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What are the requirements relating to advertising positions?
Employers can recruit through a variety of sources (eg, media and graduate career fairs). Executive search agencies are commonly used for senior and professional staff. The Hello Work network offers free support to employers looking for employees.
Positions can be freely advertised, subject to certain restrictions. For instance, under the Law on Securing Equal Opportunity and Treatment between Men and Women in Employment, employers must offer the same employment opportunities to women and men (although, in practice, this is not necessarily reflected in ads).
What can employers do with regard to background checks and inquiries in relation to the following:
(a) Criminal records?
Employers cannot directly access criminal records. They can ask employees to provide extracts of any criminal records (a cumbersome procedure), but this is unusual.
(b) Medical history?
Employers can inquire about an applicant’s medical history, provided that any inquiry is consistent with the purpose of the interview. In addition, the Industrial Safety and Health Law – which promotes the prevention of worker illness and injury – provides that medical examinations may be performed during initial hire and at least yearly.
(c) Drug screening?
Drug screening is possible (depending on the nature of the job), but is unusual.
(d) Credit checks?
Credit checks are not customary, as they are not considered directly relevant.
(e) Immigration status?
The immigration status of all foreign employees must be checked, as it is a criminal offence to employ someone who is subject to immigration control without the appropriate permission to work in Japan.
(f) Social media?
Employers can check social media accounts in order to check references, past convictions or any trouble with the law.
As it is extremely difficult to dismiss employees in Japan, the freedoms surrounding the pre-hiring and pre-screening process are broad. That said, certain background checks are prohibited (eg, checking whether a prospective employee belongs to the burakumin community).
Wages and working time
Is there a national minimum wage and, if so, what is it?
The Minimum Wage Law provides for a minimum wage. Wages differ per region and industry and the minimum hourly wage in Tokyo is Y985 (as of 1 October 2018).
Are there restrictions on working hours?
The statutory working week is 40 hours per week or eight hours per day, excluding breaks. This statutory requirement is subject to a number of business-related exceptions, under which 44-hour working weeks are acceptable. Employers must obtain and file a labour management agreement (Article 36 of the Labour Standards Law) with the Labour Standards Inspection Office if they wish employees to work over the statutory working hours or on statutory days off. Strictly speaking, there is currently no legal limit on the extension of working hours (except for hazardous work), provided that an Article 36 agreement has been filed.
Certain standards contained in the Labour Standards Law are designed to moderate overtime work (although a labour management agreement will prevail over these standards). The standard overtime work limits are as follows:
- one week – 15 hours;
- two weeks – 27 hours;
- four weeks – 43 hours;
- one month – 45 hours;
- two months – 81 hours;
- three months – 120 hours; and
- one year – 360 hours.
Employees working over the statutory working hours, on statutory days off or late-night hours (between 10:00pm and 5:00am) must receive overtime pay. Managers are not subject to the regulations on working hours, breaks and days off (except for late-night work), but the definition of a ‘manager’ in this context is very narrowly construed by the labour authorities and courts.
Partly due to recent tragic events in the media relating to karoshi (death from overwork) and well-known companies facing trial over high-profile karoshi cases, there is an increased interest in improving the management of overtime work. In January 2017 the Ministry of Health, Labour and Welfare issued Guidelines for Employers to Appropriately Manage their Employees' Working Hours, which follow the 2001 Standards for Employers to Appropriately Manage Their Employees' Working Hours but contain new and noteworthy items including a definition of ‘working hours’ and specific examples (eg, time on standby and time spent changing clothes).
As of 1 April 2019 (or later depending on company size and business sector), the statutory limitations described above in further detail will become applicable: overtime capped at 45 hours a month and 360 hours a year. If there is a temporary surge, the annual limit may be increased to 720 hours, subject to a monthly maximum of 80 hours (averaged over a period of consecutive 2,3,4,5 and 6 months) and an absolute maximum of 100 hours a month. Specific businesses are exempted.
Hours and overtime
What are the requirements for meal and rest breaks?
Employees are entitled to at least a 45-minute break for six hours of work and a one-hour break for eight hours of work. In practice, one-hour breaks are often provided even if an employee works less than eight hours. In principle, rest periods must be provided to all employees at the same time (exceptions can be made through a labour management agreement).
How should overtime be calculated?
Overtime generally must be paid for all hours worked over the statutory limits. Enhanced rates apply for overtime work and for hours worked on statutory holidays:
- overtime exceeding the statutory working hours – 25%;
- overtime in excess of the statutory working hours, exceeding 60 hours in one month – 50% (this does not apply to small and medium-sized enterprises, as defined by reference to the industry sector, but this exemption is expected to be abolished in 2019);
- work on statutory days off – 35%;
- late-night work (between 10:00pm and 5:00am) – 25%;
- late-night work exceeding the statutory working hours – 50%;
- late-night work over the statutory working hours, exceeding 60 hours in one month – 75% (this does not apply to small and medium-sized enterprises, as defined by reference to the industry sector); and
- late-night work on statutory days off – 60%.
What exemptions are there from overtime?
- Managers are generally not paid for overtime. For overtime purposes, the term ‘manager’ is narrowly interpreted. As of 1 April 2019, the special rules applicable to willing high-level professionals (the white collar exemption) described above will apply to workers who:
- have a clear scope of duties;
- earn over Y10.75 million per year; and
- are engaged in a highly specialised activity (provided that some close healthcare/medical supervision is organised).
Certain schemes can be used to minimise the financial burden of overtime payments:
- Irregular working hours scheme – this scheme applies to employers whose business is seasonal and fluctuates. Where working hours cannot be regularly prescribed, an averaging system may provide interesting options for employers. Under an averaging system, working hours will not be treated as exceeding the maximum working hours, as long as the average number of prescribed hours does not exceed the weekly legal standards within a given period. A labour management agreement is required to implement this scheme.
- Deemed working hours – this scheme can be used for employees who work remotely. The assumption is that the work is effectively performed during working hours.
- Discretionary work – this scheme applies where the employer gives broad directions and the employee has significant discretion regarding how to perform the work. The scheme covers:
- professional workers engaged in research and development and other specific occupations; and
- workers engaged in certain duties applicable to a wider range of white-collar workers (eg, planning, researching and analysing matters pertaining to business operations without concrete directions from the employer with regard to execution and allocation of time).
- Under this scheme, an employee is deemed to have worked for a certain number of hours either agreed on in advance under a labour management agreement or subject to a committee decision (including the employer and employees), depending on the employee’s activities.
Individual employment contracts can generally provide that an employee’s remuneration include a certain amount of overtime (subject to the caps set out in the Labour Standards Law).
Flexitime schemes are also available.
Is there a minimum paid holiday entitlement?
Employees who have been employed continuously for six months and worked at least 80% of all working days are entitled to 10 days of annual leave. Holiday entitlements increase over time in proportion to the employee’s length of service. After one-and-a-half years of service, employees are entitled to 11 days of holiday. After two-and-a-half years of service, employees are entitled to 12 days of holiday and so forth. After six-and-a-half years and onwards, the entitlement is 20 days. Following the entry into force of the special rules applicable to willing high-level professionals on 1 April 2019, qualifying employees will have to take holidays of not less than 104 days, not less than four days every 4 weeks. Their employers must grant them at least one holiday of two weeks in a row every year and other prescribed health support.
Employers can offer more generous conditions. Most Japanese companies grant additional paid leave for weddings, the death of close relatives and the birth of a child.
What are the rules applicable to final pay and deductions from wages?
Although employers are generally prohibited from making deductions from wages (the rare exceptions are subject to a strict cap on levies), they must deduct income tax and labour and social security insurance contributions at source.
What payroll and payment records must be maintained?
Pursuant to the Labour Standards Law, the following records must be maintained at each workplace for three years:
- a wage ledger, showing amounts paid and the basis of calculation (including hours worked);
- a workers’ roster; and
- other related documents on hiring and compensation.
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