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Discretionary Work System

The discretionary work system is one of the policies implemented as part of the reform of working styles. This system is designed to promote efficient work and ensure that the results achieved by workers are properly evaluated. It is characterized by the fact that there are no fixed hours for workers to leave or work.

Discretionary work system is applied to 'Work which is specified by an Ordinance of the Ministry of Health, Labour and Welfare as requiring advanced knowledge, etc., and which, by its nature, is not normally considered to be closely related to the results obtained through work'. This provision is applied to "Outline of the Act on the Establishment of Related Laws to Promote Reform of the Way of Working". ("White Paper on Women 2018: Women's Human Rights and the Constitutional Amendment" Japan Federation of Women's Associations, Horupu Publishing Co., Ltd., 2018)

In other words, the discretionary working system does not apply to all types of work, and there are two types of work, "Discretionary work system for planning work" and "Discretionary Work System for Professional Services".

Discretionary Work System for Professional Services

"Discretionary Work System for Professional Services" refers to jobs that require flexible responses because it is difficult for employers to give detailed instructions on work hours and work styles due to the nature of the work, and this leaves much to the discretion of workers themselves. Designers, researchers, editors, lawyers, systems consultants, program producers, and such are among them.

19 jobs covered by the discretionary working system as professional work

・Research and development of new products and technologies, or research in the humanities and Natural sciences
・Analysis or design of information processing systems
・Reporting and editing of articles in the newspaper and publishing business and reporting and Editing for the production of broadcast programs
・Devising new designs
・Producer or director in the business of producing broadcast programs or films etc.
・Copywriter
・System consultant
・Interior coordinator
・Creating game software
・Securities analysts
・Developing financial instruments by using knowledge of financial ・engineering, etc.
・Professorship and research work at universities (Limited to ・those mainly engaged in research.)
・Certified public accountant
・Lawyer
・Architect (First-Class Architect, Second-Class Architect, and Wooden Architect)
・Real estate appraiser
・Patent attorney
・Tax accountant
・Small and medium enterprise management consultant

Cited from: 専門業務型裁量労働制 (Website of the Ministry of Health, Labor and Welfare; Japanese)

Procedures for Applying the Professional Discretionary Work System

When applying the discretionary working system for professional services, companies and workers must enter into a labor-management agreement of the following matters and submit it to the Labour Standards Inspection Office.

Discretionary work system for planning work

The "Discretionary work system for planning work" is a system in which decisions on the allocation of work hours and work styles are left to the discretion of workers in the administrative and indirect departments of companies, which are involved in important parts of business operations. Personnel, public relations, management planning, accounting, sales planning, and such are among them.

Procedures for applying the discretionary working system for planning work

When applying the discretionary working system for planning work, it is necessary to establish a labor-management committee first. A majority vote of at least 4/5 of the members is required to resolve the following matters and submit the decision to the Labour Standards Inspection Office.

Deemed overtime work

As mentioned above, in the discretionary working system, there are no working hours stipulated by the company, but "deemed overtime system" which is assumed in advance to be "I worked X hours a day or a month." is adopted. For example, if you set your assumed working hours to 7 hours a day in advance, whether you work 9 hours or 5 hours, you are treated as "worked seven hours". In addition, it is stipulated that overtime pay will not be paid even if you work over the deemed hours.

*Extra wages stipulated by law are paid for late-night and holiday work.

Therefore, if the deemed hours are significantly different from the actual working hours, it may lead to the deterioration of the working environment and working conditions of workers. Therefore, it is necessary to set appropriate deemed hours between workers and companies in consideration of the conventional working environment.

Since deemed hours are also subject to the rules of the Labor Standards Act, if deemed hours exceed the legal working hours (eight hours a day, 40 hours a week), an additional wage (overtime pay) must be paid after concluding a 36 agreement.

Merits of the discretionary work system

Benefits for companies

Easy to manage labor costs

Since the discretionary working system applies to "deemed time system" and so on, the labor costs of eligible workers are considered to be almost constant. Therefore, regardless of actual working hours, companies only have to pay a salary corresponding to the predetermined deemed time, so companies do not have to worry about overtime pay.

Furthermore, even if workers work overtime more than the deemed time, if they do not work late at night or on holidays, companies do not have to pay for overtime, which leads to a reduction in expenses.

Benefits for workers

Enable shorter working hours and increase freedom in working styles

The discretionary working system allows workers to work at their own discretion, rather than based on standards set by companies. In other words, by achieving results in a short period of time and efficiently, workers can earn income equivalent to working long hours, which can increase their motivation to work.

You can also expect to spend more time on your hobbies and family, or on your personal life.

Demerit of Discretionary Work System

Disadvantages for companies

Difficulty in managing the labor system

Because discretionary work systems enable workers to establish their own working styles, working styles can be quite different even among workers in the same workplace. In other words, not everyone will be able to attend a meeting of multiple people, which inevitably creates time constraints. In this case, the result is a lack of leadership within the team, which in turn can result in reduced work efficiency

Disadvantages for workers

There is a risk that the working environment will be rather deteriorated

Under the discretionary working system, employees are not paid overtime unless they work late at night or on holidays, so if companies misuse the system, they may be forced to do more work with less labor costs. If such a bad case actually occurs, chronic long working hours and unpaid salaries commensurate with the results may occur, leading to a deterioration in the working conditions of workers.