Managing Remote Workers in Japan: Working Hours, Costs, Health and Safety, and Workers’ Compensation

Japanese labour and employment laws, including the Labor Standards Act, the Industrial Safety and Health Act and the Industrial Accident Compensation Insurance Act, apply to remote work (working from home, at satellite offices or on the move) just as they do in the office. Employers must keep track of remote employees' working hours, pay premiums for overtime, and look after their health and safety. The "deemed working hours" system for work outside the workplace can be used only where the handling of communication devices and the nature of instructions meet certain conditions. Employers required to have work rules (those regularly employing 10 or more workers) must set out in them any costs, such as internet charges, that employees are to bear (Labor Standards Act, Article 89(v)).

• A remote employee replies to chat messages late into the night, but the attendance record shows them finishing on time.
• You have treated remote work as "deemed hours, so no overtime", and an employee now says overtime is unpaid.
• Remote work has continued without deciding who pays for home internet and electricity.
• An employee who fell and was injured at home during working hours asks whether it is covered by workers' compensation.

The Ministry of Health, Labour and Welfare (MHLW) Guidelines for the Appropriate Introduction and Implementation of Telework (the "Guidelines") start from the premise that the Labor Standards Act, the Minimum Wage Act, the Industrial Safety and Health Act, the Industrial Accident Compensation Insurance Act and other labour laws apply to telework, and set out the points employers should watch.

The Guidelines also note that, wherever the employee works, the minimum wage of the prefecture in which their workplace is located applies.

When concluding an employment contract, the employer must state the place of work and other terms (Labor Standards Act, Article 15; Enforcement Regulations, Article 5(1)(i-3)). The Guidelines say that where remote work is expected from the start, the remote location, such as the employee's home or a satellite office, must be stated as the initial place of work, and where remote work is expected during the contract, it must be stated within the scope of possible changes.

Where an employer requires remote work beyond the place of work or working methods set in the contract or work rules, it needs either the employee's agreement to change the contract or a reasonable change to the work rules that is made known to employees (Labor Contract Act, Articles 8 to 11). The Guidelines ask employers to keep this in mind.

Drawing on the MHLW Guidelines on Measures Employers Should Take to Properly Record Working Hours (20 January 2017), the Guidelines treat objective records, such as computer usage logs, as the primary way to confirm start and finish times. At satellite offices, entry and exit records can be used.

Where computer logs do not reflect actual start and finish times, employers may rely on self-reporting. In that case the Guidelines require employers to:

• explain proper self-reporting fully to employees and to the managers who handle working hours;
• correct the hours where there is a significant gap between the reported hours and objective facts such as computer use; and
• not take measures that discourage accurate reporting, such as capping the overtime hours that can be reported.

As examples of a gap, the Guidelines mention emails sent outside the reported hours and records showing the computer running for a long time after the reported finish time.

Separately, the Industrial Safety and Health Act requires employers to keep track of employees' working hours in order to arrange doctor interviews for those working long hours (Article 66-8-3).

For time when employees step away from work, for example for household matters or a medical appointment, the Guidelines say employers may either track it or track only the start and finish times. If it is tracked, it can be treated as a break with the finish time pushed back, or as hourly annual paid leave. The Guidelines stress deciding the approach in advance in the work rules.

Under this system, where an employee works outside the workplace and it is difficult to calculate working hours, the employee is deemed to have worked the prescribed hours (Labor Standards Act, Article 38-2(1)).

The Guidelines say the system can be applied to telework where both of the following are met:

1. The employer has not required communication devices to be kept in a state where communication is possible at all times
2. The employee is not working on the basis of specific instructions given by the employer from time to time

On point 1, the Guidelines say it is met where employees can disconnect at their own discretion; where they cannot disconnect but can step away from the device and decide when to respond; or where, even with a company phone, they can decide whether and when to answer or call back. Simply having a device does not rule the system out.

On point 2, it is met where instructions are limited to basics such as purpose, targets and deadlines, and do not specify the day's schedule, workload or methods.

Conversely, if employees are expected to answer chat messages immediately, or a manager sets out the day's tasks and times in detail, the conditions are not met. Employers using the system should check that day-to-day practice matches both conditions.

Under flextime, the work rules leave start and finish times to the employee, and a labour-management agreement sets the employees covered, a settlement period of up to three months, the total working hours for that period and other matters (Labor Standards Act, Article 32-3(1)). The Guidelines describe flextime as well suited to telework.

The Guidelines give examples such as working shorter hours on remote days and longer hours on office days, finishing later to make up for time stepped away, and having no core time on remote days.

The Guidelines list measures such as:

• asking managers and colleagues to refrain from sending work emails outside working hours, at night or on days off;
• blocking access to company systems at night and on days off unless approved in advance;
• setting in advance the times and amount of overtime that may be worked, and stating the procedure in the work rules; and
• warning employees at risk of long hours, for example with automatic system alerts.

The Guidelines say remote work should not place an excessive burden on employees, and that it is desirable for the employer and employees to agree in advance who bears which costs, any cap on what the employer pays and how claims are made, and to set this out in the work rules.

Employers regularly employing 10 or more workers must have work rules (Labor Standards Act, Article 89), and where employees are to bear the cost of food, work supplies or similar items, this must be included in them (Article 89(v)). The Guidelines treat the cost of communication devices in the same way. The Guidelines also mention paying the actual business share of increased internet or electricity costs, calculated reasonably and objectively from working hours. For withholding tax on such payments, they refer to the National Tax Agency FAQ on home working costs.

Employers must take the measures required by the Industrial Safety and Health Act even when employees work from home. The Guidelines list health consultation arrangements (Article 13-3), safety and health training on hiring or a change of duties (Article 59), health checks (Articles 66 to 66-7), doctor interviews for those working long hours (Articles 66-8 and 66-9) and stress checks (Article 66-10).

Office hygiene standards do not generally apply to an employee's home. However, the Guidelines say employers should educate and advise employees so that the home working environment is equivalent, and ask for reports using the MHLW checklist.

The employer must give the consideration needed for employees to work while ensuring their life and physical safety (Labor Contract Act, Article 5). Without managers and colleagues nearby, signs of physical or mental strain are easy to miss, so put in place regular check-ins and make sure employees know where to go for help.

An accident during telework that arises from being under the employer's control under the employment contract is a work-related accident covered by workers' compensation insurance. Accidents caused by private acts or other non-work causes are not.

An MHLW pamphlet gives the example of an employee doing computer work at home during working hours who left their desk to go to the toilet and fell when sitting back down. This was treated as a work-related accident, because it arose from an act incidental to work and not from a private act.

The Guidelines recommend telling employees to keep working-hours records and, if injured, to record the circumstances as far as possible so that the employer and medical institutions can understand what happened.

1. For remote employees, compare attendance records with computer logs and chat timestamps for the past month.
2. If you use the deemed working hours system, check that your expectations on responding to messages and the level of detail in instructions match the two conditions in the Guidelines.
3. Decide in the work rules how to treat time stepped away during the day.
4. Set rules on internet, electricity and equipment costs, and put any costs borne by employees into the work rules.
5. Check that the place of work and the scope of changes in employment contracts include remote locations.
6. Give employees the home working environment checklist and collect their reports.
7. Tell employees how to report an injury or illness while working from home and how to record it.

• A current or former remote employee has claimed unpaid overtime.
• You cannot tell whether the deemed working hours system holds up against how work is actually done.
• You want to change the work rules to introduce or end remote work, and are unsure whether employees will agree.
• An employee has raised workers' compensation or damages for an injury at home or for health problems from long hours.
• You need to decide how to treat employees who live abroad or work across borders.

Our firm advises on telework policies and on responding to overtime claims, in English and Japanese. Please contact us through our enquiry page.

Yes. The Labor Standards Act applies to remote work, and work beyond statutory hours must be paid at a premium. The deemed working hours system presupposes that working hours are difficult to calculate, and can be applied where employees are not required to be reachable at all times and are not given specific instructions from time to time.

Not by itself. The Guidelines say the condition is met where employees can decide whether and when to respond. It is not met if immediate replies are expected or the day's tasks are specified in detail.

The law does not set a single rule. The Guidelines say it is desirable for the employer and employees to agree how costs are shared and any caps, and to put this in the work rules. Employers with 10 or more regular workers that have employees bear costs must state this in the work rules (Labor Standards Act, Article 89(v)).

An injury caused by work or by an act incidental to work during working hours is treated as work-related. The MHLW cites a fall when sitting back down after a trip to the toilet as an example. Injuries caused by private acts are not covered.

Health and safety measures, including stress checks (Industrial Safety and Health Act, Article 66-10), apply to remote employees in the same way as to office-based employees. For workplaces with fewer than 50 workers, which are not required to appoint an industrial physician, stress checks are for the time being an obligation to make efforts only (Supplementary Provisions, Article 4). The Guidelines note that these can usefully be carried out online. Because problems are harder to spot remotely, it is important to have a consultation system in place.