to the wide variety of forms of employment despite the relative low numbers of these types of employees. In addition, because the same situation applies to existing payroll agencies, this work cannot be outsourced. Therefore, in most cases the work is done manually by the human resource department, resulting in an extremely inefficient situation. The Group believes that it will be able to make a drastic improvement to the efficiency of the human resource departments of its clients by acting as an agent for all of these services.

Will dispatching based on exceptional rules and shift adjustments continue?

Because the main purpose of the prohibition of day labor dispatches in principle under the recent law revision was to improve the employment environment through a shift to direct employment, it is believed that dispatching will continue for the 18 job types specified in the positive list for which the preservation of laborers is not an issue. However, for the exceptional rules for cases in which securing employment opportunities is difficult, as a human resources services company the Group believes that when it becomes clear that sufficient employment opportunities can be secured through daily placements, these rules will and need to be eliminated.
In addition, for worker dispatching under employment contracts of 31 days or more, the Ministry of Health, Labour and Welfare released guidelines in the form of Q&As on September 20 indicating that employment contracts for roughly 20 hours or more per week were reasonable. After learning of this, the same answer was received in almost all cases when Group confirmed the situation with other prefectural labor agencies. In addition, inquiries were also made on the treatment of employment contracts without a clearly specified working date and working location, and it was confirmed with almost every agency that this would be subject to guidance. Therefore, it would be impracticable for dispatch companies to continue providing dispatch services that would allow for timely shift adjustments. Accordingly, the Group only provides long-term dispatch services under the condition that the employment contracts is for 31 day or more, the position is for 20 hours or more per week, the dispatch contract and employment contract period are the same, the client is the same, and the working date and working location are specified.

What are the future plans for the Fullcast Group?

The Group would like to provide a matching service based on hourly units as quickly as possible in order to provide even higher value to workers and companies.
For dispatching, a lead time of at least one day is required because of the various forms of advanced preparation needed by the employer. With the shift to direct employment, the Group will be freed from a portion of employment management responsibilities, making it possible to provide service with shorter lead times. This means that in the near future it will be possible to conduct matching within one to two hours.
In preparation for these developments, the Group acquired OtetsudaiNetworks Inc. in April 2012. One of the features of this company is its service that uses the GPS feature in mobile phones to deliver real-time information to job seekers that want job offer information. The Group believes that once this service is on track, client companies may change the way they place orders. A service like this could make it possible to assign human resources that could work for two hours in one hour from now by conducting production adjustments and shift adjustments on an hourly basis. As a result, the Group believes that this development will allow it to make contributions to improved productivity more than ever. On the other hand, there are workers that may not be capable of working 9:00 to 17:00, but are willing and able to work for a few hours. People such as housewives, students, and the elderly may not want to work full-time but would like to earn a bit of money in their free time by working two or three hours a day. This service will allow the Group to provide people like this with employment opportunities.

The Group will be able to provide employment management services to existing clients as well as companies that the Group has not done business with before if the companies employ a certain level of part-time workers. The Group believes that part-time worker payroll service outsourcing will allow client companies to make drastic improvements in the efficiency of their human resource divisions.
Lastly, for long-term dispatch services, the Group has launched an internal qualification system called the Long-Term Dispatch Business Officer Certification System in order to provide more personalized support. Specifically, the Group provides a basic training program in which basic business skills are learned and occupation-based training programs for positions such as telephone operators. In addition, the Group conducts regular counseling to confirm the job conditions of workers as part of efforts to improve working environments and related issues. In addition, through the establishment of a solid evaluation and feedback system, the Group has worked to motivate staff, facilitate improvements in skills, and improve the treatment of staff.

The Group plans to continue contributing to Japan’s competitiveness by improving the efficiency and productivity of the operations at client companies, as well as acting as an agent for workers.
The Group will continue evolving in the future so as to provide services that will be beneficial for both clients and workers.