• Kyodo

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Consumer financing firm Takefuji Corp. has paid 3.5 billion yen for unpaid overtime work some 5,200 current and former employees performed in the past two years, sources said Monday.

According to the Health, Labor and Welfare Ministry, it is the largest amount of unpaid overtime pay ever dished out by a single company.

The ministry’s Osaka labor bureau is expected to send the case on the Tokyo-based company, a former executive in charge of labor affairs and the former head of Takefuji’s Osaka branch who is now an executive, to public prosecutors Tuesday, the sources said. The bureau suspects the company forced employees to work overtime without pay in violation of the Labor Standards Law, they said.

The firm’s employees are not unionized, and there was a written agreement in which it set the maximum amount of overtime an employee could clock at 42 hours a month.

However, the sources said Takefuji headquarters verbally instructed branches across Japan to forbid male employees to report more than 25 hours of overtime a month and female employees six hours a month, in line with the company’s internal rules limiting overtime.

The bureau believes the company has been setting limits on the amount of overtime it pays employees since it was established about 35 years ago, with some 4,500 employees and bottom-rung managers nationwide following the rule, the sources said.

The payments followed the settlement of a lawsuit by two former Takefuji employees before the Osaka District Court in February. The company agreed at the time to pay a combined 5.9 million yen to the two for unpaid overtime work, the sources said.

As part of the settlement, the company also promised to pay all of its employees for the unpaid overtime they had put in.

As a result, Takefuji has paid about 2.7 billion yen to some 3,000 employees and roughly 700 million yen to about 2,200 former employees since February, according to the sources. The amount only covered the money the company failed to pay during the past two years, after which the statute of limitations on labor-related debts runs out.

The case expected to be handed prosecutors will probably be the unpaid wages of three former employees who worked at Takefuji branches within Osaka Prefecture between 2000 and 2001, according to the sources.

The Labor Standards Law bans workers from working more than 40 hours a week unless there is a prior arrangement agreed to between management and labor. In that case, the employer must pay at least 25 percent more than the usual wage for the hours of overtime put in. Those who violate the law are subject to a maximum six-month prison term or a fine. The company will also be fined.

While labor authorities are seeing a rise in unpaid overtime cases as companies try to cut costs amid the protracted economic downturn, sources said the Osaka labor bureau saw the Takefuji case as being particularly malicious, as the practice had been going on for decades.