PMP News: A judicial decision – Overtime allowance exceeding the limit agreed in
the 36 Kyotei deemed as valid
Dear All
The following article covers the wage category referred to as “fixed overtime allowance”
or “fixed overtime payment” which compensates the certain overtime hours worked
in a particular month.
In the case of The Windsor Hotel International, the Sapporo Supreme Court determined
on October 19, 2012 that the hotel violated the employer’s obligation and responsibility
to secure a safe work place for employees by making them work extensive hours of overtime,
contrary to fair, appropriate and acceptable practice. The Court said that the fixed overtime
allowance should only be applied within the guidelines of the 36 Kyotei.
In the case of X (January 27, 2016), the Tokyo Supreme Court determined that a fixed
overtime allowance was valid to compensate the 70 hours of monthly overtime work and
100 hours of late-night work per month. The Tokyo Supreme Court concluded that
the Labor Standard Law Article 37 (overtime, holiday, and late-night work payments)
only requires an employer to pay overtime more than the amount calculated by the prescribed
method under the law. It also said even if overtime for the month became less than the time
agreed in the 36 Kyotei, the fixed time allowance prescribed in the wage regulation should
still be valid.
Following the decision of the Sapporo Supreme Court, a series of comments by specialists were
made that a fixed overtime allowance should only cover the work up to 45 hours per month.
PMP at that time regarded the court decision as a heads up alert and suggested to clients
that they continue to monitor future court decisions.
There are potential needs for companies to revise internal rules on their fixed overtime allowance
in future when the current Labor Standard Law is revised and introduces a new upper limit of
working hours in the 36 Kyotei.
PMP continue to pay attention to this matter.
If you have any questions about this article, please feel free to contact us at info@pmp.co.jp .
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