For decades most Japanese companies banned side jobs in their work rules, on the basis that a regular employee's loyalty and energy belonged to the company. The government reversed the default in January 2018. The Ministry of Health, Labour and Welfare rewrote its model work rules to say employees may work for others outside working hours, and published guidelines encouraging employers to allow it. The model rules let employers restrict side jobs that would leak trade secrets, damage the company's reputation, compete with it or harm the employee's health. Courts had long taken a similar line: a ban is enforceable only where the side job actually affects the employer.
The complication is working time. Under Article 38 of the Labour Standards Act, hours worked for different employers are added together. Once the total passes the statutory limit, overtime premiums are owed, generally by the employer who signed its contract later. The 2020 revision of the guidelines added a simplified "management model" in which each employer pre-sets a ceiling on hours. Self-employed side work, such as consulting under a service contract, is not counted. A 2022 revision encouraged companies to publish their side-job policy.
Uptake is real but uneven. Many large employers now permit side jobs with notice or approval, while others still discourage them in practice.
What it means for a foreign employer
- Senior hires may already have one. Advisory roles, board seats, teaching and personal companies are common. Ask early, and set out what continues in the offer.
- Your work rules need a clause. Without a defined approval process, you will have no basis to refuse a conflicting or competing side job.
- The second employer carries the overtime. Hiring someone part time who already works full time elsewhere can make every hour you use an overtime hour.
- It is a way to reach scarce talent. A part-time or contracted arrangement can bring in a senior specialist who would never leave a main employer.
Sources
- Ministry of Health, Labour and Welfare, Model Work Rules (January 2018 revision).
- Ministry of Health, Labour and Welfare, Guidelines for the Promotion of Side Jobs and Concurrent Employment (January 2018, revised September 2020 and July 2022).
- Labour Standards Act, Article 38.