1994.04.22

1991 (O) 1943

Minshu Vol. 48, No. 3 at 945

Judgment concerning the act generally referred to as headhunting, and employment placement set forth in Article 5, paragraph (1) of the Employment Security Act

Case to seek damages

Judgment of the Second Petty Bench, dismissed

Tokyo High Court, Judgment of August 26, 1991

1. The act of searching a job seeker in order to introduce him/her to a job offerer and encouraging the job seeker to be employed by the job offerer, generally referred to as headhunting, falls within the scope of employment placement set forth in Article 5, paragraph (1) of the Employment Security Act.

2. The part of a fee contract for fee-charging employment placement, which corresponds to the amount beyond the maximum amount of fees specified by the Minister of Labour after consulting with the Central Employment Security Council, is invalid.

(Concerning 1) Article 5, paragraph (1) of the Employment Security Act; (Concerning 2) Article 32, paragraph (6) of the Employment Security Act, Article 24, paragraph (14) and Appended Table 3 of the Ordinance for Enforcement of the Employment Security Act, Article 90 and Article 91 of the Civil Code

Article 5, paragraph (1) of the Employment Security Act
(1) The term "employment placement" as used in this Act means receiving offers for posting job offerings and offers for registering as a job seeker and extending services to establish employment relationships between job offerers and job seekers.

Article 32, paragraph (6) of the Employment Security Act
A person who carries out a fee-charging employment placement business with permission obtained under the proviso to paragraph (1), except for the fees specified by the Minister of Labour after consulting with the Central Employment Security Council, shall not receive, under any name, the actual costs or any other fees or compensation.

Article 24, paragraph (14) of the Ordinance for Enforcement of the Employment Security Act
(14) The fees to be collected by a person who carries out a fee-charging employment placement business shall be acceptance fees and placement fees, and the maximum amount and the collection procedure of each type of fees shall be as specified in Appended Table 3.

Appended Table 3 of the Ordinance for Enforcement of the Employment Security Act
Type: Placement fees:
Maximum amount of fees:

(ii) The amount equivalent to ten-point-one hundredths (10.1/100) of the wages pertaining to the employment of a six month period in cases where the employment by the same person continued for more than six months: The fee shall be collected from the job offerer as from the date of payment of the wages being the basis of the collection.
Collection procedure: The fee shall be collected from the job offerer as from the date of payment of the wages being the basis of the collection.

Article 90 of the Civil Code
A juridical act with any purpose which is against public policy is void.

Article 91 of the Civil Code
If any party to a juridical act manifests any intention which is inconsistent with a provision in any laws and regulations not related to public policy, such intention shall prevail.

The final appeal is dismissed.
The appellant of final appeal shall bear the cost of the final appeal.

I. Concerning Reasons I and II-2 for final appeal argued by the appeal counsels, TAKAHASHI Masaaki and KAMIBAYASHI Hiroshi
1. The outline of the facts legally determined by the court of prior instance is as follows.
(i) The appellant of final appeal is a company engaged in businesses including the headhunting business, i.e. searching for people who are desired by client companies, and encouraging such people to be employed by these companies. The appellant has a license granted by the Minister of Labour under the proviso to Article 32, paragraph (1) of the Employment Security Act for carrying out the fee-charging employment placement business. The appellee of final appeal is a person who operates a clinic of internal medicine and gynecology named X.
(ii) Around July 10, 1987, the appellant promised to the appellee to search and introduce a doctor in internal medicine and gynecology capable of working at said clinic as its director, and from around July 13, the appellant started to search for an eligible doctor and introduced some doctors to the appellee. However, none of these doctors reached an agreement with the appellee to conclude a contract, and then around February 15, 1989, the appellant introduced Doctor Y to the appellee. As a result, the appellee concluded a contract with Doctor Y to employ him as the director of the clinic from April 1, 1989, at an annual salary of ten million yen.
(iii) Around March 30, 1989, the appellee promised to the appellant to pay, as the price for the services provided by the appellant until the employment of Doctor Y (hereinafter referred to as the "Services"), a total of two million yen, consisting of 500,000 yen in the name of expenses for research activities and 1,500,000 yen in the name of compensation, no later than June 30, 1989.
(iv) The appellee argued that the Services as a whole fall within the category of employment placement prescribed in Article 5, paragraph (1) and the proviso to Article 32, paragraph (1) of the Employment Security Act, and in accordance with Article 32, paragraph (6) of said Act as well as Article 24, paragraph (14) and Appended Table 3 of the Ordinance for Enforcement of said Act, the maximum amount of compensation for the Services should be 505,000 yen, equivalent to 10.1% of the wages of Doctor Y for the six-month period of employment, and that the appellee was not liable to pay any amount beyond this amount. Arguing so, the appellee refused to pay the amount beyond said maximum amount.

2. "Arranging" employment in the course of employment placement, in the meaning under the Employment Security Act, should be construed to generally refer to any act of providing assistance for and facilitating the establishment of the employment relationship between the job offerer and the job seeker (See 1953 (A) No. 4787, judgment of the Third Petty Bench of the Supreme Court of October 4, 1955, Keishu Vol. 9, No. 11, at 2150). It is appropriate to construe that arranging employment in this meaning covers not only the act of introducing the job offerer and the job seeker to each other in order to have an employment relationship established between them, but also the act of searching for a job seeker in order to introduce him/her to a job offerer and encouraging the job seeker to be employed by the job offerer, generally referred to as headhunting (hereinafter referred to as "headhunting"). The basis for this reasoning is as follows. The Employment Security Act was established for the purpose of adjusting supply and demand of labor force to provide a sufficient labor force, as well as providing every person with the opportunity to find a job suitable to him/her according to his/her abilities and under appropriate conditions, thereby achieving security of employment. Article 32 of said Act, in order to achieve such purpose, basically prohibits the fee-charging employment placement business, which caused many problems before, and requires employment to be placed fairly by a public agency free of charge, whereas in the case of a person who intends to arrange employment for people who wish to engage in an occupation which requires special skills and for which it is difficult for a public agency to place employment appropriately, said Article allows the person to carry out the fee-charging employment placement business with a license obtained from the Minister of Labour (See 1949 Shin- (Re) No. 7, judgment of the Grand Bench of the Supreme Court of June 21, 1950, Keishu Vol. 4, No. 6, at 1049). If headhunting is construed to fall outside the scope of such arranging and therefore to be free from the restrictions prescribed in Article 32 and other provisions of said Act, such construction would be equal to denying the abovementioned purpose of said Act. This also applies when the target of headhunting is a doctor.
Furthermore, in order to prove that headhunting falls within the scope of employment placement as prescribed in said Act, there is a requirement that the person who performs it should receive both an offer from a job offerer and an offer from a job seeker (Article 5, paragraph (1) of said Act). However, it is not necessary that these offers are made prior to arranging employment but this requirement is satisfied if, for example, an offer from a job seeker is made in response to the encouragement by the employment placement agency
In this case, given the facts mentioned in 1 above, the determination of the court of prior instance can be affirmed as justifiable in that it found that the Services, including the headhunting of Doctor Y, fell within the scope of arranging employment in the course of employment placement as prescribed in the Employment Security Act. The judgment in prior instance also found the fact that, as described in 1(ii) above, the appellant searched for a doctor and introduced Doctor Y to the appellee, and as a result, an employment contract was concluded between the appellee and Doctor Y, and we should consider that by finding this fact, the judgment in prior instance found and stated that Doctor Y had made an offer as a job seeker to the appellant before the appellant introduced the doctor to the appellee. Therefore, the appeal counsels' argument that the judgment in prior instance does not find the fact that Doctor Y made an offer as a job seeker should be considered to be a claim criticizing the judgment of prior instance based on their misconstruction of the judgment. We can accept none of the appeal counsels' arguments.

II. Concerning Reason II-3 for final appeal
It is appropriate to construe that Article 32, paragraph (6) of the Employment Security Act denies the validity under private law of the part of the fee contract for fee-charging employment placement, which corresponds to the amount beyond the maximum amount of fees specified by the Minister of Labour after consulting with the Central Employment Security Council, and it recognizes the validity of such contract only to the extent of such predetermined maximum amount. This is because, in light of the legislative purpose of said Act as explained in I-2, the provision of Article 32, paragraph (6) of said Act should be construed to protect the interest of both job offerers and job seekers by denying the validity under private law of the part of the fee contract which corresponds to the amount beyond the predetermined maximum amount of fees.
Consequently, the determination of the court of prior instance can be affirmed as justifiable in that it denied the part of the contract of compensation in question which corresponds to the amount beyond the maximum amount of placement fees prescribed in Article 24, paragraph (14) and Appended Table 3 of the Ordinance for Enforcement of said Act, and the judgment in prior instance does not contain such illegality as argued by the appeal counsels. The appeal counsels' arguments cannot be accepted.

III. Concerning other reasons for final appeal
Given the facts mentioned in I-1 above, the determination of the court of prior instance on other points argued by the appeal counsels can be affirmed as justifiable, and the determination process does not contain such illegality as argued by the appeal counsels. The appeal counsels' arguments, including the argument alleging violation of the Constitution, are nothing more than assertions criticizing that the judgment in prior instance is in violation of laws and regulations, based on their own dogmatic views, and none of these arguments can be accepted.

IV. Therefore, according to Article 401, Article 95, and Article 89 of the Code of Civil Procedure, the judgment has been rendered in the form of the main text by the unanimous consent of the Justices.

Justice NEGISHI Shigeharu
Justice NAKAJIMA Toshijiro
Justice KIZAKI Ryohei
Justice ONISHI Katsuya