As part of Shinzo Abe's economic reform, an amendment law has been introduced in Japan to extend the categories of employees who are not eligible for overtime pay. A new legislation, the Act on the Promotion of Measures to Prevent Karoushi, has also been enacted to help prevent deaths due to overwork.
Current Regulations
With a few limited exceptions, employees who work more than 8 hours a day on any given day are required to be compensated for their overtime work in accordance with several very rigid formulas for calculating overtime pay. Unfortunately, this often means that companies find employees intentionally staying behind after office hours to complete the work that they should have finished within office hours. For many employees, overtime pay constitutes a substantial proportion of their monthly income.
Amendment Bill to Restrict Overtime Pay and Expected Impact
The Government has proposed a bill to amend the Labour Standards Act, which, if passed, will expand the categories of employees who are not entitled to overtime pay even if they work more than 8 hours a day. It is proposed that white collar workers in the finance, forex dealing and IT industry with an annual salary of over 10 million yen will be exempted from overtime pay.
Opinions are still divided both within and outside the Government on this proposed bill and more details are expected to be announced soon. If passed, it is likely that the bill will pave the way for additional categories of workers to be exempted from overtime pay.
These amendments are expected to be welcomed by employers who are concerned that the calculations for overtime pay are unduly complicated and rigid. The amendments are also likely to encourage employees to work more effectively within office hours and may ultimately lead to lower costs for employers overall.
Introduction of Act on the Promotion of Measures to Prevent Karoushi
In addition, the Government has introduced an Act on the Promotion of Measures to Prevent Karoushi (literally, death due to overwork), which is expected to come into force by no later than 27 December 2014. This Act was enacted after strong lobbying by bereaved family members whose loved ones died from karoushi. It enshrines the Government's responsibilities to conduct research on karoushi, provides for the establishment of a committee for the promotion of measures to prevent karoushi, and sets out the principle that the relevant parties (the state, local Government and businesses etc.) should closely collaborate to prevent such deaths.
The legislation also provides for November to be a karoushi awareness month.
To show its commitment to this issue, the Government has already set up a hotline (which became operational on 1 September 2014) for both employers and employees to consult about working conditions and, in particular, excessive or unpaid overtime and impairment to health caused by excessive overtime work.
