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The Labor Standards Act stipulates wage preservation to prevent workers' wages from decreasing when introducing shortened working hours or a flexible working time system. Wage preservation means maintaining the previous wage level even if there are factors that could reduce wages. When a flexible working time system is introduced, even if work exceeds 8 hours per day or 40 hours per week, if the average working hours over a certain period do not exceed the statutory working hours, no separate overtime pay with a 50% premium is paid, making it highly likely that wages will decrease compared to before. Accordingly, the Labor Standards Act requires employers to take measures to prevent the previous wage level from decreasing upon introducing a flexible working time system and allows the Minister of Employment and Labor to require submission of the wage preservation plan or to verify it directly. In the case of introducing the weekly 40-hour system, which has been implemented in stages since July 1, 2004, depending on the size and type of the workplace, the previous wage level may decrease due to shortened working hours and reduced vacations, but the Labor Standards Act stipulates that the previous wage level and hourly regular wage must not decrease, thereby imposing responsibility for wage preservation on the employer.
Regulations to Follow During Wage Preservation for Weekly 40-Hour System Introduction
① The meaning of "the 'previous wage level' being lower than the 'changed wage level'" is that the wage level received during the 1 year prior to the application of the weekly 40-hour system (total amount including basic salary, bonuses, overtime pay, night work premium, annual and monthly leave allowances, etc.) must be less than the wage received during the 1 year after introduction, and
② "hourly regular wages must not decrease" means that even when adjusting wage items or wages to preserve the previous wage level, hourly regular wages must not be reduced, nor can they be reduced to mitigate the increasing burden of overtime pay. Considering this, wage preservation plans may include methods such as increasing hourly regular wages for preservation or newly establishing separate adjustment allowances for wage preservation. (2004.11.25, Labor Standards Division-6363): When applying the amended Labor Standards Act to general workers (8 hours per day Monday to Friday, 4 hours on Saturday), if the vacation allowance corresponding to the reduced number of vacation days compared to before is not compensated at all, resulting in a decrease in the previous wage level (comparing the total wages for 1 year before and 1 year after application of the amended law), it would be difficult to consider it as wage preservation under Article 4 of the Supplementary Provisions of the amended Labor Standards Act.