Japan: 45 hour overtime cap proposed

On 5 June 2017, the committee deliberating on the proposal to cap overtime made a written submission to the Minister of Health, Labour and Welfare proposing to cap overtime to 45 hours a month, with an annual cap of 360 overtime hours. The proposal recommends sanctions against employers who breach this rule however, it sets out a number of exceptions.

Temporary surge exception

One of the proposed exceptions is an annual cap of 720 hours where there is a temporary surge in demand, provided there is a Labour-Management Agreement in place to that effect. However, the committee proposes that this higher cap only be permitted subject to the following conditions:

1. no more than 80 overtime hours on average over a two to six month period;
2. fewer than 100 overtime hours in any single month; and
3. the exception to the 45-hour rule should apply no more than six times in a year.

Job type exception

The following categories of workers will further be exempted from the 45-hour overtime cap:

1. drivers;
2. construction workers;
3. workers engaged in research and development involving new technologies or new products; and
4. other workers designated by the Labour Standards Bureau.

In the case of (a) – (c), the proposal recommends an introduction of various caps within five years from when the 45-hour cap is introduced as law.

The proposal notes the need for raising awareness amongst employers, for example, by ensuring that they understand their obligations to enter into, and file, a Labour-Management Agreement before requiring their employees to work overtime. In relation to the employee representative (who will sign the Labour-Management Agreement), he or she must be selected with a majority vote of employees. It is proposed that the implementing legislation expressly provide that the employer is not to exert their influence over the election process of the employee representative.

Key takeaways

The proposed amendments are still under deliberation, but in the meantime, employers should monitor developments and ensure they are compliant with the current laws. In particular, employers should keep track of employees' actual work hours, properly compensate employees for overtime worked and ensure that employees are not working beyond the overtime hours stipulated in the Labour-Management Agreement. As a matter of good practice, employers should also encourage employees to leave the office on time.

Written by Florence Cheung