Japan Update: Revised Telework Guidelines

On March 25, 2021, the Ministry of Health, Labor and Welfare amended its “Guidelines for the Appropriate Introduction and Implementation of Off-site Work Using Information and Communications Technology” and published “Guidelines for the Promotion of Appropriate Introduction and Implementation of Telework” (the “Guidelines”). The Guidelines identify important labor management issues and desirable approaches relating to practical business operations following implementation of a telework system. This newsletter outlines the methods for handling and managing telework hours, as well as the issues that may arise following the establishment of a remote work system.

Purpose of the Guidelines

Revision Telework offers numerous benefits for both employees and employers. The Ministry of Health, Labor and Welfare revised and published the Guidelines with these advantages in mind in order to promote well-maintained telework schemes by, in particular, creating an environment in which employees may work comfortably while their employers exercise appropriate labor management.

Utilization of Working Hours Systems for Telework Schemes

The Labor Standards Act (the “LSA”) provides for a variety of working hours systems, including the irregular working hours system and the flextime system. The Guidelines stipulate that telework may be implemented under all working hours systems. This section contains an outline of the use of telework schemes under each system.

（1） Normal Working Hours System and Irregular Working Hours System

An employer using the normal working hours system will uniformly determine the starting and ending hours of work for each day. Under the irregular working hours system, an employer will specify the starting and ending hours of work for each day, but any prescribed working hours that exceed the statutory working hours per week or per day are determined based on the condition that the average working hours per week do not exceed the statutory working hours per week (i.e., 40 hours) based on a certain unit of period (Article 32-2 of the LSA).

However, even if these systems are in place, an employer may increase the degree of freedom allowed to each employee with regard to the starting and ending times for work. For example, an employer may consider proactively including in the company’s internal rules, such as the rules of employment, the provision regarding allowing employees to change their work starting and ending times with consent of a supervisor.

（2） Flextime System The flextime system

(Article 38-3 of the LSA) allows employees to determine the starting and ending times of their work, and works well with telework schemes. Within the context of remote work, flextime may be used in the following ways:

• Employees may flexibly adjust the starting and ending times of work according to the employee’s lifestyle.
• Employees may make adjustments to increase their working hours on days on which they commute to work (non-teleworking days) and shorten their working hours on telework days to allocate more time to private life.  
• An employee who takes time off in the middle of a workday, will be able to adjust his/her working hours, such as by delaying the ending time of work or extending the working hours on other working days.

Depending on the actual situation at the company, an employer may designate the “core time” of labor (i.e., the hours during which employees must be engaged in work), and require that core time only on non-teleworking days, rather than on telework days, so that on telework days, the working hours are left entirely to the discretion of the employees.

（3） Deemed Working Hours System for Works Outside of the Workplace

A deemed working hours system for work outside of the workplace presumes that labor has been performed in principle for a certain prescribed time if employees engage in work outside the workplace and calculation of those work hours is difficult (Article 38-2 of the LSA). In the context of telework, the deemed working hours system for works outside of the workplace may apply when both of the following requirements are met.

(a) An employee’s information and communications equipment are not always required to connect as instructed by the employer; and

(b) The employee does not always work under the specific instructions of the employer.

（4） Discretionary Work System and High-level Professionals System

An employer may also consider introducing a discretionary work system (Article 38-3 and 4 of the LSA) and/or a kind of white color exemption called “highly professional system” (Article 41-2 of the LSA) in addition to the telework scheme. These systems allow employees to freely choose how and when to perform their duties. However, the implementation and operation of these systems are not always easy because the type of work subject to those systems is limited and various procedural requirements are imposed.

Management of Telework Working Hours

Remote work necessarily means that an employee performs his/her duties while physically distanced from his/her employer, so that the employer is unable to regularly monitor the employee’s work. Those circumstances call for methods of tracking employees’ working hours that differ from the ways in which tracking was normally conducted. However, telework is generally carried out using information and communications technology such as the Internet, so working hours management may be efficiently conducted by utilizing that technology.

The Guidelines stipulate that it is advisable that an employer clearly indicates in advance the method for telework working hours management in order to enable employees to perform remote work comfortably, and also to allow the employer to accurately conduct labor management and business management. Employers should keep the following important points in mind when tracking and managing working hours for telework.

（1） Specific Methods of Keeping Track of Working Hours for Telework Working hours for telework must be managed in the same manner as regular working hours management with paying attention to the matters prescribed in the “Guidelines on Measures Employees Should Take to Adequately Ascertain Employees’ Working Hours” (January 20, 2017, No. 0120, No. 3). Further, the Guidelines indicate that employers should also keep the following matters in mind when implementing telework schemes:

1. Objective Records

In order to facilitate labor management while ensuring objectivity when employees work remotely using information and communications equipment such as personal computers or satellite offices (including shared offices and co-working spaces), an employer may find it beneficial to keep track of working hours by:

• recording the hours of use of the information and communications equipment during remote work (e.g. checking the log recorded on loaned company computers, checking the time of the last email transmission); or
• reviewing objective records such as entry into, and departure from, satellite offices (if possible)

1. Declarations by Employees (Reports via Email and Other Means of Communication)

In practice, the usage records of personal computers or other information communication devices used during remote work may not accurately reflect the starting and ending times of work. In such cases, declarations by employees themselves may be a way to track the working hours. More specifically, the company may request that its employees report their working hours using email or chat tools. Unfortunately, some employees may understate or overstate their working hours through a self-reporting system, and therefore, the following points should be considered:

• Employees should be provided with sufficient explanation regarding the importance of appropriate declarations, and those who handle the management of working hours should be provided with sufficient explanation regarding the operation of the self-reporting system.
•  If there is a significant discrepancy between the hours reported by an employee and objective facts relating to the actual hours worked, such as evidence that emails were sent outside of reported hours, or that a personal computer was active for a lengthy period of time outside of reported hours, then the employer should confirm the facts and, if necessary, make adjustments of the working hours based on those actual facts.
• The system should not be operated in such a way that impedes the proper reporting of working hours, such as by setting an upper limit on the number of hours for self-reportable overtime.

（2） Handling of Matters Specific to Teleworking

1. Time Off in the Middle of a Workday

During remote work and especially while working from home, an employee may require a certain amount of time off from work for purposes such as childcare, housework, and outings necessary in the course of daily life (“Time Off in the Middle of a Workday”). The issue of how to handle Time Off in the Middle of a Workday has been a topic of discussion in the past (e.g., whether it is possible to deduct wages for working days that consist of fewer hours than the prescribed working hours as the result of Time Off in the Middle of a Workday).

The Guidelines state that under the LSA, either of the following two methods may be used in the treatment for Time Off in the Middle of a Workday, as illustrated below:

(1) tracking Time Off in the Middle of a Workday by requiring employees to report at the end of each day; or (2) tracking only the starting and ending times of work, without requiring information regarding Time Off in the Middle of a Workday.

(1) If tracking Time Off in the Middle of a Workday:

– Treat the Time Off in the Middle of a Workday as part of rest hours, or postpone the ending time of work; or

– Treat the Time Off in the Middle of a Workday as annual paid leave calculated by the hour (Article 39, Paragraph 4 of the LSA). Implementation of this method requires execution of a labor-management agreement)

(2) If not tracking Time Off in the Middle of a Workday: An employee will be deemed to have worked for the prescribed working hours not including the prescribed breaks, regardless of any Time Off in the Middle of a Workday taken.

An employer is required to stipulate its treatment of Time Off in the Middle of a Workday in advance in the rules of employment (Article 89, Item 1 of the LSA).

1. Treatment of Breaks

The LSA stipulates that, in principle, employees must be granted simultaneous breaks (Article 34, Paragraph 2).  However, an employer may prevent the application of that principle by executing a labor management agreement to that effect (proviso to Article 34). An employer may also allow employees to take breaks on a discretionary basis. A labor-management agreement precluding the application of the principle of simultaneous breaks must be executed when adopting a system in which employees are given the freedom to decide when to take breaks during telework.

1. Management of Working Hours for Overtime and Work on Holidays

If an employer requires a telework employee to work overtime or holidays, the employer is required to conclude and filing a 36 Agreement2, and pay wages at an increased rate, in the same manner as for non-telework employees.

1. Measures for the Prevention of Long Working Hours

While remote work is expected to have the positive effect of reducing overtime work because employees are working more efficiently, there is also a risk that the system may inadvertently encourage long working hours, with the boundaries between work and private life becoming blurred. Under those circumstances, the employer’s degree of control is relatively diminished due to the fact that employees are physically distant from the employer, which also makes it easier to instruct and report on work regardless of the time of day. In light of these risks, the Guidelines state that an employer need to consider the need to prevent long working hours and to ensure a satisfactory work-life balance, and the Guidelines list the following risk avoidance methods:

• Restricting the dispatch of emails from superiors, colleagues, and subordinates outside the prescribed working hours (including late at night) and on days off.
• Restricting access to internal systems outside the prescribed working hours (including late at night) and on days off.
• Prescribing the limit for working hours for overtime work (including late-night work) and work on holidays, as well as the upper limit of total working hours, in accordance with a labor-management agreement.
• Dispatching alerts to employees who work long hours (e.g., notices from managers based on records of working hours, or alerts utilizing labor management systems).
• Using a “work-interval” system (i.e., a system under which an employee is given a certain minimum fixed amount of time for rest after the end of work and before the start of the next shift).

Effect on Actual Practice

While telework has been adopted by many companies as an emergency measure during the COVID-19 pandemic, the system is expected to become a fixture as a way of working that contributes to work-life balance, even after the end of the pandemic. As explained above, telework requires employers to devise ways to keep track of working hours that are different from those that have normally been used because employees will be working in locations other than at the office. If employers fail to manage working hours appropriately, unpaid wages may unknowingly be incurred, which gives rise to the risk that employees will not be accurately compensated. Also, there is a risk of work-related accidents due to long working hours.

Although the Guidelines are not enforceable, the labor administration is expected to engage in supervisory administration based on them, and courts are expected to issue judgements considering them. Therefore, the management of working hours in light of these Guidelines is expected to become crucial in the future. Since various labor management tools are already available on the market, it may also be beneficial to introduce these tools in accordance with the environment at each company.

By Kensuke Otsuki, Sho Ando and Hiroka Akino, Anderson Mori Tomotsune, Japan, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact japanlabor@transatlanticlaw.com

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