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Overtime pay of employees

This page details the conditions and rate for overtime pay in Japan:

Overtime Pay and Article 36

If employees work over 40 hours a week, company is expected to pay overtime to employees unless they work in Management position. Companies that intend to use overtime on a regular basis should put in place a written agreement between employees and management commonly called “article 36″ and submit it to Labor Standards Inspection Office. This agreement is often called  “Article 36″ because it refers to Article 36 of the Japanese Labor Law. This report should be renewed every year.

Limits of overtime hours in Japan

The  overtime hours should stay within the following limits in Japan:

–       5 hours per day

–       45 hours per month

–       360 hours per year.

Overtime pay rate

The Japanese Labor Law fixes the extra payment for overtime hours

When employees work overtime or work on holidays, an additional payment to the hourly base salary applies:

Overtime ( typically over 8 hours a day) Additional 25%
Night-time (22:00 – 05:00) Additional 25%
Weekends and Holidays Additional 35%
Night-time (continuing from overtime) *1 Additional 50%
Holiday (continuing from night-time) *2 Additional 60%

 

Example of Overtime payment:

*1 Example:

The employee’s normal working hours are from 09:00 to 18:00.

The employee worked from 09:00 to 23:00 and so worked overtime from 18:00 to 23:00.

The employee’s additional overtime payment will be base salary * 1.25 * 4 hours (18:00 – 22:00) plus base salary * 1.5 * 1 hour (22:00 – 23:00).

*2 Example: (theoritical)

The employee’s normal working hours are from 09:00 to 18:00.

The employee worked overtime from Friday 9:00 to Saturday 05:00.

The employee’s additional overtime payment will be base salary * 1.25 * 4 hours (18:00 – 22:00) plus base salary * 1.5 * 2 hours (22:00 – 24:00) plus base salary * 1.6 * 5 hours (0.00 – 05:00)

Disclaimer: This information is given for information purpose only . Companies should consult with a licensed social insurance consultant before making any decision

 
 
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