The term is ironic: overtime given to the company as a "service", free. It covers staying after clocking out, taking work home, arriving early for unrecorded preparation, and managers telling staff to log fewer hours than they worked. For decades it was an open secret, sustained by the idea that leaving on time showed a lack of commitment.
Legally it is plain. Hours worked at the employer's direction, express or implied, are working hours, and hours beyond the statutory limit must be paid at a premium. Failing to pay is an offence under the Labour Standards Act, punishable by up to six months' detention or a fine of up to 300,000 yen. The bigger exposure is civil. Since April 2020 wage claims can be brought for five years in principle, set at three years for now under a transitional rule, where previously it was two. A court can also order the employer to pay an additional sum, up to the same amount as the unpaid wages.
Since April 2019 employers have had to record every employee's working hours by objective means, such as time cards or computer log data, managers included. Labour Standards Inspection Offices treat a gap between recorded hours and log-on records as evidence. In 2024 inspectors dealt with more than 22,000 cases of unpaid wages, of all kinds, and secured payment of around 17 billion yen.
What it means for a foreign employer
- Your liability is three years deep. A departing employee with a laptop log and a grievance can claim three years of unpaid premiums, plus the additional payment, and often does so in the exit negotiation.
- Compare logs with time records. If system log-off times regularly run hours past recorded hours, the risk is already there.
- Titles do not exempt. Giving a team lead the manager label without real authority does not remove overtime pay.
- Pay structure matters at offer stage. Candidates from employers where overtime was paid in full will price that into their expectations. See nenshu.
Sources
- Labour Standards Act, Articles 32, 37, 114, 115 and 119; Supplementary Provisions, Article 143.
- Industrial Safety and Health Act, Article 66-8-3 (in force April 2019).
- Ministry of Health, Labour and Welfare, results of supervision and guidance on unpaid wages, 2024.