Japan Labor Standards Act: Key Rules for New Employers

The Labor Standards Act: Your Obligations as an Employer

The Labor Standards Act (労働基準法, "LSA") is the foundational employment law in Japan. Enacted in 1947 and amended many times since, it sets minimum standards for working conditions that all employers must meet. Violating the LSA can result in criminal penalties for the employer — this is not civil liability alone.

Understanding the key provisions is essential before making your first hire.

Core Provisions Every Employer Must Know

Working Hours (Article 32)

The standard legal working hours are 8 hours per day and 40 hours per week. Any work beyond these limits constitutes overtime and requires:

1. A written overtime agreement (36協定, "saburoku kyōtei") between the employer and employees, filed with the Labor Standards Inspection Office.
2. Premium pay for overtime hours.

Without a 36協定 on file, requiring any overtime is a violation of the LSA.

Overtime Pay (Article 37)

Overtime work requires premium pay above the regular hourly rate:

• Overtime (beyond 8 hours/day or 40 hours/week): 25% premium minimum
• Late-night work (10 PM to 5 AM): 25% premium minimum
• Work on statutory rest days: 35% premium minimum

These premiums are cumulative. Late-night overtime on a rest day requires a 60% premium (25% overtime + 35% rest day, with the late-night 25% applied to the base).

Rest Days (Article 35)

Employers must provide at least one rest day per week, or four rest days per four-week period.

Annual Paid Leave (Article 39)

Employees who have worked continuously for 6 months with an attendance rate of 80% or more are entitled to a minimum of 10 days of paid annual leave. This increases with years of service, up to 20 days after 6.5 years. Employers with 10 or more days of leave granted must ensure employees take at least 5 days per year.

Employment Contract Requirements (Article 15)

Employers must clearly specify the following working conditions in writing at the time of hiring:

• Contract period
• Work location and job description
• Working hours, rest periods, rest days, and overtime
• Wages, calculation method, and payment timing
• Resignation and termination conditions

Prohibition of Forced Labor (Article 5) and Intermediary Exploitation (Article 6)

These are absolute prohibitions with criminal penalties. No employer may force labor through violence, intimidation, or confinement. No intermediary may profit from a worker's employment without legal authorization.

Equal Treatment (Article 3)

Employers may not discriminate in working conditions based on nationality, creed, or social status.

How the Checker Applies These Rules

MmowW's Employment Rule Checker screens your hiring plan against the LSA's key provisions. It identifies:

• Whether a 36協定 is needed based on your planned working hours
• Which overtime premium rates apply to your work schedule
• Paid leave obligations based on employment duration
• Employment contract requirements for your specific situation

Key Benefits

• Criminal penalty awareness: The LSA is enforced through criminal penalties, not just civil claims. The checker helps you avoid violations that carry serious consequences.
• Practical compliance guidance: The provisions above are legal text. The checker translates them into specific actions for your company.
• Threshold awareness: Different obligations activate at different employee counts (e.g., employment regulations at 10 employees). The checker maps these thresholds.

Real Scenarios

Startup with no overtime agreement on file: The founder routinely asks employees to work 10-hour days during product launches. Without a 36協定 filed at the Labor Standards Inspection Office, every overtime hour is a violation of Article 32 — regardless of whether overtime pay is provided. The checker flags the need for this agreement immediately.

Company paying flat salaries with no overtime tracking: Some companies pay a fixed monthly salary and assume it covers all hours worked. Under the LSA, overtime hours must be tracked and premium pay must be calculated separately unless a legally compliant fixed overtime pay system (みなし残業手当) is properly structured and documented.

Employer unaware of mandatory paid leave use: Since the 2019 LSA amendment, employers must ensure employees with 10+ days of annual paid leave take at least 5 days per year. The employer — not the employee — bears the obligation to facilitate this.

FAQ

Q: Does the LSA apply to company directors?

A: Generally no. Directors (取締役) are officers under the Companies Act, not employees under the LSA. However, if a director also performs employee-like work under the company's direction and control, the LSA may apply to that work.

Q: What are the penalties for LSA violations?

A: Penalties vary by provision. Violations of the working hours provisions (Articles 32-35) can result in imprisonment of up to 6 months or a fine of up to ¥300,000. Forced labor (Article 5) carries imprisonment of up to 10 years or a fine of up to ¥3,000,000. These are criminal penalties enforced through prosecution.

Q: Does the LSA apply to foreign-owned companies in Japan?

A: Yes. The LSA applies to all employers operating in Japan, regardless of the company's ownership nationality. All employees working in Japan are protected by the LSA.

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