McDonald’s told to pay overtime to manager

by Akemi Nakamura

The Tokyo District Court ordered McDonald’s Holdings Co. (Japan) Ltd. Monday to pay ¥7.55 million in overtime allowance and “additional pay” to a manager at one of its outlets.

Presiding Judge Iwao Saito ruled that Hiroshi Takano, 46, who manages a McDonald’s outlet in Saitama Prefecture, does not qualify as a manager under the Labor Standards Law and thus deserves overtime pay.

The law stipulates that employers must pay overtime allowances to employees who work more than eight hours a day and 40 hours a week. However, the regulation does not apply to people in managerial positions.

Saito said employees in management positions must be able to wield significant authority and receive privileged treatment, including higher pay. Takano neither played such an important role for the company nor received better pay, he said.

According to the court, the average annual salary of McDonald’s shop managers stood at ¥7.07 million in 2005. But the salaries varied, with some 10 percent of managers receiving only ¥5.79 million, a level lower than the average annual salary of assistant shop managers, based on evaluations. Assistant shop managers meanwhile qualify for overtime pay.

After Takano was promoted to shop manager in October 1999, his salary dropped because he was not allowed to claim overtime allowances. As a result, his annual wage fell by 17 percent in 2005, compared with the ¥7.59 million he earned in 1999.

The court ordered the company to pay Takano ¥7.55 million — ¥5.03 million in overtime pay and ¥2.52 million in additional pay.

“I was confident that I could win this suit, but I wonder why it took two years,” Takano said after the ruling. “I want the company to take today’s ruling sincerely. I also hope this decision will have a positive effect on other shop managers.”

The ruling could deal a major blow to McDonald’s Japan, which has some 1,700 managers at its outlets directly run by the firm, like Takano, said Ichiro Natsume, one of his lawyers.

McDonald’s issued a statement saying that it was regrettable the court did not accept its arguments and that it is considering filing an appeal.

Takano, who was hired in 1987, filed a suit in December 2005 with the district court, claiming the company should pay him about ¥5.17 million in overtime allowances and the same amount as “additional pay” to cover between December 2003 and November 2005.

The additional pay is regarded as a punitive fine to employers who break the law. During the period, he worked 60 to 80 hours of overtime a month, and he could not take any paid holidays for 63 days from Nov. 24, 2004, through Jan. 25, 2005. He also sought ¥3 million in compensation for mental suffering — a claim rejected by the court.

McDonald’s argued that Takano should be regarded as a manager because he oversaw dozens of employees and received wages commensurate with his responsibilities.

Momoyo Kamo, chairwoman of the Japan Community Union Federation, said the ruling will have an influence not only on McDonald’s shop managers but also other workers in similar situations.

“This ruling will encourage them to raise their voices,” she said.