What is Fixed Overtime Pay?

What is Fixed Overtime Pay?

You will be going through various descriptions of job offers once you start job hunting. Some of you may have noticed the word fixed overtime pay ”固定残業代(みなし残業)”.

Understanding this concept will help you distinguish the real deal and prevent you from being disadvantaged. This article will help you understand the salary system that includes overtime wages.

What is fixed overtime pay?

This is a system that already includes your wage for working overtime in your salary on the premise the employee will work overtime for a certain amount of hours.
Simply put, your overtime wage is already included in your salary.Thus, your monthly salary will not change according to how much you work outside hours. So your salary will be the same for both busy and quiet months. Companies must pass the following criteria in order to introduce this system.

1.1. Inform the employees that their overtime pay is already included in their salary.
(It needs to be written on job postings and on employment rules.)
2.2. Clarify the base salary, fixed overtime pay, and the number of overtime hours that is excepted.

Example: Detailed information such as “Monthly salary: 250,000 yen (45 hours of fixed overtime pay of 50,000 yen included)” is necessary.
If the number of hours is not included, for instance, “Monthly salary: 250,000 yen (overtime pay included)”, this would mean the salary would be 250,000 yen even if one works for more than 100 hours.

This system may be an disadvantage for workers and can cause trouble!

Some companies may not want to pay for your overtime work that exceeds the number of hours specified. They will often say that it is already included in the salary due to this payment system. However, it is illegal. Companies must compensate the employees additionally if their overtime work exceeds the stipulated number of hours.

  • Companies cannot lower the employee’s salary even if one works less than the stipulated number of hours
  • Holiday/ late-night labor requires a separate allowance

It is important to acknowledge the points given and to check if the pay is relevant. There are cases where companies use this system to benefit themselves and refuse to pay the employees for their overtime work. In order to protect yourself, you must be aware and have correct knowledge of the payment system.

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