Managing a workforce that moonlights: work rules, aggregating working hours, and health management

Bottom line first: When a company permits side jobs, the decision is not simply whether to allow or forbid them. It has to settle how notifications are made, how hours worked elsewhere are captured, who pays the premium wage, how health is protected, and how confidentiality is handled.

Must an employer permit side jobs?

No provision of law says an employer must permit them. But the Ministry of Health, Labour and Welfare's Guidelines on Promoting Side Jobs and Dual Employment (established January 2018, revised September 2020, revised 8 July 2022) state, drawing on case law, that how a worker uses the time outside working hours is fundamentally the worker's own affair, and that it is appropriate for companies to permit side jobs in principle.

The guidelines then list four grounds on which a company may prohibit or restrict them.

1. Where there is an impediment to the provision of labour
2. Where business secrets would be leaked
3. Where competition would harm the company's interests
4. Where there is conduct damaging the company's reputation or credit, or destroying the relationship of trust

Keeping a blanket "side jobs prohibited" clause in the work rules therefore stops side jobs that fall outside these four categories as well, and becomes hard to justify. The opposite — "anything goes" — is not the answer either. What the company designs is a mechanism for gathering, in advance, the information needed to judge whether one of the four applies.

What should the work rules say?

The Ministry's Model Work Rules place the provision at Article 70, in Chapter 14 "Side jobs and dual employment" (December 2025 edition; the article number moves between editions). It has two limbs.

Paragraph 1 declares the principle of permission: a worker may engage in the business of another company outside working hours. Paragraph 2 reserves the employer's ability to prohibit or restrict where, on the basis of the worker's notification, one of the four categories applies.

When this is carried into a company's own rules, the following items are what actually prove necessary.

• What must be notified (only paid employment elsewhere, or also commissioned work and self-employment)
• When to notify (before starting, on a change of content, on ending)
• What the notification must contain
• How and how often hours worked are to be reported
• The procedure where a ground for prohibition or restriction applies
• Provisions on confidentiality and competition

On the obligation to prepare and file work rules, see From how many employees are work rules mandatory, and what is not mandatory?.

Notification or prior approval — which should the system be?

The guidelines treat the method for confirming whether a worker has a side job, and what it involves, as resting on notification by the worker, and say it is desirable to have a mechanism such as a notification system.

Using the word "approval" is not in itself unlawful, but running the system so that the company may freely grant or refuse sits awkwardly with the principle of permission. In practice it works better to call it a notification system, state expressly in the rules that the company may prohibit or restrict where one of the four categories applies, and write down the procedure for telling the worker the reason.

What the worker is asked to notify starts from the list in the guidelines.

• The business of the other employer
• The content of the work to be performed
• Whether the work is subject to aggregation of working hours

Where it is subject to aggregation, the following are confirmed in addition.

• The date the labour contract was concluded and its term
• Scheduled working days, scheduled working hours, and start and finish times
• Whether work beyond scheduled hours arises, and the expected number of such hours
• The procedure for reporting actual hours worked
• How often this is confirmed

Why does the company need to know hours worked elsewhere?

Because Article 38, paragraph 1 of the Labour Standards Act provides that "working hours shall be aggregated for the purposes of applying the provisions concerning working hours, even where the places of business differ".

The administrative interpretation is that "where the places of business differ" includes cases where the employers differ (Notification Kihatsu 0901 No. 3 of 1 September 2020). It does not mean only a different factory of the same company: hours at Company A and Company B are aggregated too.

A company cannot see another company's time records. The guidelines have the employer capture the hours worked at the other employer's place of business through declaration by the worker. Without a declaration there is nothing to aggregate, which is precisely why a notification system and a reporting mechanism are needed.

What is aggregated, and what is not?

Not everything is. The notification sets out which provisions concerning working hours are aggregated.

	Aggregated	Not aggregated
Scope	Statutory working hours (8 hours a day, 40 hours a week); the caps of under 100 hours in a single month and an average of 80 hours over multiple months	The limit on extended hours set in the Article 36 agreement (per place of business); rest periods, days off, and annual paid leave
Reason	These are provisions concerning working hours	These are set per place of business, or are not provisions concerning working hours themselves

Rest periods, days off and annual paid leave are not aggregated because they are not "provisions concerning working hours". The Article 36 limit is not aggregated because the agreement is concluded per place of business. The caps of under 100 hours in a single month and an average of 80 hours over multiple months, however, are aggregated. On the Article 36 framework, see The overtime ceiling is set by the Article 36 agreement — how far can a Shakai Hoken Roumushi help?.

Which company pays the premium wage?

It depends on the order of aggregation. The guidelines explain it in two stages.

Stage one aggregates scheduled working hours. Before the side job begins, scheduled hours are aggregated in the order in which the labour contracts were concluded. If this produces hours beyond the statutory limit, those hours are hours beyond the statutory limit for the employer whose contract came later in time.

Stage two aggregates hours beyond scheduled hours. Once the side job has begun, hours worked beyond scheduled hours are aggregated in the order in which they are actually worked.

Each employer then pays the premium wage for the hours it had the worker work at its own place of business among the hours that count as overtime once aggregated. It is neither "the later employer bears all of it" nor "the earlier employer bears all of it".

For the employer whose contract came first, this can produce a sequencing problem: its own hours stay within scheduled limits, yet its overtime becomes subject to a premium because the employee worked at the side job. This is the heaviest part of the arrangement in practice.

What does the "management model" make easier?

The guidelines set out the management model as a simplified method for reducing this calculation burden.

Before the side job begins, the parties set upper limits in advance so that the total of the hours beyond statutory limits in one month at the place of business of employer A, who comes first in time, and the working hours in one month at the place of business of employer B, who comes later, falls within under 100 hours in a single month and an average of 80 hours over multiple months.

Employer A then pays the premium wage for the hours beyond statutory limits at its own place of business, and employer B for the working hours at its own place of business.

Under this method, so long as each company keeps the worker within the limit fixed in advance, it no longer has to capture and recalculate the other company's actual hours each time. For the company permitting the side job, this is often the realistic landing point.

The management model is not a statutory provision but an operating method set out in the guidelines. Introducing it requires obtaining the side-job employer's understanding through the worker.

Is the aggregation rule about to change?

As of 20 August 2026, the aggregation rule in Article 38, paragraph 1 of the Labour Standards Act has not changed.

The debate continues. The report of the Study Group on the Labour Standards Legal Framework indicates that, as regards payment of premium wages, it would be worth working towards an amendment so that aggregation is not required, while maintaining aggregation of working hours for the purpose of protecting health. Materials before the Labour Conditions Subcommittee of the Labour Policy Council likewise show that aggregation is a reason companies find it hard to permit side jobs (200th session, 16 June 2025 and others).

But this is debate at the study stage. A check of the list of bills the Ministry has submitted to the Diet shows that, as of 20 August 2026, no bill to amend the Labour Standards Act has been submitted.

A company building its system now should therefore build it on the current rule. Waiting on the basis that "aggregation is about to disappear" is not the safer choice. At the same time, there is value in not over-engineering — keeping the management model's limits in operating procedures or individual agreements rather than in the body of the work rules makes the calculation method easier to change later.

How far does health management go?

Health check-ups, interview guidance for workers with long hours, and stress checks under Article 66 and related provisions of the Industrial Safety and Health Act must be carried out regardless of whether the worker has a side job.

The guidelines state that in selecting who is covered by these health-protection measures, hours at the side-job employer need not be aggregated. This differs from the treatment of premium wages. Where the worker has the side job at the employer's direction, however, the guidelines say it is appropriate to aggregate hours through an exchange of information with the side-job employer.

On top of that, taking measures such as exempting or curbing overtime and holiday work is described as appropriate for preventing long working hours. Being able to decide to curb overtime on one's own side when a notification shows that total hours are likely to run long is what actually protects health.

On the extension of the stress-check obligation to workplaces with fewer than 50 employees from April 2028, see Stress checks become mandatory for workplaces under 50 from April 2028; on what to do once ill health has arisen, see When an employee takes leave for mental health reasons.

How do workers' accident, employment and social insurance change?

Each scheme works differently.

Scheme	Treatment where there is a side job
Workers' accident compensation insurance	Since 1 September 2020, the basic daily benefit amount for a multiple-employer worker is determined by aggregating the wages from all places of employment. Where a single workplace alone would not support recognition, there is a route to recognition as a multiple-workplace-factor accident, assessing the burdens at several workplaces together (cerebrovascular and cardiac disease, mental disorders and the like)
Employment insurance	In principle a worker is insured only at the principal place of employment. For those aged 65 and over, the multi-job holder scheme has been available since 1 January 2022: where the scheduled weekly hours at two places of employment total 20 or more (each being 5 or more but under 20), among other requirements, the worker becomes insured by applying to Hello Work in person
Social insurance	Where the requirements are met at two or more covered places of business, the Notification of Selection of Place of Business / Employment at Two or More Places of Business must be submitted within 10 days of the event. The standard monthly remuneration is determined by aggregating the monthly remuneration at each place of business, and the premium is apportioned according to the remuneration at each

The social insurance notification is in principle submitted by the insured person, though a person in the office or a Shakai Hoken Roumushi may also submit it. On how the standard monthly remuneration is determined, see What is the difference between the santei kiso todoke and the getsugaku henko todoke?; on coverage for short-hours workers, see What happens to social insurance when you hire someone for short hours?.

For employment insurance, from 1 October 2028 the scheduled weekly hours requirement falls from 20 hours or more to 10 hours or more (Act Partially Amending the Employment Insurance Act and Others, Act No. 26 of 2024). The multi-job holder requirements change to 10 hours or more at one place of employment and 10 hours or more in total across two. Side jobs in the 10-to-19-hour range will start to bear on insured status, so the amendment weighs most on companies that permit side jobs. On the wider picture for those aged 65 and over, see Is it all right to keep the mandatory retirement age at 60?.

How does an employed side job differ from a freelance one?

Aggregation of working hours is required where the person works as a worker to whom the working-hour regulation of the Labour Standards Act applies.

The guidelines state that where the form of the side job is freelance work, independent practice, starting a business, joint management, or acting as an adviser, consultant, counsel, director or auditor, working-hour regulation does not apply and aggregation is not required.

So an employee who takes on web development under a commissioning contract at the weekend and an employee who works part-time for another company at the weekend put different obligations on the company. The former needs no aggregation calculation; the latter does. That is why the notification form needs a field for whether the work is as an employee.

That said, even where the contract is called a commissioning contract, a person who in fact works under direction and supervision may be judged to be a worker. That boundary is set out in The line between outsourcing and employment is not drawn by the contract.

Even where aggregation is not required, the guidelines recommend that the worker keep track of their own working time so that overwork does not impair performance. For the company too, asking about total working time makes sense for health protection.

How are confidentiality, competition and information handled?

Of the four grounds for prohibition or restriction, leakage of secrets, competition, and damage to reputation or credit belong to a different track from the management of working hours.

What the company can put in place is a framework of this kind.

• Provisions on confidentiality and competition in the service rules within the work rules
• A notification form recording the side-job employer's business and the content of the work
• Confirmation that the company's trade secrets and customer information will not be taken out
• A rule that company-issued devices and accounts are not to be used for the side job

Whether a particular side job amounts to competition, and how far a non-competition agreement is effective, are individual determinations this office does not handle. Where the validity of a contract or a claim for damages is in issue, we refer you to a lawyer (Bengoshi). Drafting the provisions of the work rules and passing legal judgment on an individual case are different jobs.

Frequently asked questions

Q. Our work rules say "side jobs prohibited". Is leaving that in place a problem?
A. It is not immediately unlawful, but the Ministry's guidelines say that how the time outside working hours is used is fundamentally the worker's own affair and that permitting side jobs in principle is appropriate. A company may prohibit or restrict on four grounds: an impediment to the provision of labour, leakage of business secrets, competition harming the company's interests, and conduct damaging reputation or credit or destroying trust. A blanket ban stops side jobs outside those four as well, and becomes hard to justify at the point where the company actually wants to act. Switching to a notification system and writing in the four grounds is the practical course.

Q. If an employee starts a side job, does a premium wage attach to overtime at our company?
A. It may. Under Article 38, paragraph 1 of the Labour Standards Act, working hours are aggregated even where the employers differ. Scheduled hours are aggregated in the order the labour contracts were concluded, and hours beyond scheduled hours in the order they are actually worked; each company pays the premium wage for the hours it had the worker work among the aggregated overtime. To reduce the burden, the guidelines set out the management model: with each company's limit fixed in advance, there is no need to capture and recalculate the other company's actual hours each time.

Q. Do we aggregate working hours where the side job is under a commissioning contract?
A. Not where the way of working falls outside the working-hour regulation of the Labour Standards Act. The guidelines list freelance work, independent practice, starting a business, joint management, and acting as an adviser, consultant, counsel, director or auditor. But a contract called a commissioning contract may still create worker status if the person in fact works under direction and supervision. And even outside aggregation, keeping track of working time is recommended for health protection.

Q. We hear the rule aggregating side-job hours is going away. Should we wait?
A. As of 20 August 2026, the aggregation rule in Article 38, paragraph 1 of the Labour Standards Act has not changed. The report of the Study Group on the Labour Standards Legal Framework indicates it would be worth working towards an amendment so that aggregation is not required for premium wages, while maintaining aggregation for health protection — but this is debate at the study stage. No bill to amend the Labour Standards Act appears among the bills the Ministry has submitted to the Diet. A company building its system now should build it on the current rule, in a form that is easy to adjust later.

Basis for this article

• Labour Standards Act (Act No. 49 of 1947), Article 38, paragraph 1 — "working hours shall be aggregated for the purposes of applying the provisions concerning working hours, even where the places of business differ"
• "Interpretation of Article 38, paragraph 1 of the Labour Standards Act concerning the management of working hours in cases of side jobs and dual employment" (Notification Kihatsu 0901 No. 3 of 1 September 2020) — "where the places of business differ" includes cases where the employers differ. What is aggregated is the statutory working hours and the caps of under 100 hours in a single month and an average of 80 hours over multiple months. The limit on extended hours in the Article 36 agreement is per place of business and is not aggregated. Rest periods, days off and annual paid leave are not provisions concerning working hours and are not aggregated
• Ministry of Health, Labour and Welfare, Guidelines on Promoting Side Jobs and Dual Employment (established January 2018, revised September 2020, revised 8 July 2022) — how the time outside working hours is used is fundamentally the worker's own affair, and permitting side jobs in principle is appropriate. Prohibition or restriction is available where (i) there is an impediment to the provision of labour, (ii) business secrets would be leaked, (iii) competition would harm the company's interests, or (iv) there is conduct damaging reputation or credit or destroying trust. Whether there is a side job and what it involves is confirmed by notification from the worker, and it is desirable to have a mechanism such as a notification system
• The same guidelines (aggregation) — scheduled working hours are aggregated in the order the labour contracts were concluded, and hours beyond scheduled hours in the order they are actually worked. Each employer pays the premium wage for the hours it had the worker work at its own place of business among the hours that count as overtime once aggregated
• The same guidelines (management model) — before the side job begins, upper limits are set so that the total of the hours beyond statutory limits in one month at employer A's place of business and the working hours in one month at employer B's place of business falls within under 100 hours in a single month and an average of 80 hours over multiple months; employer A pays the premium wage for the hours beyond statutory limits at its own place of business and employer B for the working hours at its own
• The same guidelines (outside aggregation) — freelance work, independent practice, starting a business, joint management, and acting as an adviser, consultant, counsel, director or auditor are outside the working-hour regulation of the Labour Standards Act and outside aggregation, though keeping track of working time is recommended so that overwork does not impair performance
• The same guidelines (health management) — health check-ups, interview guidance for workers with long hours and stress checks under Article 66 and related provisions of the Industrial Safety and Health Act must be carried out regardless of a side job. Hours at the side-job employer need not be aggregated in selecting who is covered. Where the side job is at the employer's direction, aggregating through an exchange of information with the side-job employer is appropriate. Measures such as exempting or curbing overtime and holiday work are appropriate
• Ministry of Health, Labour and Welfare, Model Work Rules (December 2025 edition) — Chapter 14 "Side jobs and dual employment", Article 70. Paragraph 1 provides that a worker may engage in the business of another company outside working hours; paragraph 2 that the employer may prohibit or restrict where, on the basis of the worker's notification, one of the four grounds applies. The article number differs between editions (Article 68 in the March 2025 explanatory material)
• Report of the Study Group on the Labour Standards Legal Framework — as regards payment of premium wages, it would be worth working towards an amendment so that aggregation is not required, while maintaining aggregation of working hours for health protection. Materials before the Labour Conditions Subcommittee of the Labour Policy Council (200th session, 16 June 2025 and others) show aggregation as a reason companies find it hard to permit side jobs. Both are at the study stage; as of 20 August 2026 no bill to amend the Labour Standards Act has been submitted to the Diet
• Ministry of Health, Labour and Welfare, "Workers' accident insurance benefits for multiple-employer workers" (in force 1 September 2020) — a multiple-employer worker is a worker in a labour contract relationship with several places of business under different employers at the time of the injury, among others. The basic daily benefit amount is determined on the basis of the aggregate of wages from all places of employment. Benefits for multiple-workplace-factor accidents, recognised by assessing the burdens at several workplaces together, were newly established (cerebrovascular and cardiac disease, mental disorders and the like)
• Ministry of Health, Labour and Welfare, "Employment insurance multi-job holder scheme" (in force 1 January 2022) — the requirements are being aged 65 or over, being employed at two places of employment, scheduled weekly hours at one place of 5 or more but under 20, a total of 20 or more across the two, and an expected employment period of 31 days or more at each. The worker applies in person to the Hello Work with jurisdiction over their residence, and insured status begins on the date of application (no retroactive application)
• Act Partially Amending the Employment Insurance Act and Others (Act No. 26 of 2024) — the scheduled weekly hours requirement for insured status changes from 20 hours or more to 10 hours or more, in force 1 October 2028. The requirements for the special insured person aged 65 and over (multi-job holder) likewise change to 10 hours or more at one covered business and 10 hours or more in total across two
• Japan Pension Service, "Procedure where a person becomes employed at several places of business" — where the requirements are met at two or more covered places of business at the same time, the "Health Insurance / Employees' Pension Insurance Notification of Selection of Place of Business and Employment at Two or More Places of Business" is submitted within 10 days of the event. The standard monthly remuneration is determined by aggregating the monthly remuneration at each place of business, and the premium is apportioned on the basis of the remuneration at each. The notification is submitted by the insured person, or by a person in the office or a Shakai Hoken Roumushi
• Public materials and statutory provisions were checked on 20 August 2026

This article does not determine whether any particular case qualifies. 四葉社会保険労務士事務所 can advise on preparing and amending work rules and internal regulations on side jobs, designing notification forms and reporting workflows, organizing the operation of working-hour aggregation including the management model, preparing and filing Article 36 agreements, building internal rules to curb long working hours, social insurance notifications arising from employment at several places of business, and procedures under the employment insurance multi-job holder scheme. Tax filing on side-job income and the treatment of resident tax are matters we connect you with a tax accountant (Zeirishi) for. Whether a particular side job amounts to competition, the effect of confidentiality and non-competition agreements, and situations where damages are in issue are not handled by this office; we refer you to a lawyer (Bengoshi). Company incorporation and licensing where an employee sets up a company for a side job are handled by 四葉行政書士事務所 as a separate business entity. If a different professional is needed, each is contracted separately, and there is no referral fee. Fees are set out in the fee schedule, and frequently asked questions are collected in the FAQ.

四葉不動産株式会社, 四葉行政書士事務所, and 四葉社会保険労務士事務所 each accept work as separate, independent business entities. Where we introduce another professional, we do so on the basis that you contract with them directly, and we receive no referral fee.

This article is general information. Individual determinations are made by a qualified professional after a consultation, in light of individual circumstances. Written by Joji Uramatsu (Shakai Hoken Roumushi, Gyoseishoshi, Registered Real Estate Transaction Specialist).