Heads up, Small Firm Managers:
Your Exemption from Paying Extra Overtime Is About to End

January 10, 2023

Yugo Kobayashi, Attorney

E-mail/kobayashi_y@clo.gr.jp

I. Introduction

Under the Labor Standards Act, the minimum rate by which wages must be increased for overtime work beyond 60 hours a month (“60+ Overtime”) is set at 50% (Lab. Stands. Act, art. 37, para. 1). This relatively new requirement was introduced through a series of revisions recently made to the Labor Standards Act, along with a temporary exemption for small and medium-sized enterprises (“SMEs”) . However, SMEs too will be subject to this new requirement in the not-too-distant future, namely, starting from April 1, 2023.

If you are running an SME, you may need to take some steps to comply with the above-mentioned requirement, for example, by amending the rules of employment (shūgyō-kisoku). This article comments on selected matters concerning the requirement to pay increased overtime rate for 60+ Overtime (“Premium Rate”) by SMEs.