Newsletter:
"Newsletter Overtime (October 2019)"

Newsletter Overtime (October 2019)

Published: (Mon) 07 Oct 2019

Overtime is one of the most sensitive topics in Japanese labor relations. Following the suicide of a young female employee of a major Japanese company in December 2015 due to working extensive hours, resulting in the resignation of the representative director of said company, the Japanese public’s perception of the social and legal consequences of overwork have changed and authorities are again on high alert. As a consequence, overtime related investigations by the competent authorities are expected to increase. In October 2016, the Japanese government issued its first white paper examining the issues surrounding death by overwork and the measures being taken to prevent it.

This newsletter summarizes the legal framework concerning overtime in Japan and what actions companies should take to mitigate related risks of financial claims, regulatory sanctions and loss of reputation.

1. Overtime System
In Japan, the statutory regular maximum working hours for employees are forty (40) hours per week and eight (8) hours per day. If an employer wants its employees to render work outside the statutory regular maximum working hours, a labor management agreement regarding overtime needs to be concluded between the employer and a representative of the employees (Article 36 of the Labor Standards Act). Ordering employees to render work outside the statutory regular maximum working hours without concluding said agreement violates the Labor Standards Act and may result in imprisonment of up to 6 months or fines up to 300,000 JPY. In accordance with the guidelines of the Ministry of Health, Labor and Welfare in Japan (“MHLW”) the maximum overtime hours under such labor management agreement, excluding work on holidays or legally designated weekly rest days, are as set forth below:

Period

Maximum Overtime Hours

1 week

15 hours

2 weeks

27 hours

4 weeks

43 hours

1 month

45 hours

2 months

81 hours

3 months

120 hours

1 year

360 hours

Further, an employer may order its employees to render overtime work beyond the above maximum overtime hours by concluding a labor management agreement specifying the circumstances for overtime work beyond the above maximum hours, such as for example “handling of increased orders volumes”, etc. Such special agreement allows to eliminate the statutory limitation of overtime work hours and may thus lead to excessive overtime work hours. Triggered by the aforementioned event, an “Act on the Streamlining of Related Laws to Promote Work Style Reform” was implemented on 1 April 2019 which stipulates a limitation of the possible number of overtime hours under such special agreement to 720 hours per year. In addition, within the 720-hours limit, overtime hours shall be (i) less than 100 hours a month for any single month, (ii) capped at an average of 80 hours a month for a continuous period of two (2) to six (6) months and (iii) the exceptions from the rule of maximum 45 hours of overtime a month shall not be applied more than six times a year. It should be noted that the overall limit of 720 hours per year excludes holiday work (different from the monthly limitations stated above in the items (i) and (ii) above which include work on holidays) and thus basically allows for extra hours outside the regular work week.

 

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