Leave of Absence and Return to Work for Mental Health Conditions: Aggregation Rules and Points to Note in Return-to-Work Decisions

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

An employee who has been absent for a long period because of a mental health condition may return to the workplace once, only to become unwell again within a short time and go back on leave. If the work rules do not clearly set out how leave periods are aggregated, the calculation of the remaining available leave and the explanation given to the employee become uncertain, which can lead to serious conflict between the company and the employee. In addition, even where the attending physician submits a medical certificate stating that the employee "can return to work," careful assessment is required as to whether that statement alone justifies returning the employee to exactly the same duties as before.

In practice, two axes of judgment form the core: the contractual terms of leave and return that apply to the employee, and whether the employee is in a condition to safely provide the work required under the employment contract. Focusing only on the formal aspect of the expiration of the leave period and rushing to treat the employee as having resigned, or formally accepting the wording of a medical certificate and ordering the employee to work without sufficient preparation, can both result in a decision-making process that lacks the proper steps. Scrutinizing medical certificates, managing health information properly and guiding the employee to income-support procedures are important processes that lawfully support the substantive judgment.

The Legal Nature of Leave for Non-Occupational Illness and the Limits of Amending Work Rules

There is no statutory provision that requires every company to provide a uniform leave period or grace system for absences due to illness or injury unrelated to work (non-occupational illness). Who is covered, the requirements for ordering leave, the length of leave available and the return-to-work criteria are left to each company's work rules and individual employment contracts. Even where the work rules contain no express provision, there is room for an individual agreement between the company and the employee to serve as the basis, so it is not appropriate to conclude hastily that "because there is no rule, there is no room for leave." On the other hand, if the company unilaterally orders an employee to take unpaid leave, the work rules or similar must clearly set out that authority and the requirements for ordering leave.

Article 89 of the Labor Standards Act requires workplaces that regularly employ 10 or more workers to prepare and file work rules, and provisions on leave of absence are positioned as relatively required items that must be included if such a system is established. The Ministry of Health, Labour and Welfare's explanation of work rules (Japanese) also shows the distinction between absolutely required items such as wages and retirement and the leave system. Even for workplaces that regularly employ fewer than 10 workers, the value of preparing a written document allowing both sides to confirm the content of the system in advance remains the same.

Furthermore, newly amending the work rules is not understood to have the effect of immediately applying retroactively so that past leave periods can be aggregated. Articles 9 and 10 of the Labor Contracts Act (Japanese) take individual agreement as the principle for disadvantageous changes to working conditions through work rules, and recognize binding force only in exceptional cases where the rules are made known to employees and the change is reasonable. Newly establishing an aggregation rule or shortening the leave period has the result of restricting the period of medical treatment that employees could previously enjoy, so the degree of disadvantage, the business necessity of the change and the appropriateness of the content of the revised rule, among other things, are called into question.

Therefore, the handling of employees currently on leave and the preparation of work rules for the future must be considered clearly separately. Measures that unilaterally bring forward the expiration date based solely on a newly established aggregation rule, without scrutinizing leave orders already issued, past explanations given to the employee and the company's previous practice, should be avoided.

Criteria for Return-to-Work Decisions and Safety Considerations According to the Scope of Duties

Article 5 of the Labor Contracts Act imposes on employers a duty to give necessary consideration so that workers can work while their life, body and so on are kept safe (the duty of care for safety). In return-to-work decisions, the employer is expected to scrutinize whether the employee's state of health fits the workload of the duties to be assigned after the return. This is not understood to mean that HR staff should step into the physician's domain and independently diagnose medical recovery.

As page 2 of the main text of the Ministry of Health, Labour and Welfare's "Guide to Supporting the Return to Work of Workers on Leave Due to Mental Health Problems" (Japanese) points out, a diagnosis by the attending physician often assumes recovery to the point that daily life can be led without difficulty, and does not necessarily coincide with a judgment that the employee has recovered the prescribed ability to perform the work required in the workplace. It is essential for the company to provide information about the specific duties and workload, and to carefully compare the attending physician's medical opinion with the conditions under which the workplace can accept the employee.

Even if the employee is not in a state to fully perform the previous duties, that fact alone does not lead directly to the conclusion that the possibility of returning to work is immediately ruled out. In particular, where the employment contract was concluded without limiting the type of job or place of work (an employee without job-type limitation), a duty arises to consider whether there are duties to which the employee can realistically be assigned, in light of the employee's work history and abilities, the size of the company and the realistic capacity for placement. The Ministry of Health, Labour and Welfare's explanation of resignation and dismissal (Japanese) also introduces cases in which the possibility of reassignment and the like should be examined when deciding at the expiration of leave. The employer is not obliged to force the creation of a post that does not exist within the company, but a process of carefully exploring feasible room for accepting the employee, based on the range of duties contemplated by the contract, is required.

Procedures for Starting Leave, and Communication and Income Security During Leave

In practice, one of the factors that tends to cause trouble at the stage of ordering leave is how the medical certificate is obtained. If the company has received only an oral statement from the employee such as "I want to take time off because I'm not feeling well," it cannot decide whether to order leave, to treat the absence as an ordinary sick absence, or to apply annual paid leave. The basis and procedure for requesting a medical certificate should be set out in the work rules, and the outlook for treatment confirmed to the extent necessary for the leave decision. When requiring the employee to see a doctor designated by the company, consider not only the rules but also the necessity of the examination and the employee's circumstances.

If the medical certificate contains only a brief statement such as "requires rest at home," it becomes difficult for the company to estimate the leave period. When requesting the certificate, it is wise to instruct the employee in advance to ask the attending physician to state the expected period of treatment. In addition, when issuing the leave order, state in writing the contact point and frequency for regular communication during leave, how the employee's share of social insurance premiums will be collected during the unpaid period, the procedure for submitting additional medical certificates and so on, to prevent disputes over who said what.

As for communication during leave, it is necessary to reach agreement in advance on the frequency and means. Refraining too much from contact makes it difficult to grasp the employee's recovery and leads to confusion just before expiration, while excessive contact may place an undue psychological burden on the employee during treatment. It is practical to operate a communication system that confirms the course of the condition and the outlook for treatment, while giving consideration to the employee's physical and mental health, using communication methods agreed in advance (such as email or regular meetings).

In addition, to ease anxiety about living expenses during leave, inform the employee about the health insurance sickness and injury allowance system (Japanese). The sickness and injury allowance is paid by the insurer, such as the Japan Health Insurance Association (Kyokai Kenpo) or a health insurance society, when requirements are met, including that the person is receiving treatment for a non-occupational illness or injury, is unable to work, has been unable to work from the fourth day onward after a waiting period of three consecutive days, and is not receiving salary (where the salary is less than the daily amount of the allowance, the difference may be paid). The payment period is capped at a total of one year and six months for the same illness or injury. Since the decision to pay is made by the insurer and the company has no authority to decide it, clearly distinguish between "the existence of the system" and "the fact that the employee is the applicant and applies to the insurer" when giving guidance, and encourage the employee to check the insurer's guidance for detailed requirements and the calculation of the amount paid.

Conducting Return-to-Work Interviews and Labor Law Rules on Trial Attendance

Once the employee indicates an intention to return, summarize in writing the duties to be assigned and the prescribed working hours. Also describe the burden of commuting and overtime, and present this to the attending physician to seek a judgment on whether the employee can work. This is because the physician's criteria differ greatly depending on whether the duties are described simply as "office work" or specified as involving interpersonal negotiation and deadline management. In workplaces where an industrial physician has been appointed, hear the industrial physician's opinion through an interview, and in small workplaces without an obligation to appoint one, check the matters that can be discussed and the conditions of use for consultation services such as Regional Occupational Health Centers (Japanese).

When obtaining medical information directly from the attending physician, explain the purpose of use and the scope of the inquiry to the employee in advance and proceed with the necessary consent. One approach is to keep a written record so that what was consented to can be confirmed later. Sensitive personal information obtained, such as medical certificates and physicians' opinions, should be managed only by the managers directly involved in leave and return decisions. Rather than uniformly disclosing the name of the illness or the treatment history itself to the on-site manager of the receiving department, communicate only what is necessary for accepting the employee at work, such as the content of work restrictions and the work environment requiring consideration.

Before the formal return-to-work decision, another option is to use "trial attendance," rehabilitation attendance or shortened working hours, which are also introduced in the Ministry of Health, Labour and Welfare's guide, to help the employee adapt to the workplace in stages. Consider this in line with the employee's condition and the workplace's conditions for acceptance. However, when introducing rehabilitation attendance, it is necessary to exchange a written document that clarifies whether the period is legally an extension of the leave period or a period of work after the return, as well as the criteria for paying wages (completely unpaid, payment based on actual attendance, etc.) and the maximum period.

As page 6 of the main text of that guide expressly states, it should be noted that where the employer instructs specific tasks and those tasks constitute the company's business, among other cases, the activity is regarded as "work" under the Labor Standards Act and an obligation to pay wages arises. Merely labeling the activity "rehabilitation" or "during leave" does not automatically permit treating it as unpaid or exempt it from minimum wage regulations. Lawful management of wages and working hours in accordance with the actual provision of work and the presence or absence of directions and orders is essential. If the arrangement begins without clear advance agreement, a serious gap in understanding may arise, in which the employee believes "I have already returned and am working" while the company regards it as "merely training during leave," which can lead directly to trouble such as claims for unpaid wages. For a return with shortened working hours as well, setting out in advance the applicable period, the working hours that apply and whether evaluation or transfers are possible supports a smooth return.

Aggregating Periods on a Second Leave and Resignation or Dismissal Procedures at Expiration

In cases where an employee goes back on leave within a short period, carefully compare the date of the previous return, the start date of the current absence, the content of the physician's diagnosis and the aggregation rule in the work rules. Where, after returning once, the employee again becomes unable to provide work because of the same or a similar illness, whether this is counted from zero as a separate new leave or aggregated with the previous leave period is determined based on the content of the work rules.

Where the work rules contain no provision on aggregation, it cannot be concluded that the period is automatically reset as a matter of law, nor that the previous leave period can automatically be deducted. Reach a decision by comprehensively checking the overall structure of the rules, whether there is any individual agreement and the company's past practice. When applying aggregation, carefully explain to the employee in an objective written document the periods subject to aggregation, the number of remaining days of available leave and the basis for that calculation.

As a way of drafting aggregation rules that prevents future disputes, it is effective to set out expressly a standard such as "if, within a certain period after returning to work (the period specified in the work rules), the employee again becomes absent or goes on leave because of the same or a similar illness, the earlier and later leave periods shall be aggregated." In doing so, unless you specifically define what range is recognized as "the same or a similar illness" and where the starting date for aggregation is set, this becomes a factor that invites conflict between the company and employees over interpretation.

Where the employee remains unable to provide work when the leave period expires, whether the outcome is automatic retirement (retirement as of course) under the work rules or dismissal by the employer depends on the legal structure of the rules. If the form of dismissal is adopted, the doctrine of abuse of the right to dismiss under Article 16 of the Labor Contracts Act applies directly, and objectively reasonable grounds and appropriateness in light of socially accepted norms are required. Even if the rules formally provide for automatic retirement, the effectiveness of the termination of the contract may be challenged where there was an error in calculating the expiration date or where the consideration of the possibility of returning to work described above was insufficient. Whether the conditions for automatic retirement are met is judged according to the rules and the specific circumstances.

Therefore, as expiration approaches, conduct a final check of the employee's intention to return and ability to work based on the latest medical certificate, and confirm that every realistic possibility of reassignment or accommodation at work has been exhausted. On that basis, give advance written notice of the remaining period and how the termination of the contract upon expiration will be handled. Merely sending a termination notice as a formality cannot cure defects in the substantive decision-making process.

Note also that where there is a suspicion that the mental health condition was caused by overwork or harassment in the workplace, readily treating it as a non-occupational illness carries serious legal risk. This is because Article 19 of the Labor Standards Act in principle prohibits dismissal during the period of leave for treatment of an occupational illness or injury and for 30 days thereafter. Rather than rushing to terminate the contract based solely on the rules for non-occupational leave, the employer is expected to carefully separate and examine whether the condition is work-related and whether a measure to terminate the contract is permissible.

Preparing Leave and Return-to-Work Rules and Support for Individual Cases

When reviewing leave rules, check not only who is covered and the requirements for starting leave, but also the calculation method on a second leave, the return-to-work decision and the procedure at expiration, as one continuous sequence. Where there are employees already on leave, consider separately the individual handling based on current terms and the scope of application of any rule amendments.

At LegalAgent, we support the review of work rules relating to labor management and human resources and the handling of individual leave and return-to-work cases. If you would like to engage outside attorneys, including for ongoing internal consultations, please see Legal Outsourcing.