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40% of companies in Japan taking steps to lower overtime cap: survey

About 40 percent of companies in Japan that responded to a recent Mainichi Shimbun survey on work-style reforms said they have lowered or will reduce the upper limit on overtime set by a labor-management agreement under Article 36 of the Labor Standards Act.

When companies that are working on reducing overall labor hours without changing the overtime cap are combined, the majority of the surveyed companies are tackling the problem of long working hours through work-style reforms, the survey has found. The questionnaire, which was conducted from early through mid-September, covered 126 major companies, of which 97 firms, or 77 percent, responded.

While the government's move to introduce a legal revision necessary to introduce an overtime cap with penalties was shelved due to the dissolution of the House of Representatives and the snap general election, the survey found that many companies are engaged in work-style reforms after the highly publicized, overwork-induced suicide of a new recruit at advertising giant Dentsu Inc.

Under the Labor Standards Act, employers must enter a labor-management agreement with employees on overtime by presetting the upper limit of such hours. According to the Mainichi poll, 40 companies said they intend to lower the overtime cap set by a labor-management agreement under the act. Of them, 14 firms gave concrete figures, with five of them saying they intend to lower the current overtime cap of 750 to 800 hours a year to 720 hours. This was apparently in response to the government's policy of setting the overtime cap at 720 hours a year.

Meanwhile, 50 other companies said they have no intention of changing their overtime caps, though 11 of them replied that they are working on curbing overtime, including one apparel company that closes its office buildings at 8 p.m.

With regard to the government policy to relax working hour regulations through exemptions of high-income, highly skilled professionals from overtime pay in lieu of rewards for performance and an expansion of the discretionary labor system, the survey found 20 percent of companies are planning to adopt at least either of these two measures.

Twenty-one companies said their workforce includes highly skilled professionals such as financial traders, of which nine companies said they will intend to introduce the exemption of such workers from overtime pay in the near or long term, while one company was looking into adopting the scheme.

As for the discretionary labor system, 16 companies including those in the banking, communications and pharmaceutical sectors said they are planning to introduce the scheme.

Five of the surveyed corporations said they will adopt both the exemption of highly skilled white-collar workers from overtime pay and the discretionary labor system, while 15 other firms said they will introduce either of the two schemes. One major electronics company commented that it hoped measures to expand the discretionary work system and establish the white-collar exemptions will be promoted, while not disclosing whether the firm will introduce those systems.

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