Regional minimum wages are expected to see record rises this year. How should companies confirm that their payments to workers are above the minimum wage standard?
As prefectural labor bureaus have responded to the Central Minimum Wages Council’s minimum wage proposal, companies are required to review wages of low-pay workers to ensure their wages are above the standard by raising part-timers’ hourly wages or reviewing the starting salaries for high school graduates.
Record increases will have a significant impact on company management. To allow companies time to make necessary arrangements, some prefectures have postponed the effective date to the end of March 2026. Companies have to pay attention not just to minimum wages, but also to the effective date.
For the calculation of minimum wages, basic wage item\s that are paid every month are used. The items 1-6 below are excluded from the calculation.
1. Temporary allowances (marriage allowance, etc.)
2. Wages paid for a period exceeding a month (bonuses, etc.)
3. Wages paid for work exceeding scheduled working hours (extra pay for overtime, etc.)
4. Wages paid for work on non-scheduled working days (extra pay for holidays, etc.)
5. Extra wages for work between 10 p.m. and 5 a.m. (extra pay for late-night work, etc.)
6. Excellent or perfect attendance allowance, commutation allowance, family allowance
Particularly, companies must be careful about attendance allowance, since it is included in the calculation of extra wages for overtime. To confirm that monthly-salary workers’ wages are above the minimum wage standard, the total sum of relevant items is divided by an average monthly work hours and compared with the minimum wage.
An average monthly work hours is calculated by dividing the scheduled annual work hours by twelve. In the case of a worker scheduled to work eight hours a day, 240 days a year, the average monthly work hours will be [8 hours x 240 days / 12 months = 160 hours.]
If the number of holidays changes each year, the scheduled annual work days must be adjusted accordingly.
If the effective date of minimum wage comes in the middle of a wage calculation period, companies must be sure that payments after the effective date are above the new standard. If the effective date is October 1, wages paid for work from October 1 onward must be changed.
In the case the wage calculation period is from the 16th to the 15th of the next month and the effective date is October 1, the company may need to calculate part-timers’ wages separately for the periods before and after October 1. To avoid complicated calculation and making mistakes, it might be better to raise wages to ensure they are above the new minimum wage level.
Since this year will see greater increases in minimum wages than normal years, companies must take extra care and confirm all workers are paid above the standard.
Support for SMEs
The Labor Ministry provides various information to support small- and mid-sized companies likely to be affected by an increase in minimum wage
・Dispatch of experts, providing of consultation: establishment of a system to provide one-stop, free-of-charge consultation and support (nationwide)
・Operation improvement subsidy: support for SMEs and micro businesses to improve productivity (individual support)
・Work-style reform promotion subsidy (organizational promotion) : support for efforts to raise wages by industrial organizations (industrial support)
The Labor Ministry’s special website for wage increase provides information about prefectures’ support measures and additional subsidies of the operation improvement support program.
[Reference]
The Labor Ministry, “Types of minimum wages”
https://saiteichingin.mhlw.go.jp/point/page_point_class.html
“Wage increase special website”
https://saiteichingin.mhlw.go.jp/chingin/
*The information is based on laws and regulations as of the date of the original article.
