Convergence of Japanese
GAAP with IFRS
Selected Topics
from the 2006 Tax Reform Act
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OKAMOTO & COMPANY
International Accounting Office
/ Hanato Tax Accountant Office
Hirakawacho Daiichi Seimei Building 1F,
1-2-10 Hirakawacho, Chiyoda-ku Tokyo Japan 102-0093
TEL +81-3-5276-0900
FAX +81-3-5276-0950
E-mail:info@okamoto-co.com
| Working Overtime | Japanese... |
Rules of employment and Article 36 agreements
Lately the frequency of labor disputes have increased in office environments. If a company decides to dismiss an employee because of his/her poor performance,
the possible consequences must be carefully considered. Although disputes with employees appear to be sudden, the root of the problem exists before the employee starts with the company.
Does your company have a formal rule of employment (i.e. Employee workrules)?
For those who have, are you aware that the employer cannot instruct the employee to work overtime
if the company does not conclude an Article 36 agreements (known commonly as "Saburoku Kyoutei" )?
Has your company submitted these documents to the Labor Standards Inspection Office?
Dismiss
The company must have rational and justifiable reasons,
otherwise the company will be considered abusing the rights of the Labor
Standards Act, Article 18, No.2, when attempting to dismiss an employee. Enacted
in 2004, these ordinances require "a reason for dismissal". You cannot dismiss
an employee if he/she does not fall under a dismissal reason of the rules
of employment.
What is Article 36 ?
Labor Standards Act Article 36 is an article of the Labor Standards Law of Japan which provides for collective agreements concerning overtime work and work performed
on holidays. The company shall not have an employee work more than forty hours in any one week or eight hours in one day, unless Article 36 agreements are submitted
to the Labor Standards Inspection Office.
If there is a labor dispute, authorities refer to the rules of employment and Article 36 agreements before the Labor Standards Inspector begins his/her official inspection. In order to remain compliant with this new regulation, it is imperative that the company adopts Article 36 agreements into its rules of employment.
Annual review of the rules of employment and Article 36 are recommended to minimize labor problems, especially those involving overtime.Effective April 2006
| ･ | Job Security Act for Seniors | |
| 1. | This Act requires companies to incrementally increase the mandatory retirement | |
| age to 65 years old. | ||
| from April 2006 62 years old | ||
| from April 2007 63 years old | ||
| from April 2010 64 years old | ||
| from April 2013 65 years old | ||
| 2. | If companies are adopting retirement ages below 65, | |
| one of the following must be adopted. | ||
| (1) Increase the retirement age to 65 | ||
| (2) Implementation of the "Continued Employment System" | ||
| (3) Abolish the retirement age clause | ||
| Numerous corporations appear to be implementing the "Continued Employment System." | ||
| ･ | National pension monthly premiums | |
| 13,860 yen/month | ||
| ･ | Child-rearing subsidy | |
| 5,000 yen each per month for the first and second children, | ||
| 10,000 yen for subsequent children through Grade 6 | ||
| (Note:household income restriction exists) | ||
| ･ | Determination of monthly standard remuneration for Social Insurance | |
| (Effective July 2006) | ||
| The required number of workdays to be considered for this determination has decreased from 20 days to 17 days. | ||
| ･ | Notification of change to monthly standard remuneration for Social Insurance | |
| (Effective July 2006) | ||
| The company must report more than two-grade changes to his/her monthly remunerations if an employee works more than 17 days (versus 20days previously). | ||