Can you use a commission wage and the deemed-working-hours system for outside work for real estate brokerage sales staff?

In short: You cannot pay real estate brokerage sales staff on commission alone. Workers used on a piece-rate (contract) basis need a guaranteed wage corresponding to their working hours (Labor Standards Act, Article 27). The deemed-working-hours system for work outside the workplace (Article 38-2) can be used only when working hours are difficult to calculate, and it becomes hard to use where you give instructions and take reports at any time by smartphone (the Hankyu Travel Support case, Supreme Court, January 24, 2014). When you build a fixed overtime allowance into a commission wage, the part that is ordinary wages and the part that is overtime pay must be distinguishable, and any shortfall must be paid separately (the Kokusai Jidosha case, Supreme Court, March 30, 2020). The full-time requirement for a registered real estate transaction specialist assumes regular attendance, so it is not unrelated to how you design working hours. From the viewpoint of a shakai hoken roumushi's labour management, this page sets out the guaranteed wage, the deemed-working-hours system, the requirements for a valid fixed overtime allowance, and the registered real estate transaction specialist and working hours — leaving the real estate business licence to a gyoseishoshi and individual wage-claim disputes to an attorney, under separate engagements.

Real estate brokerage sales combines a commission wage that swings with each deal, outside work with staff going straight to and from sites, and sharp busy-and-slack cycles, so designing wages and working hours tends to be hard. This page is for managers and HR staff of real estate brokerage firms who want to design their sales staff's commission wage, fixed overtime allowance and outside working-hour management lawfully.

Can you pay commission alone? Is a guaranteed wage (Labor Standards Act, Article 27) needed?

A pure commission system (where the whole wage is set only by the output of deals) is not possible. This is because for workers used on a piece-rate or other contract basis, the employer must guarantee a certain amount of wages corresponding to their working hours (Labor Standards Act, Article 27, the guaranteed wage under a piece-rate system). The aim is to prevent actual earnings from dropping sharply due to circumstances not attributable to the worker, such as customers' convenience or the economy.

The law does not set the specific amount of the guaranteed wage either. The administrative interpretation asks that it be set so that income "not much below the ordinary actual earnings" is guaranteed, but there is no fixed numerical standard (this article does not assert a single amount). In practice, it is common to set a fixed-wage portion that guarantees a monthly minimum. Where the fixed portion makes up the bulk of the total wage, it is understood that the case does not fall under "used on a contract basis" under Article 27 in the first place.

How the wage is built	Relation to Article 27
Pure commission (no fixed wage)	No guaranteed wage — risk of violation
Fixed wage + commission	The fixed portion can serve as a guaranteed wage (amount to be examined)
Mostly fixed + small commission	May be understood as not "used on a contract basis"

In every case, you separately check that the wages actually paid do not fall below the regional minimum wage.

Can you use the deemed-working-hours system for outside work for field sales? (How smartphone contact is treated)

The deemed-working-hours system for work outside the workplace (Labor Standards Act, Article 38-2, paragraph 1) deems a worker to have worked the prescribed hours (or the hours normally required to perform the work) when the worker performs work outside the workplace for all or part of the working hours and the working hours are difficult to calculate. It is often considered for field sales where staff go straight to and from sites.

But the finding of "when the working hours are difficult to calculate" has become strict. In a case about a tour conductor, the Supreme Court held that it did not fall under "when the working hours are difficult to calculate" because the content of the work was fixed in advance, the conductor carried a mobile phone during the tour so instructions could be given at any time, and the state of performance was reported in detail in a conductor's log (the Hankyu Travel Support case, Supreme Court, January 24, 2014). For sales too, if you have staff in constant contact by smartphone for instructions and reports, so the company can grasp where they are and the times, the system becomes hard to use.

Circumstance	Ease of using the deeming system
The company designates where and when to visit and takes reports at any time	Hard to use (hours can be calculated)
The worker has large discretion and contact is not at any time	Room to consider
Times are recorded by an attendance app even with direct travel	Hard to use because hours can be grasped

Where the deeming system cannot be used, you grasp working hours by objective records as a rule, and pay overtime, late-night and holiday work at the premium rate (Labor Standards Act, Article 37). Whether working hours are difficult to calculate is also an issue for telework, covered in Working-hour management for telework. A qualified professional checks whether it applies in light of the actual situation.

What are the requirements for a valid fixed overtime allowance built into a commission wage?

To combine a fixed overtime allowance (a flat overtime payment) with a commission wage, you must meet the requirements set by the case law. There are two points. First, the part of the wage that is ordinary wages for working hours and the part that is overtime pay must be distinguishable (clear separation). Second, there must be an agreement and practice to pay the difference in a month where the fixed portion falls short of the actual overtime amount (the Nippon Chemical case, Supreme Court, July 19, 2018, and others).

What became a particular problem with commission wages was a scheme that deducts an amount equivalent to overtime pay in calculating the commission wage. The Supreme Court held that under such wage rules, the part that is ordinary wages for working hours and the part that is overtime pay cannot be distinguished, and overtime pay cannot be found to have been paid (the Kokusai Jidosha case, Supreme Court, March 30, 2020). In other words, merely stating that "overtime pay is included in the commission wage" does not amount to having paid overtime pay.

Design	Guide to validity
Deducting an overtime-equivalent amount from the commission and setting it off	May be found invalid because it cannot be distinguished
Showing the fixed overtime allowance as an independent allowance and paying the difference on a shortfall	Room to be valid if the requirements are met

Setting the amount and hours of the fixed overtime allowance and reflecting it in the work rules and wage rules is designed by looking at the whole wage system.

How do you organise the full-time requirement for a registered real estate transaction specialist and working hours?

A real estate transaction agent must place, for each office, at least one full-time registered real estate transaction specialist for every five persons engaged in the work (Real Estate Transaction Business Act, Article 31-3, paragraph 1; the same Act's Enforcement Regulation, Article 15-5-3). "Full-time" here is understood to mean regular attendance at that office and being engaged exclusively in real estate transaction business.

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This regular attendance is not unrelated to the design of working hours. For example, if you apply an extremely short-hours schedule or a broad deemed-working-hours system to a full-time specialist so that they can no longer be said to be in regular attendance, a problem can arise on the side of the setting requirement for the real estate business. It is safest to build the design so that both the labour side (working hours and work style) and the human requirement of the real estate business (full-time, regular attendance) are met. That said, the final judgment on whether the full-time requirement is met, and the real estate business licence procedure, are matters of the licensing of real estate transactions and are the work of a gyoseishoshi.

Issues about contract periods, such as conversion to an indefinite term where a commission-paid worker continues fixed-term contracts beyond a total of five years, are covered in The indefinite-term conversion rule.

What can 四葉社会保険労務士事務所 do for you?

四葉社会保険労務士事務所 in Kohinata, Bunkyo Ward, handles, for real estate brokerage sales staff, designing wage rules including a guaranteed wage, checking the requirements for a valid fixed overtime allowance and arranging the clauses, examining whether the deemed-working-hours system applies, designing how working hours are grasped, and putting the work rules and the 36 Agreement in order. The initial consultation is free. We quote according to the content and the number of employees; for how fees are thought about, see the fee schedule, and the questions we are asked most often are on the FAQ page.

The real estate business licence and the judgment on the full-time specialist requirement are the work of a gyoseishoshi, and individual wage-claim disputes over commission or fixed overtime allowances are the work of an attorney; we will guide you to contract with each separately, as an independent business entity. This office does not accept referral fees.

Frequently asked questions

Q. Can we pay real estate sales staff on a pure commission basis (no fixed wage)?
A. No. Workers used on a piece-rate or other contract basis need a guaranteed wage of a certain amount corresponding to their working hours (Labor Standards Act, Article 27). The aim is to prevent income from dropping sharply due to circumstances not attributable to the worker, such as customers' convenience or the economy. There is no specific numerical standard for the guaranteed wage in law; an administrative interpretation asks that income not much below the ordinary actual earnings be guaranteed. You also check that the wages actually paid do not fall below the minimum wage.

Q. If it is direct-to-and-from-site field work, can we use the deemed-working-hours system for outside work?
A. Only when the working hours are difficult to calculate. If you give instructions and take reports at any time by smartphone and the company can grasp where staff are and the times, the hours are not difficult to calculate and the system becomes hard to use (the thinking of the Hankyu Travel Support case, Supreme Court, January 24, 2014). Where it cannot be used, you grasp working hours by objective records and pay the premium rate for overtime, late-night and holiday work (Labor Standards Act, Article 37). Whether it applies must be checked against the actual situation.

Q. If we decide that "overtime pay is included in the commission wage," does that count as having paid overtime pay?
A. That alone is not enough. The part that is ordinary wages and the part that is overtime pay must be distinguishable, and any shortfall must be paid separately. A scheme that deducts an overtime-equivalent amount in calculating the commission wage has been held not to be distinguishable and not to count as having paid overtime pay (the Kokusai Jidosha case, Supreme Court, March 30, 2020). It is safest to show the fixed overtime allowance as an independent allowance and pay the difference in months where it falls short.

Q. How are the full-time specialist of the real estate business and working hours related?
A. A full-time registered real estate transaction specialist assumes regular attendance and exclusive engagement (Real Estate Transaction Business Act, Article 31-3, paragraph 1; Enforcement Regulation, Article 15-5-3). If you apply short-hours work or a broad deemed-working-hours system in labour terms so that they can no longer be said to be in regular attendance, a problem can arise on the setting-requirement side of the real estate business. It is safest to meet both the labour design and the human requirement of the real estate business; the final judgment on the full-time requirement and the licence procedure are the work of a gyoseishoshi.

Sources for this article

• Labor Standards Act (労働基準法, Act No. 49 of 1947), Article 27 (for workers used on a piece-rate or other contract basis, the guarantee of a certain amount of wages corresponding to working hours), Article 37 (premium pay for overtime, holiday and late-night work), Article 38-2, paragraph 1 (the deemed-working-hours system for work outside the workplace = the "when working hours are difficult to calculate" requirement) (confirmed against e-Gov on October 18, 2026)
• Supreme Court, Second Petty Bench, judgment of January 24, 2014 (the Hankyu Travel Support case). Held that it did not fall under "when working hours are difficult to calculate" because the work content was fixed in advance, instructions and reports could be made at any time by mobile phone, and the state of performance was reported in detail in a conductor's log (referenced October 18, 2026)
• Supreme Court, First Petty Bench, judgment of March 30, 2020 (the Kokusai Jidosha case, second appeal). Held that under wage rules deducting an amount equivalent to overtime pay in calculating the commission wage, the part that is ordinary wages and the part that is overtime pay cannot be distinguished, and overtime pay cannot be found to have been paid (referenced October 18, 2026)
• Supreme Court, First Petty Bench, judgment of July 19, 2018 (the Nippon Chemical case). For a fixed overtime allowance to be valid, it is a premise that the part that is ordinary wages and the part that is overtime pay can be distinguished (referenced October 18, 2026)
• Real Estate Transaction Business Act (宅地建物取引業法, Act No. 176 of 1952), Article 31-3, paragraph 1; the same Act's Enforcement Regulation, Article 15-5-3 (placing at least one full-time registered real estate transaction specialist for every five persons engaged in the work at each office). "Full-time" is understood as regular attendance and exclusive engagement (confirmed against e-Gov on October 18, 2026; the interpretation of "full-time" follows the Ministry of Land, Infrastructure, Transport and Tourism's thinking on the interpretation and operation of the Real Estate Transaction Business Act)
• There is no statutory standard for the specific amount of the guaranteed wage; only an administrative interpretation asking that income not much below ordinary actual earnings be guaranteed. A single figure is not given as a fixed value (referenced October 18, 2026)

This article does not go so far as to decide whom you should consult. Designing wage rules including a guaranteed wage, arranging fixed-overtime-allowance clauses, examining whether the deemed-working-hours system applies, grasping working hours, and putting the work rules and the 36 Agreement in order are the work of a shakai hoken roumushi. The real estate business licence and the judgment on the full-time specialist requirement are the work of a gyoseishoshi, and individual wage-claim disputes over commission or fixed overtime allowances are the work of an attorney; each is carried out by an independent business entity and contracted separately. This office does not accept referral fees. The cost of consulting 四葉社会保険労務士事務所 is set out in the fee schedule, and the questions we are asked most often are on the FAQ page.

This article is general information. Judgments that fit your particular circumstances are made by a qualified professional after a meeting. Written by Joji Uramatsu (Shakai Hoken Roumushi (Certified Social Insurance and Labor Consultant), Gyoseishoshi (Certified Administrative Procedures Legal Specialist), Registered Real Estate Transaction Specialist).