In this paper, the effects of equitable treatment of permanent and non-permanent employees on firm performance are analyzed. Statistical analysis in this paper is based on data from 393 firms which was collected by the Japan Institute for Labour Policy and Training in 2005. The effect of the practice which gives opportunity for non-permanent employees to become permanent employees on organizational performance is enhanced by the qualitative utilization of nonpermanent employees. The effects of incentives, job enrichment, and career development of non-permanent employees on organizational performance are reduced. Furthermore, the interactions between equitable treatment and qualitative utilization of non-permanent employee are more negative for firms which have reduced only permanent employees, but not non-permanent employees.