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‘Work reform’ bill outline includes white-collar exemption, overtime cap

  • September 9, 2017
  • , The Mainichi
  • English Press

The Ministry of Health, Labor and Welfare presented the outline of a bill for the government’s “Realization of Work Style Reform” action plan to an advisory panel to the labor minister on Sept. 8, incorporating the exemption of highly skilled white collar workers from overtime pay, an expansion of those eligible for discretionary work, and a cap on overtime hours that representatives for the government, employers, and workers agreed upon at “Realization of Work Style Reform” talks held this past spring.


Equal numbers of representatives from the public (experts), workers and employers comprise the advisory panel, called Labor Policy Council. Workers have expressed their objections to the exemption of highly skilled professionals from overtime pay in lieu of rewards for performance, and the expansion of the discretionary work system. The council, however, is expected to conclude that the bill outline is “appropriate” with the approval of experts and employers, and report as such to the minister by the end of this month. The government plans to submit the draft bill to the extraordinary session of the Diet that is set to open later this month, with the aim of bringing the law into effect in April 2019.


The bill incorporates changes to eight labor-related laws and regulations, including the Labor Standards Act, the Worker Dispatch Law and the Labor Contract Act.


The outline includes all the changes that Japan’s biggest labor federation Rengo, or the Japanese Trade Union Confederation, sought from Prime Minister Shinzo Abe in July. This includes requiring at least 104 days off annually for highly skilled professionals, not expanding eligibility for discretionary work to all sales jobs, and not applying the rules to new graduates just starting work. Rengo at one time embraced the idea of exempting skilled professionals on high salaries from overtime pay. But after facing strong protest from labor unions under its umbrella, it rescinded its approval of the white-collar exemption.


Furthermore, the bill outline advocates for equal pay for equal work among regular employees and non-regular (part-time and limited-term) employees. Such rules, the outline proposes, would be applied to small- to mid-sized businesses in April 2020.


Additionally, in order to curb long working hours, maximum overtime, in principle, is explicitly stated as “45 hours per month, 360 hours per year.” Even at particularly busy times of year for businesses, the outline caps overtime at “less than 100 hours per month, and 720 hours per year.” Any violations of these rules will be subject to punishment.


For small- to mid-sized businesses, a higher overtime pay rate for overtime exceeding 60 hours per month will be increased starting April 2022 from the current rate of 25 percent to 50 percent, which is the rate large companies are required to pay. The outline also requires employers to urge employees to take paid vacations, and to set working-hour intervals between the time an employee leaves the workplace and the time an employee returns to work. Rengo is demanding that the increase in the overtime pay rate be instituted earlier, but essentially agrees with the outline on providing equal pay for equal work, putting a cap on overtime work and securing working-hour intervals.

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