In April to September 2016, the Labor Standards Inspection Offices (LSIOs) conducted inspections on workplaces that were suspected of violating limits on working hours. The inspection was specifically targeted to employers who asked their employees to work more than 80 hours of overtime per month.
In a report released on 17 January 2017, the Japanese Government said that LSIOs inspected 10,059 workplaces and found 6,659 labour standard violations (66.1 percent). Among those, 4,416 workplaces had employees work overtime illegally, 637 did not pay statutory overtime allowance and 1,043 did not take the required measures to protect workers’ health from long hours. The LSIOs have clearly sharpened their focus on long working hours. They conducted similar inspections of places where employees were working more than 100 hours of overtime per month. Criminal investigations related to long working hours have also reportedly targeted some major corporations.
Under the Labor Standards Act, employees cannot work more than 40 hours per week or more than 8 hours per day for each day of the week (except for managerial positions). Employers can extend working hours if it has a written agreement with the following authorities:
After getting the agreement, employers must notify the relevant government agency of the agreement — known as a “36-agreement” because it is executed under Article 36 of the Labor Standard Act — and must pay an overtime work allowance that cannot be less than what the Labor Standard Act stipulates.
The 36-agreement must specify why the overtime is necessary and the length of the extra working hours. The administrative notice from the relevant agency stipulates the maximum extra working hours. In temporary and extraordinary circumstances, an employer can exceed the limits by having a special clause in the 36-agreement.
Japanese Government’s report said that 4,416 workplaces with illegal overtime included employers that did not have 36-agreements or that exceeded limits set in 36-agreements. How violations are punished If an employer had employees work overtime without a 36-agreement or beyond the limits set in a 36-agreement? Thus, a natural person who is in charge of human resources could be imprisoned, with required labour, for up to six months or fined up to JPY300,000. The employing entity itself could also be fined up to JPY300,000. Unpaid statutory overtime allowance must be paid with interest, and courts might order an employer to make an additional payment of that identical amount.
If a worker suffers illness due to long working hours, employers might have to pay related damages. Although (mandatory) Industrial Accident Compensation Insurance would apply first, those payments are unlikely to cover all damages, especially if a worker died or was disabled.
Moreover, the Japanese Government reportedly plans to submit a bill to Congress to amend the Labor Standards Act by tightening the rules for long working hours, including setting a clear maximum and strengthening legal punishment. Employers should be aware of not only the current regulations but also the planned amendments, which could take effect soon. Even without the amendments, more stringent enforcement is expected.