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A recent compromise mediated by the Tokyo High Court settled an important issue of overtime pay. McDonald’s Corporation Japan agreed to pay ¥10 million to a worker who filed for correct compensation for his position. The case was an important milestone for employees long accustomed to unpaid overtime. It sets an important precedent for fair and reasonable compensation.

According to Japan’s Labor Standards Law, an employer does not have to pay overtime to managers. This case found that the fast food company had treated the employee as a “manager in name,” but without the authority of a real manager. This fuzzy area surrounding a common practice has now been clarified. Regular employees are entitled to full overtime pay, and managers can be given different conditions, but managers must really be managers.

Though this ruling is clear, the basic legal issue of accurate compensation is still complicated by many social and psychological factors special to Japan. First of all, Japanese employees tend to have strong dedication to their workplaces. That devotion has many positive benefits: productivity, responsibility and good service, among many others. At many workplaces, though, duties are not specified precisely and the sense of group responsibility ensures all tasks are finished before people go home. That inherent work ethic, though, also makes it easy for management to take advantage of workers.

McDonald’s can helpfully follow up this settlement with a more substantial policy that is as precise and productive about duties and pay as it is about preparing food. The settlement shows the company acknowledges its employees, and their attitudes, to be a valuable asset, an attitude that could serve as a useful model to all employers. Japanese workplaces should pride themselves on both strong responsibility by employees and fair compensation by employers.

The temptation to simply “shut up and put up” with unpaid overtime is even greater in the current economic crisis. As cutbacks, layoffs and firings continue in the current economic climate, all employees, rank and file or managerial, need to be paid fairly and treated well.

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