Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

I wrote recently that Nova staff didn't get their summer bonus and weren't paid their salary for July. Admittedly, this was all based on speculation since I was citing anonymous messages on the Nova Teachers United mailing list and 2Ch. It seems that the press has finally caught wind of this problem with an article on ZAKZAK. As PanicInducingGaijin has pointed out in the forums, this is very bad news if you work for Nova: they are running out of money.

Here's a more detailed summary of the story:

Nova's predicament: unpaid salaries and short on cash

Frenzy to repay 5 billion yen in refunds

According to the article, reporting by the Yukan Fuji revealed that Nova staff have not been paid their bonuses and salaries. This comes after Nova had been punished by METI on June 13 for violating the Specific Commercial Transaction Law over its misleading advertising and false explanations when soliciting contracts.

Non-payment occurred on July 17 when staff did not receive their summer bonus followed by the non-payment of their salaries on the 27th. A fax in president Sahashi's name went out to all schools on the 26th stating that bonuses would not be paid due to financial reasons. The fax also said that a new management system would be in place by September and that bonuses would be paid in mid October.

There was no warning that salaries would not be paid. According to one Nova middle manager, staff received a fax on payday stating that a salary payment system developed by the Personnel and Accounting departments had not been completed in time and that staff should wait until the 31st for their salaries. The manger also added that when area managers phoned head office about this, they were told they would be paid on the 30th.

It turns out that salaries still were not paid on the 31st. A Nova public relations official admitted that the reason for the delay was due to a system glitch in Nova and that even though salaries weren't paid on the 31st, the salaries had been processed and depending on the bank, would be transferred the next day. Some staff members had received their salaries on August 1st.

But according to Yukan Fuji's investigation, most staff members do not seem to have been paid on the 31st.

With Nova's business worsening, there are suspicions over the development of its payment system. According to a tax accountant familiar with corporate accounting, a glitch in a payment system that results in salaries not being paid is unheard of and this doesn't happen even in small and medium-sized businesses. With its cash flow problem, all Nova is doing taking July's salary and carrying it over to August.

Nova is currently having trouble keeping up with paying refunds for canceled contracts. According one industry insider, Nova has to pay out 5 billion yen a month in refunds. Broken down, large schools are having to refund approximately 18 million yen a month, with smaller schools having to pay out at least 1.5 million yen a month.

Even head office has instructed its schools to tell students that refunds would take two to three months in an attempt to try and slow the outflow of cash. According to a former employee, each school deposits that day's sales into its own account and that whereas the head office used to leave each school with at least 600,000 yen, the accounts are all being sucked dry by head office now.

With staff and instructors quitting, new staff members who joined in April are having to spread their duties across two or three schools. One young female staff member noted that since Nova is in a tight spot, staff are taking out loans to purchase several hundreds of thousands of yens worth of lesson points, and registering themselves as students.

Comment: Holy shiat! Nova is forking out 5 billion yen a month and the staff are taking out loans to buy lessons now? Why do you still work at Nova? You should take this opportunity to plan your escape.