The end of September will mark the midway point in the 2011 fiscal year, and — due to economic repercussions from the March 11 earthquake, tsunami and nuclear plant meltdown — some economists are predicting more bad news, in the form of ruinous mid-term financial results for many companies.

Nikkan Gendai (Sept 22) reports that according to the Teikoku Data Bank, as of Sept 11, some 314 companies had already filed for bankruptcy — a rate 2.8 times higher than the same six-month period following the Hanshin-Awaji quake that devastated Kobe and environs in January 1995.

Bankruptcies tend to fall under two basic patterns: One, the company applies to the court and goes into receivership; and two, the company owner just shuts down operations and flees, leaving his creditors and employees to fend for themselves. This second type is being opted for by increasing numbers of small- and medium-sized businesses.

In many cases of corporate failure, workers’ wages are in arrears. A 39-year-old man employed by an advertising production company said when the troubles began, he first began receiving wages two or three days behind schedule; but then the employer switched to incremental payments and in the end, fell behind for three months. By that time, efforts to contact the firm’s president were futile.

The bankruptcy law requires failed companies to pay their workers 80% of their remaining salaries, but with a cap — depending on the worker’s age — of between 880,000 to 2.96 million yen.

“In the case of a court-supervised bankruptcy, this will be overseen by a court-appointed attorney, says Yuka Inage, a paralegal specializing in labor and welfare. “Salary payment vouchers serve as evidence, and even if the payment itself is delayed, they will be essential to obtaining a settlement at some point down the road.”

According to Inage, any accrued worker’s pension is subject to the same conditions as the aforementioned salary: 80% of the total owed, with the same caps depending on the age of the worker. However any semi-annual bonus payments normally due to workers are excepted from such rules.

According to the labor laws, a company facing imminent bankruptcy is obliged to issue workers a pre-dismissal “teate” (stipend), equivalent to one month’s wages, 30 days before it files with the court. But realistically, says Inage, the likelihood of receiving this, even when a worker requests one from his employer, is low.

In some ailing small companies, cases have been reported where workers actually chipped in with money from their own pockets to pay utility bills or gasoline and road tolls for company vehicles. Obtaining reimbursement for such outlays presents all kinds of legal problems, and often litigation is the only solution.

At the very least, workers should obtain a “rishokuhyo” (certificate of job separation), as they will be eligible for compensation starting from seven working days after they became jobless. The Hello Work public employment office will handle the paperwork. In cases where the company owner flees with no forwarding address, Hello Work can also be prevailed upon to issue such a certificate — provided the worker can show his salary payment vouchers for the previous six months. So it’s always a good practice to hang on to one’s pay vouchers for as long as practical.

In general, health insurance on the company scheme will become invalid and workers will need to visit their local pension office and apply to switch to the National Health Insurance scheme. If you’ve been residing in company-subsidized housing or a dormitory, the company should negotiate with the building’s owner to cover costs for your move. If you want to stay, you might be able to work out an arrangement with the landlord, but expect to pay a higher rent.

A final question arises: when a company’s failure appears imminent, are employees permitted to carry off office equipment like PCs or copiers, or other items they might be able to sell? Definitely not a good idea, warns Nikkan Gendai, as they could very likely be slapped with charges of theft.

Photo: Hello Work office in Tokyo.