– Revised Labor Standards Act / Revised Industrial Safety Act – 36 Kyotei Administration Part 1 (excluding “special provisions”)

An executive member of the Japan Trade Union Confederation (Rengo) advised us that on March 6, Rengo would commence a public awareness campaign to highlight revised provisions in the Labor Standards Act and the Industrial Safety Act prior to their legal enforcement date on April 1, 2019.
The latest revisions of the Labor Standards Act relate to the government initiatives on the “Work-Style Reform (Hatarakikata Kaikaku)”. It expected that the changes will have the most significant impact on labor laws and associated frameworks in Japan in 70 years.

We detail below what PMP believes to be the most pertinent aspects of the proposed changes that to Human Resources Departments should be aware of:

1. Although the changes are deemed significant from a Labor Law perspective, PMP regards the actual changes in the administration of 36 Kyotei will be relatively minimal for most companies.

(1) The current legal caps on overtime hours (45 hours per month or 360 hours per year) have now been officially added to the Labor Standards Act as part of a new provision under Article 36-4. (PMP understands that most of our clients have already been observing the legal caps.) While the current directive issued by the Ministry of Health, Labor and Welfare imposes no penalty to companies if they exceeding the caps on overtime regulation, the revised Act will impose “penal servitude of up to 6 months”, or “penalty of up to JPY300,000” on companies that fail to observe the new provision.

(2) Effective April 1, the period covered by a 36 Kyotei agreement shall only be 12 months from that date it becomes effective. (New: Labor Standards Act, Article 36-2-2).
Although the period of a 36 Kyotei cannot exceed 12 months, it is possible for a company to create a 36 Kyotei for a validity date exceeding 12 months. In such case, the actual period that the 36 Kyotei is deemed valid at any time shall be no more than 12 months. When the current 12 months come to an end, the new 12 months start with the same provisions under the same 36 Kyotei agreement. This cycle continues until the end of the original validity date.

(3) Effective April 1, any new 36 Kyotei signed by a company and their employees’ representative, must specify the overtime hours and the number of days that employees are requested to work on holidays per “day”, “month” and “year” respectively (hereinafter referred to as the “Exceeding Hours and Days”).
(Labor Standards Act Article 36-2-4). However, PMP has noticed that the sample of the new 36 Kyotei template distributed by the Ministry of Health, Labor and Welfare does not accommodate the capturing of Exceeding Hours and Days. The example simply states that “employees will be asked to work on a legal holiday per month” and nothing is mentioned about the number of days they will be asked to work on holidays during the year.
FYI – You can find the example of the new 36 Kyotei issued by the Ministry of Health, Labor and Welfare (only in Japanese):
https://jsite.mhlw.go.jp/tokyo-roudoukyoku/content/contents/000310071.pdf
The current HR practice follows the announcement issued by the Ministry of Labor, which allows employers to specify the Exceeding Hours and Days for any period less than three months. However, effective April 1, companies must stipulate the Exceeding Hours and Days per month in the 36 Kyotei. If there are business reasons, they can set additional Exceeding Hours and Days for an extended period. Companies will be deemed to be violating the law if they require employees to work more than the hours defined in the specific 36 Kyotei (Labor Standards Act Article 32).

(4) Effective April 1, companies are required to specify in the 36 Kyotei the start date of the one-year period during which they are eligible to request employees to work overtime.
(New Ordinance of Labor Standards Act Article 17-1).

(5) The new 36 Kyotei template has a section where companies can voluntarily specify the working hours beyond the “prescribed working hours (per day, month and year)”. This is in addition to the current required information of working hours beyond the “statutory working hours (per day, month and year)”. Human Resources staff should know that the 36 Kyotei restricts the overtime work performed beyond the statutory working hours. In reality, there are companies with little to no understanding of what “statutory working hours” means. Guidelines at such companies often set the prescribed working hours to be less than the statutory working hours, and employees/managers cannot tell the difference between prescribed and statutory working hours.
With these facts in mind, PMP considers that the additional column in the revised 36 Kyotei will better help employees and managers to distinguish between prescribed and statutory hours.

2. Detailed below are important changes in the Labor Standards Act, which PMP believe Human Resources Departments should keep in mind when applying the new provisions to their internal guidelines and administrative process.

(1) First Restriction
Effective April 1, the total hours of overtime work performed on normal workdays or legal holidays in a month shall be less than 100 hours. (Labor Standards Act Article 36-6-2):
Even in a case where the 36 Kyotei has no special provisions, companies are required to manage employees’ working hours (including working on legal holidays) in each month. This new regulation will prevent managers from exploiting loopholes where they request employees to “work less overtime on regular work days and attend work on holidays instead”. (Such requests shall not be made from the individual’s health and well-being management perspective).

(2) Second Restriction
Effective April 1, the average monthly overtime hours including working on legal holidays per month shall not exceed 80 hours. This means the average of working hours in ANY consecutive months shall not exceed 80 hours. Companies should be fully aware of the “golden rule of maximum 80 hours (960 hours per annum)” this includes work performed on legal holidays.

(3) Checkbox
The new 36 Kyotei template has checkbox columns to assist companies in confirming they are compliant with the new regulations stated in the previous paragraphs prior to finalizing their own 36 Kyotei. Effective April 1, any 36 Kyotei that fails to tick all the checkbox columns shall be regarded invalid. (Labor Standards Act Article 17-1-3): In the new 36 Kyotei template, there is a section that states “regardless of the hours mentioned above, the total hours of overtime and working on holidays shall be less than 100 hours in a month, and shall not exceed the average of 80 hours”. It means that the total of 100 hours of overtime and working on holidays in a month will not be acceptable, but the average of 80 hours of overtime and working on holiday in a month is deemed valid under the regulation.
In order to comply with revised regulations, it will be mandatory for companies to manage (1) working hours on legal holidays described in the previous paragraph, (2) the total working hours per month, and (3) the average working hours for the period between any 2 and 6 months.

In our next PMP newsletter, we will discuss the new 36 Kyotei with special provisions and the revised Article 36 of Labor Standards Act.

Thank you.