Many people aspire to become managers when working in a company. However, there are concerns that managers do not receive overtime pay. The article also explains the relationship between managers and overtime pay, as well as the definition of managers under labor laws. It also discusses the cases of lawsuits regarding overtime pay for managers. The article concludes with suggestions for negotiation, contact with labor standards supervision offices, and even the option of finding a new job if necessary. It is also recommended to check if the person in a management position actually fits the definition of a manager under labor laws.
So many people aspire to be in management positions at work. However, there are stories about not receiving overtime pay once they become managers. A media platform for solving business challenges, “Political Think Tank,”
An aspiration for many people who want to advance within a company is to aim for a management position. Managers earn more than the average employee, and they have more discretion. However, on the other hand, there are stories about managers not receiving overtime pay. Is this true?
This time, we will discuss the relationship between managerial positions and overtime pay.
Do managers receive overtime pay?
First, let’s look at whether managers are paid overtime.
Definitions of overtime hours under the Labor Standards Act
First, how is overtime calculated? Generally, an employee’s working hours are determined as follows.
・Working hours = 8 hours per day, maximum of 40 hours per week
・Break time = 45 minutes if working more than 6 hours a day, and 60 minutes if working more than 8 hours a day
・Days off = 1 day off per week.
If you work beyond these hours, you are paid overtime. Overtime is usually 1.25 times the regular salary.
There is no obligation for a supervisor to pay overtime
However, some companies are not required to pay overtime. This applies to employees who are “supervisors”.
Under the Labor Standards Act, there are no regulations for supervisory and managerial employees’ working hours. Why are managers or supervisors not required to pay overtime?
Managers or supervisors have the ability to control their own working hours. Also, their base pay is higher than that of regular employees, and they have greater economic freedom. Therefore, it is determined that there is no need to establish overtime pay for them.
Definition of a Supervisor
So, what is the definition of a manager? The Ministry of Health, Labor and Welfare has introduced the requirements of supervisors under the Labor Standards Act.
・A person who has a consistent attitude towards management decisions regarding labor conditions and other labor management matters
・Has important work responsibilities that require them to work beyond the specified hours, breaks, and holidays.
-Has serious responsibilities and authority to work beyond the specified working hours, breaks, and holidays.
・Actual working conditions do not match the regulations for working hours and the like.
・Remuneration and treatment are appropriate for the position.
Also, an important point about the definition of supervisors is that they are not judged based on their position but rather based on the job content, responsibilities, authority, and the actual manner in which they carry out their work.
Is a Manager a Supervisor?
Looking at the above definition of a supervisor, it is clear that not all managers are supervisors.
For example, even if you are in a managerial position, if you cannot control your working hours, then you are not considered a supervisor and have the right to receive overtime pay.
Checkpoints for determining whether you are a manager or supervisor
Here, we will explain the checkpoints for determining whether you are a manager or supervisor for each position.
・Leader, section manager, unit manager
Let’s take a closer look at each of these.
For Leaders, Section Managers, and Unit Managers
At first glance, the title of a leader, section manager, or unit manager may seem to correspond to a management or supervisory role. However, as mentioned earlier, there are cases where the job content does not fit the scope of a management or supervisory role.
For example, even if you are a leader or department manager, if you depend on your superiors for many decisions, you are not considered a manager or supervisor. This is because you are not considered a “figure who has become one with management”.
Also, it is not uncommon for someone to be called a section manager just by having the position title, even if it is not reflected in their income or it does not increase. This is because they do not receive the “treatment according to their position”.
However, consider the job content or how you work cautiously, even if you are a section manager.
If the executive has delegated all the authority of the department to an individual, they would be considered a manager or supervisor. For example, if you give orders on labor management within the department or have control over working hours, you could be considered a manager or supervisor.
However, it is not unusual for someone to be called a unit manager just because they were given a position title. If they depend heavily on their superiors for important decision making, or if they work in the same way as regular full-time employees, they are not considered managers or supervisors.
For Store Managers
The most common issue of non-compliance is with managers of restaurants and retail stores.
There are factors that a store manager could use to disprove that they are a store manager:
– Do not have the right to employ part-time workers
– Do not have the right to dismiss part-time workers
・Do not participate in personnel evaluations
・Do not have the authority to manage working hours
– Are made to work long hours
・Most of the work is done according to the manual
・Base salary without giveaways
・Hourly pay etc. is lower than the labor standards for part-time workers
According to the Ministry of Health, Labor and Welfare, if the above circumstances apply, there is a possibility that they have lost their qualifications as a manager or supervisor.
In reality, even if you are a store manager, many important decisions are often made by the regional manager. In this case, the regional manager becomes the supervisor, and the store manager is not included.
For Regular Employees
If you are a regular full-time employee, you may think that you do not qualify as a supervisor. However, an employee is evaluated as a supervisor based on the job content and salary, not their position. Therefore, even if they are a regular employee, they may be classified as a manager/supervisor if they cooperate with the management, receive appropriate treatment, and are not subject to labor time restrictions.
In larger companies, this may not be the case. On the other hand, in small elite companies or new enterprises, the average employee may also be classified as a manager/supervisor.
What is a Nominal Manager?
Although they are clearly not considered supervisors, they are seen in many workplaces where individuals are not paid overtime due to their status as managers. These individuals are called “nominal managers” and it has become a problem in many workplaces. Based on the checkpoints introduced earlier, it is essential to confirm whether you or your workplace are becoming a “name-only manager”. Depending on the situation, this could escalate into a major issue.
Lawsuits Surrounding Overtime Pay for Managers
There are several cases where corporate disregard has led to lawsuits. Further, reviewing legal precedents regarding overtime pay for managers deepens understanding of supervisory positions.
Here, we introduce legal precedents related to the overtime pay of managers.
The Japanese McDonald’s Case
The Japan McDonald’s case (Tokyo District Court, January 28, 2008) was a case where a nominal business owner acquired a bad reputation.
In this case, a store manager at a Japan McDonald’s location was awarded approximately 7.5 million yen in overtime pay after being recognized as “not being a store manager” for that reason.
Currently, the following elements are considered negative requirements for executive officers.
・While they have major authority over store operations, they must follow the headquarters’ policies on supply chain and prices, among other things.
・They have no personnel rights over part-time workers, while they have no personnel rights over employees.
・Once overtime exceeds 100 hours a month, it cannot be said that they have discretionary control over working hours.
・The average annual salary of an assistant store manager can be reversed when compared to the store manager’s
Engaging in careful evaluations, that store manager was judged to not fall under the category of a manager or supervisor. Considering this precedent, if labor hours and treatment are issues, the manager is at high risk of being dismissed.
The Special Society Case
In the Tokushukai case (Osaka District Court, March 31, 1988), the Personnel Department head of a medical corporation sued for additional pay, and the court recognized them as a manager or supervisor.
The judgment criteria were as follows:
・They had the authority to plan and implement nurse recruitment.
・They had authority over personnel matters relating to nurses.
・While the chief physician has authority over the Person-in-Charge Nurse, they can express their own opinions.
・They had discretionary control over work hours.
・Punching a time card was mandatory but no firm restrictions.
After considering the above, that person was judged as a manager. This implies that if weakly adversed to denying that they are an executive, they usually get judged as an executive.
How should nominal executives act?
If you suspect that you might be a nominal executive, how should you act? Here, we explain the actions that nominal executives should take.
・Check whether you have the qualifications to be a supervisor
– First, negotiate with the company
・Contact the Labor Standards Inspection Office
・Get advice from a lawyer
Check whether you have the qualifications to be a supervisor
To begin with, the first thing you need to do is to check whether you have the qualifications needed to be an executive.
Check the current Labor Standards Act and see if you fall under the definition of a manager or supervisor. It is also recommended to check relevant precedents to assess your situation and those who are also in the same position of being a potential manager.
First, negotiate with the company
If the company does not seem to comply with overtime payment regulations for non-executives, try to negotiate with the company.
It is possible that the company does not know about the position of nominal executives, so negotiations may lead to the company paying overtime. However, be aware that there is a three-year statute of limitations for claiming overtime pay.
If the non-payment of overtime violates public order and morals and is mentioned in the employment rules, civil law may take precedence.
In any case, the first thing you should do is to negotiate with the company and communicate the information that if the situation is not resolved, you will contact the Labor Standards Inspection Office. The company cannot ignore this negotiation.
Contact the Labor Standards Inspection Office
If you do not get any results from contacting the company, the best course of action is to contact the Labor Standards Inspection Office.
During negotiations with the company, note that you should inform the company that if the issue is not resolved, you will contact the Labor Standards Inspection Office. The company cannot ignore this negotiation.
When contacting the Labor Standards Inspection Office, the concern is that you may not receive a legal judgment. If the company refuses to recognize whether a person is a manager, that person needs to determine whether they are a manager through a legal judgment, and this may require resolving the situation through the court.
Get advice from a lawyer
If there is no effect after contacting the Labor Standards Inspection Office, seeking advice from a lawyer is the best course of action. This may lead to a lawsuit if it is proven that one is not a manager through a legal judgment.
Take note that lawsuits may come with costs, and you might end up losing even if you receive overtime pay. Consider carefully what the overall income and expenses would be and whether to file a lawsuit.
Another option is to look for a new job even if you are not paid overtime for being an executive.
Working without overtime pay brings little reward. Considering a job change to a company with a higher salary is worth considering.
So, let’s summarize this article.
・Unless you are a supervisor, managers in leadership positions are paid overtime.
・The assessment criteria for determining whether one is a manager or supervisor are “job content,” “work style,” and “treatment.”
・If you are not a manager but are not paid overtime, then you are called a nominal manager.
If you are a “name-only manager,” it may be necessary to negotiate with the company to ensure that you receive the overtime pay you deserve. Confirming whether there is a nominal executive problem within a company is also important for the company.
Editing Department of the Knowledge Research Institute/The concept is to create articles that will help with management tasks. The Senigaku method has been introduced in over 3,000 companies, and it has been made available to the public.
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Citation: Knowledge Research Institute