Labor design when opening a restaurant — the late-night premium, shifts and fixed overtime pay

In short: For a restaurant, designing three things before you open — the late-night premium, shifts and fixed overtime pay — prevents later unpaid-wage trouble. Work between 10 p.m. and 5 a.m. needs a late-night premium of 25% or more (Labor Standards Act, Article 37, paragraph 4), and where that time is also overtime it stacks with the overtime premium of 25% or more to reach 50% or more. Even under a shift system the statutory working hours of 8 hours a day and 40 hours a week and the breaks (Articles 32 and 34) do not move, and an Article 36 agreement is required to exceed them (Article 36). Fixed overtime pay (deemed overtime) is valid only when you show "how many hours for how much," split between the ordinary wage and the premium part, and settle any shortfall once the hours are exceeded. This article sets out, for restaurant managers and owners, the design of working hours and wages to decide at opening.

"We stay open late — how do we pay the premium?" "We build shifts freely, so what about breaks and limits?" "If we add fixed overtime pay, do we not have to pay overtime?" — these are questions we often hear from people opening an izakaya, restaurant or café. This page focuses on how to design working hours, the late-night premium, fixed overtime pay and part-timers' social insurance before you open with a business permit. Handling an individual unpaid-overtime claim or litigation is outside its scope.

How is the late-night premium (after 10 p.m.) calculated at a restaurant?

The late-night premium adds 25% or more to the ordinary wage for work between 10 p.m. and 5 a.m. (Labor Standards Act, Article 37, paragraph 4). It is a separate premium from the overtime premium (Article 37, paragraph 1), so if the work is both late-night and overtime, both apply.

Way of working	Approximate add-on rate
Late-night within statutory hours (10 p.m.–5 a.m.)	Late-night 25% or more
Overtime (over 8 hours a day) overlapping late-night	Overtime 25% + late-night 25% = 50% or more
Statutory-holiday work overlapping late-night	Holiday 35% + late-night 25% = 60% or more
Overtime over 60 hours a month overlapping late-night	Overtime 50% + late-night 25% = 75% or more

The overtime rate is 25% or more in principle, but the portion of overtime exceeding 60 hours a month is 50% or more (Article 37, paragraph 1, proviso; applied to SMEs too since April 2023). The idea is the same for hourly-paid part-timers: you add the late-night premium to the hourly wage for the late-night band. You cannot treat a manager as exempt from the late-night premium, because it applies even to a manager or supervisor — see the treatment of a "manager in name only" and the late-night premium.

Under a shift system, are there still limits on hours and breaks?

Yes. A shift system is a way to arrange the time bands of work flexibly; it is not a way to remove the statutory working hours or the duty to give breaks.

Item	Principle
Statutory working hours (Article 32)	8 hours a day, 40 hours a week. An Article 36 agreement is needed to exceed them
Breaks (Article 34)	45 minutes for work over 6 hours, 60 minutes for work over 8 hours, given during the working time
Exception to simultaneous breaks	The food-service business is an exempt business for simultaneous breaks, so breaks may be taken in rotation (Article 40; Enforcement Regulations Article 31)
Article 36 agreement (Article 36)	Concluding and filing it is required to exceed statutory hours or work on a statutory day off

For a shop where hours concentrate in busy periods, a monthly or yearly variable working-hours system lets you keep to an average of 40 hours a week over the period. For how to choose the system, see choosing between the variable working-hours system and flextime. For the upper-limit rules on an Article 36 agreement (even with a special clause, within 720 hours a year, under 100 hours in a single month, an average of 80 hours or less over multiple months, and over 45 hours only up to six times a year), see how far an Article 36 agreement can be entrusted to a Shakai Hoken Roumushi.

How do you design fixed overtime pay (deemed overtime) so it is valid?

Fixed overtime pay (a fixed premium, deemed overtime) is a way of paying a set amount of overtime pay in advance each month. Adding it is allowed, but it is valid only if it meets requirements.

• Distinguishable: the ordinary-wage part and the part that is premium wage can be told apart in the contract and the pay slip
• Nature of consideration: the allowance is paid as consideration for overtime and similar work (Nihon Chemical case, Supreme Court First Petty Bench judgment of 19 July 2018)
• Shortfall settlement: if the person works beyond the hours the fixed amount corresponds to, the premium for the excess is paid additionally

You cannot run it as "we added fixed overtime pay, so no matter how much they work there is nothing more." You show how many hours for how much, and in a month that exceeds those hours you pay the difference — it is valid only when this is all in place. Restaurants have large swings in busy and slack periods, so months exceeding the assumed hours arise easily; deciding in advance how to calculate, including the overlap with the late-night premium, is safer. For the requirements and shortfall-settlement practice, see the requirements for valid fixed overtime pay and the difference settlement.

From what point do part-timers join social insurance?

Restaurants have many part-timers, so you must look at the joining threshold person by person. Workers' accident compensation insurance covers everyone regardless of hours. Employment insurance and social insurance (health insurance and employees' pension) are decided by requirements such as working hours.

Insurance	Approximate joining threshold
Workers' accident insurance	All workers (including part-timers and students)
Employment insurance	Prescribed working hours of 20 a week or more and an expected employment of 31 days or more (daytime students are in principle excluded)
Social insurance (three-quarters rule)	Prescribed weekly hours and monthly days both three-quarters or more of an ordinary worker's
Social insurance (specified workplace)	At a workplace with 51 or more employees: 20 hours or more a week, monthly wage of 88,000 yen or more, an expected employment over 2 months, and not a student

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The firm-size requirement for social insurance is scheduled to be lowered and abolished in stages. Even at a shop centered on student part-timers, requirements can be met through second jobs or work after graduation, so how you set the prescribed hours in the contract governs whether they join. For the details of the test, see what happens to social insurance when you hire for short hours. For the labor and social insurance of foreign staff, especially highly skilled people, see also labor and social insurance when hiring a highly skilled foreign professional.

Who handles the labor, the business permit and the premises?

In opening a restaurant, the procedures that move are divided by qualification.

What is done	Whose responsibility
Designing work rules, the Article 36 agreement, shifts and fixed overtime pay; social and employment insurance procedures; payroll	Shakai Hoken Roumushi (this office)
Restaurant business permit, food-hygiene notification, notification for late-night alcohol-serving business	Gyoseishoshi (procedures at the public health center and police)
Introducing premises, checking conditions, the lease	Real estate transaction agent
An individual unpaid-overtime claim, collective bargaining, a labor tribunal	Attorney

Designing the work rules, the Article 36 agreement and fixed overtime pay and the social-insurance procedures is the work of a Shakai Hoken Roumushi. The business permit and food-hygiene notification are for a Gyoseishoshi, and the premises are for a real estate transaction agent — each is an independent entity and you contract with them separately. Even when this office refers you to another entity, there is no referral fee.

What can 四葉社会保険労務士事務所 do?

四葉社会保険労務士事務所, in Kohinata, Bunkyo City, handles designing a restaurant's working hours, wage regulations and fixed overtime pay including the late-night premium, designing shifts and the variable working-hours system, drafting and filing the Article 36 agreement, the social and employment insurance procedures for part-timers, and payroll. Deciding the working conditions and wage pattern before you open prevents later corrections and trouble. Consultation is free. For fees, see the fee schedule; for frequently asked questions, see the FAQ.

Frequently asked questions

Q. At a shop that stays open late, what happens with the premium?
A. Work between 10 p.m. and 5 a.m. needs a late-night premium of 25% or more of the ordinary wage (Labor Standards Act, Article 37, paragraph 4). If that band is also overtime over 8 hours a day, the overtime 25% or more and the late-night 25% or more stack to 50% or more. The same applies to hourly-paid part-timers.

Q. Under a shift system, are there no breaks or limits on hours?
A. There are. Even under a shift system, the statutory hours of 8 a day and 40 a week do not move, and a break of 45 minutes for over 6 hours and 60 minutes for over 8 hours is required. An Article 36 agreement must be concluded and filed to exceed them. Because the food-service business is exempt from simultaneous breaks, breaks may be taken in rotation.

Q. If we add fixed overtime pay, is there no extra overtime to pay?
A. There can be. Fixed overtime pay is valid only when the ordinary-wage part and the premium part are distinguishable, it is clearly consideration for overtime, and any shortfall is settled once the corresponding hours are exceeded. If you do not show how many hours for how much and do not pay the difference in a month that exceeds them, it may not be recognized as valid.

Q. Do student part-timers need to join social insurance?
A. Daytime students are in principle excluded from both employment insurance and social insurance, but workers' accident insurance covers everyone. Requirements can be met through work after graduation, second jobs or increased hours, so how you set the prescribed hours in the contract is the dividing line for joining.

Sources

• Labor Standards Act (Act No. 49 of 1947), Article 32 (statutory working hours = 8 hours a day, 40 hours a week), Article 34 (breaks = 45 minutes over 6 hours, 60 minutes over 8 hours, given during work, simultaneous grant), Article 36 (agreement on overtime and holiday work and the upper-limit rules), Article 37 (premium wages; paragraph 1 = overtime 25% or more / over 60 hours a month 50% or more, holiday 35% or more; paragraph 4 = late-night 10 p.m.–5 a.m. 25% or more), Article 40 and Enforcement Regulations Article 31 (businesses exempt from simultaneous breaks, such as the entertainment-and-hospitality business)
• Whether fixed overtime pay (a fixed allowance) is recognized as consideration for overtime = Nihon Chemical case, Supreme Court First Petty Bench judgment of 19 July 2018. Whether an individual case qualifies is judged differently depending on the circumstances
• Social insurance for short-time workers (Health Insurance Act, Employees' Pension Insurance Act) = the three-quarters rule, and at a specified workplace the requirements of 20 hours or more a week, a monthly wage of 88,000 yen or more, an expected employment over 2 months, and not being a student, including the staged lowering and abolition of the firm-size requirement
• Employment insurance (Employment Insurance Act) = prescribed working hours of 20 a week or more and an expected employment of 31 days or more, with daytime students excluded
• The premium rates and the joining requirements for social and employment insurance are confirmed from materials published by the Ministry of Health, Labour and Welfare and the Japan Pension Service (as of September 2026)

This article does not decide whom to consult. Designing the work rules, the Article 36 agreement and fixed overtime pay and the social and employment insurance procedures are the work of a Shakai Hoken Roumushi; the restaurant business permit and food-hygiene notification are the work of a Gyoseishoshi; the premises are the field of a real estate transaction agent; and an individual unpaid-overtime claim, a labor tribunal or litigation is the work of an attorney — each is an independent entity and you contract with them separately. For fees when consulting 四葉社会保険労務士事務所, see the fee schedule; for frequently asked questions, see the FAQ.

This article is general information. A judgment on individual circumstances is made by a qualified professional after a consultation. Written by Joji Uramatsu (Shakai Hoken Roumushi, Gyoseishoshi, Registered Real Estate Transaction Specialist).