Overtime Update

Overtime Update

A reader wrote in and asked about an article on overtime a while back, asking as an employer what the actual practical overtime rates actually are. This got me checking about the latest on the whole overtime issue, now that the economy is starting to move again, and what I found was interesting – it looks like the government is starting to implement labor laws to protect people from excessive overtime.

First, though, to answer the specific question. On checking with the Tokyo Labor Bureau, we were told that the law allows the following overtime rates for regular employees normally working 09:00 to 18:00 5 days a week. Weekdays, 18:00 to 22:00, the rate is 1.25 times the normal hourly pay. Between 22:00 and 05:00, the rate is 1.5 times. On public holidays (or in the case of a typical weekday worker, Sunday as well) the rate between 09:00 to 22:00 is 1.35 times, and between 22:00 to 24:00 is 1.60. In all cases, overtime rates are only paid on your base salary, not on bonuses, special allowances, and other non-base remuneration.

As I have mentioned in a previous article, employers can require you to work hours convenient to the company, providing those hours don’t exceed 40 hours per week for mid- to large-size firms and 45 hours per week for small firms. Note that working Saturdays and Sundays is not considered overtime if those days are your regular work days.

As I have also mentioned, generally companies only pay overtime on units exceeding 30 minutes past your regular work hours, and also providing you have received permission to do that overtime. In reality of course, many companies in fact expect employees to work unpaid overtime, as a means of showing devotion to the company and a willingness to support the rest of the team. Thus, “good” workers show up at the office 30 minutes early and leave the office 11-12 hours later, around the same time as their boss does. This means that the average unpaid overtime being pulled by most workers is around 20 hours per week! This is known as “Service Zangyo.”

It is no coincidence, then, that the government is considering changing the Industrial Safety and Health Law next year (2005) to require companies who make their staff work 80 or more hours of overtime per month, to provide those employees with doctors visits and interviews. The move is apparently aimed at reducing the rash of suicides and cases of chronic fatigue plaguing Japanese workers. Part of the plan is that doctors who spot workers under overtime-induced stress would then counsel both the worker and their employer, encouraging them to reduce the employee’s hours and make them take holidays.

The problem of unpaid overtime is particularly rampant at present, because of the overlap between companies’ continuing focus on reducing man-power costs and the more recent pickup in the economy. In light of the huge shift to part-time workers, the remaining full-timers, especially in smaller companies, are under severe pressure to get everything done with less resources. As a result, in FY2003 the Labor Standards Office ordered over 18,511 small companies across Japan to back-pay employees for extra hours worked, versus just 1,500 such orders issued in FY2002.

According to a recent Japan Times article, a professor at the Kansai University has estimated that Japanese employees worked a total of JPY27.33trn ($248bn) of unpaid overtime in FY2002, equivalent to an extra 8.18m full-time jobs. The article then goes on to illustrate the cases of a 34-year old bank employee and 27-year old supermarket worker who work on average of 300 hours and 150 hours of unpaid overtime per month respectively! No wonder the two individuals had decided to call the Association of Labor Lawyers hotline for help. It’s a wonder they had enough energy left to find the number…

Terrie Lloyd is the founder of DaiJob, Inc. He also writes a weekly newsletter for entrepreneurs and business people about business and political opportunities in Japan. You can find the newsletter at www.terrie.com. For further contact with Terrie, email him at terrie.lloyd@daijob.com.