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The decision earlier this week by McDonald’s Holdings Co. (Japan) to make up for inadequate overtime wages and nonscheduled cash earnings owed to nearly 130,000 part-time and regular-payroll workers has sent a shock wave through industries heavily dependent on employees paid by the hour.

The operator of franchise and directly controlled hamburger restaurants said Aug. 1 that it will pay the wages due retroactive to August 2003.

McDonald’s said it had mistakenly calculated employee hours worked to the nearest half-hour, ignoring any time that had been worked beyond the half hour.

The Health, Labor and Welfare Ministry has said it will step up efforts to crack down on companies that are not calculating overtime properly.

“The store manager told me that every store has a policy of not paying for fractional overtime,” said a college student who works part time at a “izakaya” pub franchise in Tokyo.

“When I complained after seeing the news about McDonald’s in the newspaper, I was told the chain’s headquarters is looking into it.”

The news came as students began their summer jobs, so the news clipping was widely circulated among the part-time staff, the student said.

In a circular issued by the former Labor Ministry, firms are told to calculate overtime wages on a monthly basis, counting in hourly increments. If the total time is more than 30 minutes it is to be rounded up to an hour and any time under 30 minutes is discounted.

However, at McDonald’s, these calculations were done on a daily basis. The practice affected about 130,000 workers.

But companies take different approaches to calculating workers’ overtime pay.

At major retailer Ito-Yokado Co., managers adhere to the policy of having employees to work overtime in 15-minute sets. These sets are then added up at the end of the month.

Convenience store chain Seven-Eleven Co.’s policy is to count overtime in 15-minute increments, but in practice the actual time worked is paid.

Restaurant chain Skylark Co. said it follows the labor ministry’s instructions but is considering calculating to the minute as it would reflect actual working time.

The McDonald’s problem was uncovered in a probe by the labor standards inspection office after someone at McDonald’s brought it to the attention of labor authorities, according to sources.

Based on all the employee reports, which are coming in more frequently as a result of new legislation protecting whistle-blowers, the labor ministry is poised to become more assertive about going after labor law violations such as overtime pay.

The number of labor law violations rose to about 82,000 in 2004 from about 79,000 the previous year.

Business groups, including the Japan Business Federation (Nippon Keidanren), are not happy with the changes.

“Restrictive orders by labor standards officials threaten to become an obstacle to firms’ international competitiveness,” one Keidanren official said.

The labor ministry has said that if labor and management cannot resolve matters by themselves, it is only natural for the labor authorities to do their duty.

A Tokyo-based managers’ union that has also received complaints about McDonald’s said the nonexistence of a union is one factor behind the problems with part-time workers’ pay.

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