Variable working hours system (変形労働時間制): A system that averages working hours over a month or a year instead of counting each day and week

Variable working hours let an employer plan around a predictable cycle of busy and quiet periods. Instead of applying the eight-hour day and 40-hour week every day and week, the employer sets a schedule in advance for a period, and only hours beyond that schedule, or beyond the average, count as overtime.

There are three types. The one-month type, under Article 32-2, averages hours over a period of up to a month and can be introduced by the work rules or a labour-management agreement. The one-year type, under Article 32-4, averages over more than a month and up to a year. It needs an agreement filed with the Labour Standards Inspection Office and has firm limits: no more than 10 hours a day or 52 a week, no more than 280 working days a year when the period exceeds three months, and normally no more than six consecutive working days. The one-week type, under Article 32-5, is limited to retail, hospitality and restaurant workplaces with fewer than 30 employees.

The key difference from flextime is who controls the hours. Under a variable schedule the employer sets each day's hours in advance and must publish the calendar; under flextime the employee chooses when to work. Changing the schedule after the period starts is generally not allowed.

What it means for a foreign employer

It suits operations, not head offices. Factories, logistics, retail and seasonal businesses use it. For office staff who want flexibility, flextime is usually the better fit.
The calendar must exist before the period starts. Without a published schedule, the system is invalid and every hour over eight a day becomes overtime.
Errors are expensive. Inspectors and courts look closely at whether the agreement, calendar and records match. Get the year-type agreement filed every year.
Candidates from manufacturing may be used to it. It is a normal feature of shift and plant work, and comes up when hiring operations leaders.

Sources

Labour Standards Act, Articles 32-2, 32-4 and 32-5, and the Ordinance for Enforcement of the Labour Standards Act, Article 12-4.
Ministry of Health, Labour and Welfare, guidance on the one-year variable working hours system.

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General information for employers, not legal advice. Thresholds and dates are checked against the sources listed and dated above; confirm anything you act on with a Japanese employment lawyer or a licensed labour and social security attorney.