Overtime Pay and Overtime Pay Rate
In Japan, in case an employer has employees work overtime, the employer must pay increased wages in addition to the regular pay. Companies can set an extra wage pay rate higher than a legal rate in the Labor Standard Act.
In this News, we will mention the overtime pay and overtime pay rate stipulated under the Labor Standard Act.
2. Overtime pay and overtime pay rate
An employer must pay an increased rate of wages specified below to employees who work in excess of statutory working hours, late night work, and work on holidays.
① Work in excess of statutory working hours (exceeding eight hours per day or 40 hours per week) ? at least 25%
② Late night work (work between 10PM and 5AM) ? at least 25%
③ Work on statutory days off ? at least 35%
※ As for ① and ③, in case employees work late at night, a further increased rate should be applied.
Also, please check the following article about the overtime work exceeding 60 hours per month.
3. How to calculate overtime pay
The hourly based overtime pay is calculated as follows.
① For hourly pay
Hourly pay X an increased pay rate
② For daily pay
(Daily pay + allowances)÷statutory working hours per day X an increased pay rate
③ For monthly pay
(Monthly pay + allowances)÷statutory working hours per month X an increased pay rate
In this News, we mentioned the overtime pay and overtime pay rate. Employers are forced to pay increased wages when employees work in excess of statutory working hours, late night work, and work on holidays. As you can see, the calculation of overtime pay is somewhat confusing. Companies are required to control employees’ working hours diligently and avoid excessive unpaid overtime.
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.
(Reference / in Japanese)
Tokyo Labour Bureau
“Understanding Labor Standard Act ? Overtime Pay”
Ministry of Health, Labour, and Welfare
“How is Overtime Pay Calculated Based on Wages?”