Japanese Employment Law Update (By Shinsuke Masuda and Sae Harada)

In this issue, we provide a summary of the amendment to the Ordinance for Enforcement of the Labor Standards Act which enables employers to pay wages to an employee’s digital account from April 1, 2023.

We also note another important change to the wage regulations which become effective on April 1, 2023. The Labor Standard Act requires that, in cases where overtime working hours exceed 60 hours per month, employers should pay a premium at a rate of 50% for such overtime work exceeding 60 hours, instead of the regular 25% overtime premium. This requirement has been applicable to large enterprises since April 1, 2010, but will apply to all employers including small and medium-sized enterprises from April 1, 2023. Affected businesses should amend their salary rules, review employment contracts and labor management agreements on overtime (so-called Article 36 Agreements), and adjust their payroll operations.