Are You Being Paid Properly for Overtime Work? Types Of Overtime Pay and How to Calculate
Table of contents
Rules for Working Hours and Days Off
Types of Premium Wages (Overtime)
How to Calculate Overtime Pay
Fixed Overtime Pay
Legal Working Hours and Prescribed Working Hours
Exceptions for Overtime Pay in Agricultural Work and Similar Industries
Agricultural Technical Intern Trainees Are To Be Treated Normally
What To Do If You Are Not Paid Enough For Overtime
For anyone who has felt this way while working in Japan, we present types of overtime pay and calculation methods so you can calculate it yourself when consulting with your company, your technical intern training organization (supervising organization), a registered support organization for Specified Skilled Workers, or the Labour Standards Inspection Office.
Rules for Working Hours and Days Off
Under Japan’s Labour Standards Act, working hours, rest periods (breaks), and days off are stipulated as follows:
| Working Hours | Up to 8 hours per day, up to 40 hours per week *Breaks are not included. |
| Breaks | A break of at least 45 minutes for 6 or more working hours and a break of at least 1 hour for 8 or more working hours. |
| Days Off | At least 1 day per week or at least 4 days every 4 weeks |
“Up to 8 hours per day, up to 40 hours per week” are called “legal working hours”. If the company or organization makes workers work more than their legal working hours, they must pay overtime. This overtime pay must be paid as a “premium” wage.
Types of Premium Wages (Overtime)
“Overtime work” refers to work beyond legal working hours. For overtime work and work on days off, companies must pay the following premium wages.
| Types of Overtime Work | Details | Premium |
|---|---|---|
| Overtime Work | Working more than 8 hours a day, 40 hours a week | A premium of at least 1.25 times normal wages *When overtime work exceeds 60 hours per month, the premium for the portion exceeding 60 hours must be at least 1.5 times that of normal wages. |
| Late night work | Working between 10:00 PM and 5:00 AM | A premium of at least 1.25 times normal wages |
| Work on Legal Days Off | Working on days off (once a week) | A premium of at least 1.35 times normal wages |
Labor contracts with wages lower than these are invalid because they violate the law.
How to Calculate Overtime Pay
How to Calculate Premium Wages
Premium wages are calculated as follows.
Premium wages = Normal wages (hourly wages) x Number of overtime hours worked x Premium rate
However, the method for calculating overtime pay under the variable working hour system is different. The variable working hour system has the following calculation methods:
✓ Decide on working hours each day for a set period within one month while making sure that working hours do not exceed 40 hours per week on average for the period.
✓ Deciding on which days to work and the working hours for each day for a set period within one year while making sure that working hours do not exceed 40 hours per week on average for the period.
How to Calculate Normal Wages
We will now explain how to calculate normal wages (hourly wages), the basis for calculating premium wages.
1. Prescribed number of working days per year x Prescribed working hours per day ÷ 12 = Average prescribed working hours per month
2. Monthly salary (basic wage) ÷ Average prescribed working hours per month = Hourly wage (normal wage)
*Prescribed working hours are working hours determined by the company.
*”Monthly salary (basic wage)” in the formula includes not only your base pay but also allowances paid according to work types, service allowances, executive allowances, and the like. Basic wages do not include family allowance, commuting allowance, allowance for separate stationing from family, children’s education allowance, housing allowance, temporary wages, or bonuses. However, allowances paid in a uniform amount without taking into consideration individual circumstances are included in basic wages, even if they are named “family allowance”, “housing allowance”, or “commuting allowance”.
*Be aware that the above may not apply depending on the content of your labor contract.
Example of Calculating Normal Wages
(Ex.) A worker with 125 days off per year at a company where prescribed working hours are 8 hours per day whose monthly salary (basic wage) is 240,000 yen
1. Average prescribed working hours per month
(365 days/year – 125 days off) x 8 hours/day ÷ 12 months = 160 hours/month
2. Hourly wage (normal wage)
240,000 yen/month ÷ 160 hours/month = 1,500 yen/hour
Example of Calculating Overtime Pay
Now, what would the overtime pay be for a worker whose normal (hourly) wage was 1,500 yen if they worked from 9:00 AM to 11:00 PM (including two one-hour breaks from 12:00 PM to 1:00 PM and 6:00 PM to 7:00 PM)?
– Here, working hours excluding the breaks would be 12 hours. Because 12 hours – 8 legal working hours = 4 hours, the number of hours eligible for overtime pay would be 4 hours.
(A) Overtime pay for the 3 hours from 7:00 PM to 10:00 PM: Calculate only the premium wages for overtime work.
Normal wage of 1,500 yen x 1.25 x 3 hours = 5,625 yen
(B) Overtime pay for the time between 10:00 PM and 11:00 PM: The premium rate for overtime work (1.25 or more that of normal wages) and the premium rate for late night work (1.25 or more that of normal wages) are combined.
Normal wage of 1,500 yen x 1.5 x 1 hour = 2,250 yen
*Workers are entitled to premium wages for both overtime and late night work.
– Total overtime pay is A + B = 7,875 yen.
Fixed Overtime Pay
Fixed overtime pay is the premium wage paid as a fixed lump sum for overtime work, work on days off, and late night work for a set period of time.
If fixed overtime pay is lower than the overtime pay for the actual overtime worked, the company and others must pay an additional difference. For instance, if the company pays fixed overtime pay for 10 hours per month, but you work 18 hours of overtime one month, the company must pay overtime pay for eight hours in addition to the fixed overtime pay.
Legal Working Hours and Prescribed Working Hours
The Labour Standards Act defines working hours as “up to 8 hours per day, up to 40 hours per week”. These are called “legal working hours”. Meanwhile, the working hours defined under company employment regulations or similar documents are called “prescribed working hours”. Prescribed working hours must be within legal working hours.
Now, how many hours of overtime would you get if you worked 10 hours per day under prescribed working hours of 7.5 hours?
– When the amount of overtime is calculated based on legal working hours, it would be 10 hours – 8 hours = 2 hours.
– When the amount of overtime is calculated based on the company’s prescribed working hours, it would be 10 hours – 7.5 hours = 2.5 hours.
In this case, the company is only obligated to pay for 2 hours of overtime. However, it is up to the company whether to pay overtime allowances based on its own prescribed working hours. When legal working hours differ from prescribed working hours in this way, the method for calculating overtime pay is determined by employment regulations, etc.
Exceptions for Overtime Pay in Agricultural Work and Similar Industries
Exceptions to the Labour Standards Act
The provisions of the Labour Standards Act regarding working hours (up to 8 hours per day, up to 40 hours per week), breaks, and days off do not apply to certain industries. This is because the Labour Standards Act has exceptions.
For example, agriculture is affected by the weather, so applying the Labor Standards Act’s requirements of “8 hours per day,” “40 hours per week,” and “at least one day off per week” can lead to problems, such as being unable to make preparations to protect vegetables from typhoons. There is also the idea that workers can take sufficient time off during non-busy seasons or bad weather and that they are free to take breaks at any time without needing to set specific breaks, making it impossible to apply the provisions on working hours, breaks, and days off set forth by the Labour Standards Act.
Therefore, for agricultural workers, the rules in the Labour Standards Act on working hours, breaks, and days off do not apply, meaning there is no concept of “overtime work” or “work on days off,” and thus no corresponding premium wages (allowances for overtime and work on days off). The same applies to the livestock industry, sericulture, and the fisheries industry (including aquaculture).
You Are Entitled to Normal Wages for Working Hours
That said, if you work beyond the prescribed working hours in the employment regulations, you must be paid normal wages for that time. You just won’t receive a premium.
You Are Entitled to a Late Night Work Allowance
Even in agriculture, if you work between 10 PM and 5 AM the next morning, you must be paid a premium wage for late night work of at least 1.25 that of your normal wage for that time.
Duty of Care
There are no legal rules regarding working hours, breaks, or days off for industries such as agriculture, livestock, and fisheries (including aquaculture). However, companies have a “duty of care” for workers. Thus if a worker becomes ill due to insufficient days off or breaks, companies may be liable for damages.
No Exceptions Other Than Working Hours
The only exemptions for industries such as agriculture, livestock, and fisheries (including aquaculture) are the provisions regarding working hours, breaks, and days off, meaning that all other provisions of the Labour Standards Act as well as minimum wage and workers’ accident compensation insurance still apply. For example, wages must not be lower than the legal minimum wage and annual paid leave is required. These apply not only to full-time employees but also to part-time workers and temporary staff.
Agricultural Technical Intern Trainees Are To Be Treated Normally
Working hours, breaks, and days off under the same conditions as the Labour Standards Act must be determined for technical intern trainees in agricultural work, and they must be paid premium wages accordingly. This is based on a notice on technical intern trainee working conditions issued by the Ministry of Agriculture, Forestry, and Fisheries in 2000.
Therefore, if agricultural technical intern trainees work beyond the legal working hours, they must be paid premium wages of at least 1.25 times the normal wage, and when working on days off, at least 1.35 times the normal wage.
What To Do If You Are Not Paid Enough For Overtime
If you are not being paid enough for overtime, consider the following:
– Discuss it with your workplace supervisor.
– If discussing it in the workplace is difficult, consult with the Labour Standards Inspection Office (LSIO), etc.
*Consultation services for labor issues such as overtime pay can be found on the following website.
– Consult with the supervising organization (union) as well if you are a technical intern trainee.
– If consulting with the supervising organization does not lead to improvement, consult with the Organization for Technical Intern Training (OTIT) or the LSIO.
Native Language Consultation Service｜Organization for Technical Intern Training (OTIT) (otit.go.jp) (Consultation available through the website)
Working in Japan – Pay, Overtime Pay and Paid Leave
This article tells you how salaries are calculated for foreigners working in Japan.. It also explains the overtime pay and paid leave systems.
If you want to know more, check here!
Multilingual Glossary for Employment Management｜Ministry of Health, Labour and Welfare
