A Canadian man who has been working in Tokyo's finance sector for nearly two decades is suing his employer Mitsubishi UFJ Morgan Stanley Securities for what is known in Japan as paternity harassment.

Glen Wood, 47, who was the brokerage's head of global sales, is arguing that he has been unfairly sidelined by the company with a demotion and a hefty pay cut after the birth of his son, Alexander, two years ago, reported the Straits Times.

Now a single father, he is fighting for his old job and salary back in the ongoing case before the Tokyo District Court. Wood has been suspended without pay since Oct 18.

The lawsuit has wider implications for a nation that is struggling to cope with not only a demographic time bomb, but also with a severe lack of interest among top foreign talent which it is wooing by offering the world's quickest road to permanent residency.

The number of births recorded in Japan in 2016 fell below one million for the first time, despite generous childcare leave benefits. For one, the law grants fathers up to 52 weeks or an entire year of paid paternity leave.

But the Ministry of Health, Labour and Welfare said only about 3 per cent of new fathers took any or all of that benefit last year (2016). The government wants to raise this to 13 per cent by 2020.

Childcare is an issue that often incurs public furore. Last month (November), city lawmaker Yuka Ogata, 42, from Kumamoto on the south-west island of Kyushu was reprimanded with an official warning after she brought her seven-month-old son to an assembly session that was slated to last for 15 minutes.

Her colleagues, overwhelmingly male, promptly raised heckles. The session was postponed for 40 minutes, just so Ms Ogata could leave her child with a nanny.

A study this year, meanwhile, also found that most young fathers hoped to take paternity leave, but are not doing so out of social hurdles including peer pressure and fears that their colleagues would "think unfavourably" of them.

This issue of entrenched mindsets is amplified in monolithic, traditional Japanese corporations, Wood told The Straits Times in a recent interview.

"In Japan, people are afraid to have children. This is why the birth rate is so low, they don't feel that they can have both children and a career and that is very sad. It is not a humane answer to the situation," said the Ontario, Canada, native, who holds a Masters in Business Administration from Wharton School of the University of Pennsylvania. He first came to Japan almost 30 years ago and is fluent in Japanese.

According to the court filing seen by The Straits Times, Mr Wood said his demotion had been unjust, given that revenues have doubled between 2012 and 2015 as the company grew its base of institutional investors. Furthermore, he has consistently scored high reviews in internal company appraisals, the document said.

"This isn't about a foreigner trying to go against the Japanese system. I follow all the rules, my e-mails are in Japanese, I do everything in Japanese," he stressed. "But I feel very strongly that large traditional corporations should not be allowed to operate above the law. If companies do not follow government policies, then they are useless, just a piece of paper."

"It is also about work-life balance. In Japan, historically, when you join a company, you are a soldier. It's like a battle, but if you get sick or have a baby then you are gone," he added.

In response to queries from The Straits Times, an MUFJ spokesman said, however, that the company "has set up a childcare leave system even before this incident, and we actively support our employees in applying for childcare leave regardless of their gender or nationality".

They added that about 42 per cent of new fathers who qualify for paternity leave applied in fiscal 2016, and that the company is on course for 100 per cent in the current fiscal year.