Illegally long working hours and deaths from overwork are now a social problem in Japan. In response to this, on 20 January 2017, the Ministry of Health, Labour and Welfare (the ‘MHLW’) established ‘Guidelines for Measures to Be Taken by Employers to Properly Monitor Working Hours’ (Labour Standards Bureau Notification 0120 No. 3 dated 20 January 2017; the ‘Guidelines’). The Guidelines were established as part of the ‘Zero Deaths from Overwork’ emergency plan developed on 26 December 2016, by the Task Force for Reduction of Long Working Hours, which was set up by the MHLW. They are based on and replace the ‘Standards for Measures to Be Taken by Employers to Properly Monitor Working Hours’ (Labour Standards Bureau Notification No. 339 dated 6 April 2001; the ‘Old Standards’), which required employers to properly monitor their employees’ working hours. The Guidelines aim to reinforce efforts to correct illegally long working hours. Given the recent trend towards tightening regulations relating to long working hours, companies are now required to monitor and control their employees’ working hours more strictly in line with the Guidelines.
An outline of the Guidelines’ key points with references to changes from the Old Standards is set out below.
1. Interpretation of Working Hours
The Guidelines include a new paragraph entitled ‘Interpretation of Working Hours’. In this paragraph, the term ‘working hours’ is defined as the hours during which employees are directed and managed by their employer, including those hours when employees engage in work following the express or implied instructions of their employer. This definition is consistent with the interpretation adopted in various judicial precedents (such as the Mitsubishi Heavy Industries Nagasaki Shipyard Case; Supreme Court Judgment of 9 March 2000, Minshu Vol. 54, No. 3, p.801).
To further clarify what constitutes working hours, this paragraph provides the following three examples:
In addition to these illustrative examples, the Guidelines state that any other time when employees are objectively considered to be working under the direction and management of their employer must be treated as working hours.
2. Measures to Be Taken by Employers to Properly Monitor Working Hours
Basic methods to confirm and record starting and finishing time
The Old Standards specified two basic methods to confirm and record an employee’s starting and finishing time. They were:
These two methods are also specified in the Guidelines. However, the Guidelines provided an additional example of the objective records described in the second bullet point above by adding the phrase ‘time records of computer usage’.
Measures to be taken when confirming and recording starting and finishing time through self-reporting
Under the Old Standards, if an employer could not implement either of the methods described above, then that employer could confirm and record its employees’ starting and finishing time based on the employees’ own reporting of their hours (‘self-reporting method’). The Guidelines are consistent with the Old Standards in this respect. However, the Guidelines recognise that discrepancies can easily arise between an employee’s self-reported working hours and his/her actual working hours.
Accordingly, to ensure that employers which have adopted a self-reporting method monitor employees’ working hours properly, the Guidelines require such employers to take the following measures.
Although, in common with the Guidelines, the Old Standards required employers to properly monitor working hours if they adopted a self-reporting method, the Guidelines strengthen these measures. The Guidelines do so by, among other things, stipulating that sufficient explanation to be provided to managers (as described above) and requiring that surveys of the actual working hours be conducted and that the working hours be revised to reflect the results of such surveys.
Proper preparation of a salary payment record
The Guidelines also include another new paragraph entitled ‘Proper Preparation of a Salary Payment Record’. In this paragraph, the Guidelines require employers to input certain information in salary payment records pursuant to Article 108 of the Labour Standards Act (‘LSA’) and Article 54 of the Ordinance for Enforcement of the LSA. Such information includes, among other things, each employee’s working days and hours as well as his or her hours of overtime work, late-night work and holiday work, if any.
Additionally, the Guidelines provide that, if the employer fails to input the requisite information in the salary payment record or intentionally inputs false information (such as incorrect working hours), a fine of up to JPY 300,000 will be imposed on the employer pursuant to Article 120 of the LSA.
This paragraph merely explains the laws and regulations that have existed since before the establishment of the Guidelines.
Retention of written records of working hours
As under the Old Standards, the Guidelines require employers to retain written records of working hours for three years pursuant to Article 109 of the LSA. Furthermore, while the Old Standards did not specify the written records to be retained, the Guidelines refer to ‘attendance records’ and ‘timecards’ as examples of the written records to be retained, in addition to the ‘roster of employees’ and ‘salary payment records’ set out in Article 109 of the LSA. Although it is not stated in the Guidelines, a breach of Article 109 of the LSA may subject an employer to a fine of up to JPY 300,000 (Article 120, Item 1 of the LSA).
Utilisation of labour-management consultative mechanisms
In addition to the above, in common with the Old Standards, the Guidelines require employers to comprehend the actual circumstances concerning their management of working hours, examine problems related to this management, and create solutions for any problems through the use of labour-management consultative mechanisms (such as a committee to improve the arrangement of working hours), as necessary.