The Supreme Court reversed the second trial court’s decision to deny the application of the deemed working hours system outside the workplace, and sent the case back to the High Court.

On April 16th, the Supreme Court (Presiding Judge Yukihiko Imazaki) overturned the ruling of the second instance, which had denied the application of the deemed working hours system for work outside the workplace, and remanded the case to the Fukuoka High Court.
This marks the first Supreme Court precedent concerning work outside the workplace since the Hankyu Travel Support case (Supreme Court decision January 24, 2014) in 2014.

 In the second trial, it was determined that specific working hours could be ascertained through daily reports, and thus it did not fall into the deemed working hours system using the category of “when it is difficult to calculate working hours.”
However, the Supreme Court pointed out that there was insufficient examination of specific circumstances concerning the accuracy of the reported contents. It stated that in the examination, not only should general methods for verifying accuracy be presented, but also should clarify the feasibility and effectiveness of the employer realistically adopting those methods.

 The case was brought by a worker who worked as an instructor at the Kumamoto branch of the Globe Cooperative Association (Fukuyama City, Hiroshima Prefecture), an organization supervising foreign technical interns. The job involved visiting host companies in the assigned area, responding to trainees’ consultations and providing life guidance, escorting them upon arrival in Japan, and interpreting in case of sudden troubles. The schedule for visiting host companies was entrusted to the worker, and the employer claimed that they had not given specific instructions or requested reports via the provided mobile phone.

The actual working hours were not tracked, time cards were not being used, and the worker self-reported their start and finish times, break times, and destinations, and details of the work for each working day in their monthly work report. The worker was also given discretion on how to visit the host companies, being able to go straight home and also return directly, not needing to start and finish their dai in the office in addition to the timing of daily breaks.

The High Court judged that the detailed reports on work execution in the work report indicated that it did not fall under “when it is difficult to calculate working hours.” Additionally, it was judged that if there were any doubts about the contents of the work report, it could be confirmed with the host companies visited by the worker, ensuring a certain degree of accuracy. It was also pointed out that the organization sometimes paid overtime based on the work report in practice.

However, the Supreme Court found that the High Court’s examination of the specific circumstances ensuring the accuracy of the work report was insufficient. It stated that the general indication of “confirmable with host companies” did not concretely clarify the realistic possibility and effectiveness, and the fact that the organization sometimes paid overtime based on the work report did not guarantee the accuracy of the reported hours.

The judgment also included a supplementary opinion by Justice Michiharu Hayashi, pointing out that work outside the workplace, such as telecommuting and teleworking, has diversified in recent years, making it increasingly difficult to determine the difficulty of calculating working hours uniformly. He emphasized the importance of considering specific circumstances in each case when judging “when it is difficult to calculate working hours.”

— Supplementary Explanation for HR Professionals

**Deemed Working Hours System**:
– The deemed working hours system is a legal framework in Japan that allows employers to consider certain working hours having been performed when employees work outside the usual workplace, such as during business trips or remote work, where it is difficult to accurately track actual working hours.

**Purpose and Application**:
– This system aims to simplify labor management by presuming standard working hours has been worked, typically when the nature of work makes it challenging to monitor and record exact working hours. It is often applied in scenarios where employees have significant autonomy over their schedules and are not under direct supervision.

**Conditions for Application**:
– The system can only be applied if it is genuinely difficult to ascertain the actual working hours. Employers cannot use this system arbitrarily; and they must demonstrate that traditional time-tracking methods are impractical.

**Judicial Scrutiny**:
– The case highlights the judicial scrutiny required to ensure that the deemed working hours system is not misused. Courts examine whether employers have realistically and effectively adopted methods to verify the accuracy of reported working hours.

**Implications for Employers**:
– Employers must be diligent in implementing this system, ensuring that they provide realistic means for verifying working hours. Failure to do so can result in legal disputes and the invalidation of the deemed working hours system’s application.

**Recent Trends**:
– The supplementary opinion mentioned in the case reflects recent trends in remote work and telecommuting, which adds complexity to the traditional understanding of work hours management. This evolving landscape requires flexible yet robust approaches to ensure compliance with labor laws.
Understanding these points can help HR professionals grasp the nuances of Japan’s deemed working hours system and its application in labor management.