How to Calculate Overtime Pay in Japan: 25%, 35% and 50% Premiums and Your Base Hourly Wage
If your overtime pay is less than you expected or doesn't match your own calculation, the cause usually lies in two places: the base hourly wage and which premium rate applies. This article works through the premium rates and how they stack, how to find your base hourly wage from a monthly salary, the 50% premium beyond 60 hours a month, and how to check fixed overtime pay.
Overtime pay is three numbers multiplied
Overtime pay is base hourly wage × premium rate × overtime hours. It looks hard because each of the three numbers has its own rules. Conversely, once you've settled these three, the calculation is just multiplication.
- Base hourly wage: the wage per hour used as the basis for calculating premium wages. For monthly salaries, it's monthly salary ÷ average scheduled working hours per month.
- Premium rate: 1.25 for overtime, 1.35 for statutory holidays, an addition of 0.25 for late night, and 1.5 for overtime beyond 60 hours a month.
- Overtime hours: time beyond 8 hours a day or 40 hours a week. In principle, it's counted to the minute.
For example, someone with a base hourly wage of 1,700 yen who works 20 hours of overtime earns 1,700 × 1.25 × 20 = 42,500 yen in overtime wages. When late-night or holiday work is mixed in, the rates change as in the table below.
Premium rates and how they stack
These are the premium rates set by Article 37 of the Labor Standards Act. All are minimums, and work rules are free to set higher rates.
| Type | Condition | Premium rate |
|---|---|---|
| Overtime | Time beyond 8 hours a day or 40 hours a week | 25% or more (1.25) |
| Overtime (beyond 60 hours a month) | The part of monthly overtime beyond 60 hours | 50% or more (1.5) |
| Statutory holiday work | Time worked on the weekly statutory holiday | 35% or more (1.35) |
| Late-night work | Time worked from 22:00 to 5:00 | Add 25% or more (+0.25) |
The key is that late night alone is an addition. Overtime overlapping with late night is 1.25 + 0.25 = 1.5, and a statutory holiday overlapping with late night is 1.35 + 0.25 = 1.6. Overtime beyond 60 hours a month overlapping with late night reaches the maximum of 1.5 + 0.25 = 1.75.
| Combination | Multiplier | Per hour at a base wage of 1,700 yen |
|---|---|---|
| Regular working hours | 1.0 | 1,700 yen |
| Overtime | 1.25 | 2,125 yen |
| Overtime + late night | 1.5 | 2,550 yen |
| Statutory holiday | 1.35 | 2,295 yen |
| Statutory holiday + late night | 1.6 | 2,720 yen |
| Overtime beyond 60 hours a month + late night | 1.75 | 2,975 yen |
Finding the base hourly wage, and which allowances can be excluded
For monthly salaries, the hourly wage used for premium wages is monthly salary ÷ average scheduled working hours per month. The monthly salary here isn't just base pay. In principle, it includes most allowances.
The wages that may be excluded from the base are limited to 7 types under the Ordinance for Enforcement of the Labor Standards Act. Allowances that don't fit these must be included, whatever they're called.
- Family allowance (paid according to the number of dependents)
- Commuting allowance (paid according to actual distance or cost)
- Separate living allowance
- Children's education allowance
- Housing allowance (paid according to housing costs)
- Wages paid on a temporary basis (such as wedding gifts)
- Wages paid at intervals of more than 1 month (such as bonuses)
- 1
Find average scheduled working hours per month
Calculate (365 days − annual days off) × scheduled hours per day ÷ 12. With 120 days off a year and 8 hours a day, it's about 163.3 hours.
- 2
Total the monthly wages in the base
Add to base pay every allowance that doesn't fit the 7 excluded types. Position and qualification allowances go in here too.
- 3
Divide to get the hourly wage
Base monthly wages ÷ average scheduled hours per month. 280,000 yen ÷ 163.3 = about 1,715 yen. So as not to disadvantage the worker, fractions of a yen are usually rounded up.
- 4
Multiply by the premium rate
1,715 × 1.25 = about 2,144 yen per hour of overtime. Multiply this by your overtime hours to get your overtime pay.
A 50% premium beyond 60 hours a month
When monthly overtime exceeds 60 hours, the premium on the excess rises to 50%. This applied to large companies from 2010, and from April 2023 to small and medium companies, which had been given a grace period, so company size no longer matters.
| Monthly overtime | Breakdown | Amount at a base wage of 1,700 yen |
|---|---|---|
| 40 hours | 40 hours × 1.25 | 85,000 yen |
| 60 hours | 60 hours × 1.25 | 127,500 yen |
| 80 hours | 60 hours × 1.25 + 20 hours × 1.5 | 178,500 yen |
| 100 hours | 60 hours × 1.25 + 40 hours × 1.5 | 229,500 yen |
These 60 hours don't include statutory holiday work, but they do include the part of company holiday work beyond 40 hours a week. There's also a system that replaces overtime beyond 60 hours a month with substitute paid leave, but introducing it requires a labor-management agreement.
If you have fixed overtime pay
With a pay structure that includes fixed overtime pay for 30 hours a month, there are three things to check. For fixed overtime pay to be valid, regular wages and the premium part must be clearly separated.
- How many hours: are the hours and amount stated in the job posting or employment contract?
- Is the excess paid? Overtime beyond the fixed amount requires separate premium wages.
- Is the base hourly wage above the minimum wage? Check by dividing base pay, excluding fixed overtime, by scheduled working hours.
For example, with base pay of 240,000 yen (including 50,000 yen of fixed overtime for 30 hours), the basis for premiums is 190,000 yen. Dividing by 163.3 average scheduled hours a month gives about 1,164 yen, or about 1,455 yen at 1.25 times. For 30 hours, that's 43,650 yen, so the 50,000 yen of fixed overtime covers 30 hours.
- 1
Enter a month of working hours
Paste your timecard into the tool's "Monthly total" tab. If it's in the order of date, start, finish and break, it reads tabs, commas or spaces as separators.
- 2
Enter your hourly wage
Enter your base hourly wage to see a breakdown of wages for scheduled hours, overtime, late night and statutory holidays. The part beyond 60 hours a month is automatically calculated at 50%.
- 3
Compare with your fixed overtime pay
If the total overtime shown exceeds your fixed overtime amount, the difference may be unpaid.
The result is only an estimate. Actual pay varies with work rules and social insurance premiums. To see how much overtime pay comes to after deductions, also see how to calculate social insurance premiums. If you work many late-night hours, see calculating the late-night premium, and if you're concerned about attendance rounding, see rounding to 15-minute units.
FAQ
- How is overtime pay calculated?
- Base hourly wage × premium rate × overtime hours. For monthly salaries, the base hourly wage is monthly salary (excluding the 7 types of excludable allowances) divided by average scheduled working hours per month. The premium rate for overtime beyond 8 hours a day or 40 hours a week is 1.25. With a base wage of 1,700 yen and 20 hours of overtime, it's 1,700 × 1.25 × 20 = 42,500 yen.
- Which allowances can be excluded from overtime calculations?
- Only 7 types: family, commuting, separate living, children's education and housing allowances, wages paid on a temporary basis, and wages paid at intervals of more than 1 month (such as bonuses). This list is exhaustive, so position, qualification and attendance allowances are included in the base. Housing and family allowances paid at a flat rate to everyone can't be excluded because they don't reflect personal circumstances.
- What's the premium for overtime beyond 60 hours a month?
- The part beyond 60 hours has a premium of at least 50%. It has applied to large companies since April 2010 and to small and medium companies since April 2023, so company size no longer matters. In a month with 80 hours of overtime, 60 hours are calculated at 1.25 times and the remaining 20 at 1.5 times. These 60 hours don't include statutory holiday work, but they do include the part of company holiday work beyond 40 hours a week.
- What's the premium when overtime and late night overlap?
- 1.5 times. The late-night premium is added to other premiums, so 0.25 is added to the 1.25 for overtime. Late night on a statutory holiday is 1.35 + 0.25 = 1.6, and late night in overtime beyond 60 hours a month reaches the maximum of 1.5 + 0.25 = 1.75. Statutory holiday work has no concept of overtime, so working over 8 hours on a holiday stays at 1.35 and doesn't become 1.6.
- Does fixed overtime pay mean no other overtime pay?
- No. Overtime beyond the fixed amount requires separate premium wages. If it's set at 30 hours a month, you're paid as usual from the 31st hour. For fixed overtime pay to be valid, regular wages and the premium part must also be clearly separated in amount and hours. Even in a month with no overtime, fixed overtime pay is paid as wages.
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