Japan is now facing situations such as “the working-age population is declining with the declining birthrate and aging population” and “the needs of working people are diversifying such as balancing childcare and nursing care”.

Under these circumstances, it is important to improve productivity through investment and innovation, and to create an environment where employees can expand their employment opportunities and fully demonstrate their motivation and ability.

To prevent overworking, the working hours legal system has been reviewed in order to protect the health of workers to achieve various work-life balances. The main points touched upon in the “Act on the Arrangement of Related Acts to Promote Work Style Reform” (Act No. 71 of 2018) are as follows.

・Review work-hour regulations

 (1) Correcting the practice of long working hours

 ① Set a legal ceiling on overtime hours

The ceiling on overtime hours is set as 45 hours a month and 360 hours a year in principle.

 ② Changes to the pay rate for overtime work exceeding 60 hours a month in small and medium-sized enterprises

A moratorium for small and medium-sized companies on the extra pay rate for overtime exceeding 60 hours a month will be lifted.

 ③ Ensuring that workers take paid leave

Employer shall designate the period for 5 days of the total paid leave each year

   ④ Ensure the effectiveness of working hour monitoring

Monitoring of working hours shall be conducted by the method stipulated in the ministerial ordinance

 (2) Realizing the diverse and flexible work style

    ① Revision to the flextime system

Extend the maximum settlement period for the system from one month to three months.

   ② Introduction of a system to exempt highly skilled professionals from work-hour regulations and reward workers based on their performance (Highly professional work system)

The system allows employers to exclude those earning at least 10 million yen per year and engaged in certain jobs requiring specialized skills and knowledge from regulations on working hours, holidays and extra pay for night work if they satisfy the following requirements: taking measures to maintain workers’ health including securing at least 104 days off a year for workers and obtaining a consent from workers when employers intend to apply the system to the said workers.

Reference:『Outline of the “Act on the Arrangement of Related Acts to Promote Work Style Reform” (Act No. 71 of 2018)』