When calculating monthly payrolls or work hours, how to treat fractions could be puzzling. This article explains about legal rules on the treatment of fractions of numbers.
[1] Treatment of fractions in work hours
Pay calculation begins with counting work hours. As a basic rule, wages must be paid based on work hours counted by minutes. Standard work hours, overtime work hours, and late-night and holiday work hours must be totaled by minutes, respectively.
Meanwhile, companies are allowed to round down a fraction of an hour in totaling monthly overtime work hours, late-night work hours and holiday work hours. A fraction smaller than 30 minutes may be rounded down, while a portion equal to or greater than 30 minutes may be rounded up to an hour.
[2] Treatment of fractions in extra wages
In calculating extra wages, companies are allowed to round off a fraction of an hourly wage. A fraction less then a half yen (50 sen) may be rounded down, and a larger fraction may be rounded up to the next whole yen. Please see the example below.
(Example)
Monthly basic salary: 230,000 yen
Average monthly work hours: 168 hours
Hourly wage = 230,000 ÷ 168 hours = 1,369.0476…
=> The decimal smaller than 50 sen is rounded down. => Hourly wage: 1,369 yen
The same rule applies to fractions in calculating extra wage for overtime, late-night work or holiday work in a month.
[3] Treatment of fractions in payrolls
Many companies pay salaries by bank transfer to employees’ accounts and do not worry about fractions of amounts to be paid, but rounding off of payrolls is also allowed to some extent.
In the case an amount to be paid has a fraction smaller than 100 yen, the fraction may be rounded off to the nearest 100. Companies are also allowed to carry over a portion smaller than 1,000 yen to the payment of the following month. To adopt this method, companies must include the description in their wage rules.
Please check your calculation methods and ensure they are appropriate, since in some cases all fractions are rounded down. If you have uncertain matters, please feel free to contact us.
[Reference]
Tokyo Labor Bureau, “How to treat fractions in calculating overtime wages, etc.”
https://jsite.mhlw.go.jp/tokyo-roudoukyoku/yokuaru_goshitsumon/tinginnokeisan/q3.html
