Regarding wage payment, various rules are set by relevant laws and regulations. Companies are required to pay their workers in accordance with the rules. This article explains about the base wage for the calculation of overtime allowances and the items included in the calculation of minimum wages.
[1] Overtime allowances
The seven items below may be excluded from the base wage for overtime allowances. When calculating extra wages for overtime, the amount excluding these items should be used.
1. Family allowance
2. Commutation allowance
3. Family separation allowance
4. Child education allowance
5. Housing allowance
6. Temporary allowance
7. Allowances paid for a period exceeding one month
For 1 to 5, companies need to examine the contents of their allowances, rather than their names. Please refer to the guidelines of the Labour Ministry. Taking “housing allowance” for example, allowances calculated based on the housing expenses can be excluded, according to the guideline. It also shows specific examples as below.
(Example of items that can be excluded)
An allowance calculated by multiplying the actual housing expense by a designated rate, e.g., a specific percentage of rent or monthly mortgage.
(Example of items that cannot be excluded)
A flat amount provided regardless of the type of housing, e.g., 20,000 yen for workers living in rented accommodation and 10,000 yen for workers living in their own homes.
[2] Minimum wages
Minimum wages are calculated based on regular remuneration paid on a monthly basis. Specifically, the total amounts paid to workers excluding the following items are used for the calculation of minimum wages.
1. Temporary allowances (marriage allowance, etc.)
2. Wages paid for a period exceeding one month (bonuses, etc.)
3. Wages paid for work exceeding scheduled working hours (overtime wages, etc.)
4. Wages paid for work other than scheduled working days (wages for holiday work, etc.)
5. Extra wages paid for work between 10 p.m. and 5 a.m. in addition to hourly wages (Extra wages for late-night work, etc.)
6. Attendance allowance, commutation allowance, family allowance
[3] Allowances easily mistaken
Among allowances that easily cause confusions is attendance allowance. Allowances paid for high or perfect attendance are included in the calculation of overtime wages, but must be excluded from minimum wages.
Please doublecheck your company’s calculation is appropriate and ensure that amounts paid to employees are above the level of minimum wage. If you find any problem, please correct it immediately.
[Reference]
The Ministry of Labour, “The base wage for the calculation of overtime allowances”
https://www.mhlw.go.jp/new-info/kobetu/roudou/gyousei/kantoku/dl/040324-5a.pdf
“Which items are included in the minimum wage?”
https://saiteichingin.mhlw.go.jp/point/page_point_targetwages.html
