On 29 June 2018 a bill relating to work style reform was enacted in the National Diet, which amends the Labour Standards Act, the Industrial Safety and Health Act and relevant laws. Most amendments will come into effect on 1 April 2019. This update provides an overview of the amendments to the Labour Standards Act and the Industrial Safety and Health Act.
Revision of overtime regulations
Introduction of restrictions on maximum amount of overtime The amended Labour Standards Act stipulates that the upper limit for overtime shall be, in principle, 45 hours a month and 360 hours a year. Even in special circumstances, the upper limit will be:
- 720 hours a year;
- less than 100 hours a month (including holiday work); and
- an average of 80 hours a month (including holiday work).
However, there are exceptions for certain business sectors. For certain employees – including motor vehicle drivers, construction workers and doctors – there is a grace period before the regulation must be applied. For employees working in R&D of new technology, products or services, the application of this regulation shall be excluded, provided that employees receive face-to-face consultation with a doctor.
Abolition of transitional measure for small and medium-sized enterprises The higher rate (at least 50%) of overtime payment for overtime exceeding 60 hours a month will also apply to small and medium-sized enterprises.
Securement of taking annual paid leave In order to promote the secure taking of paid leave, the amended Labour Standards Act requires employers to designate the timing of five days of annual paid leave for employees who are granted 10 days or more of annual paid holiday.
Ensuring effectiveness of monitoring working hours With a view to ensuring the effectiveness of monitoring working hours, the amended Industrial Safety and Health Act provides that working hours shall, in principle, be recorded by an on-site supervisor or by objective methods.
Realising diverse and flexible working styles
Revision of flexi-time system Under the amended Labour Standards Act, the upper limit of the 'settlement period' of the flexi-time system shall be extended from one month to three months.
Establishment of highly specialised work and performance-based work system The amended Labour Standards Act creates a new category of exemption from working hours regulations – the 'highly professional system'. Subject to the employee's consent and the resolution by the labour management committee, employees with a clear scope of duties and a certain annual income (likely JPY10.75 million or more, which will be determined by an ordinance of the Ministry of Health, Labour and Welfare) may be exempted from the regulations regarding working hours, holidays and late-night extra wages if they are engaged in work:
- that requires a high level of specialised knowledge; and
- in which there is not found to be a strong correlation between the length of working hours and the results of the work.
The business to which employers may apply this exemption will be specified by an ordinance of the Ministry of Health, Labour and Welfare. For example, the following works will be exempted:
- development of financial products;
- dealing in financial products;
- services of analysts (eg, advanced analysis of companies and markets);
- consulting services (ie, advanced ideas or advice concerning the planning and operation of businesses and services); and
- R&D services.
Employers must ensure employees' health by ensuring that relevant employees take 104 days of holiday a year. In addition, employers must take at least one of the following measures:
- introducing an inter-working interval system;
- setting the upper limit of hours spent in the office;
- granting holiday for two consecutive weeks; or
- having employees undergo periodical medical check-ups.
Further, if an employee has more than the upper limit of hours in the office, the employer must ensure that the employee receives face-to-face consultation with a doctor.
Promotion of work-interval system
Amendments to the Act for Improvement of Setting of Working Hours provide that employers shall endeavour to secure a certain period of rest between the finish time of the previous day and the start time of the next day to promote employees' health. They also provide that when a company does business with other companies, it shall endeavour to avoid making orders with an extremely short delivery time or changing orders too frequently.
Strengthening function of industrial physicians
For workplaces with 50 or more workers which are obliged to appoint an industrial physician, the amended Industrial Safety and Health Act requires employers to:
- report the industrial physician's recommendations concerning workers' healthcare to the health committee; and
- provide industrial physicians with the information necessary to perform their duties.
To comply with these new regulations, companies should review their rules of employment and labour management agreement before the amendments come into effect.
For further information on this topic please contact Eriko Ogata at Nagashima Ohno & Tsunematsu by telephone (+81 3 6889 7000) or email ([email protected]). The Nagashima Ohno & Tsunematsu website can be accessed at www.noandt.com.
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