Two- and three-shift work in manufacturing: how to design variable working hours and night/shift allowances

Bottom line first: In a factory running two or three shifts, you use a monthly (Article 32-2 of the Labor Standards Act) or yearly (Article 32-4) variable working-hour system to match peaks and troughs, and the night band (10 p.m. to 5 a.m.) always carries the 25%-or-more night premium under Article 37, paragraph 4. A shift allowance is not a legal duty but a voluntary allowance, distinct from the night premium. The authoritative record lives in the work rules, wage rules and labor-management agreement.

How do you apply a variable working-hour system to two- and three-shift work?

Shift work is a way of working in which the hours of a single day are hard to fix. Rotating day, evening and night shifts tends to produce a design where some days are 8 hours and others approach 10, and under the plain principle of 8 hours a day and 40 hours a week (Article 32 of the Labor Standards Act) overtime arises frequently. So you use a variable working-hour system that averages a set period to within 40 hours a week.

System	Basis	Framework	Suited to
Monthly variable working-hour system	Article 32-2	Average within 40 hours a week over a period of up to one month; set by work rules or a labor-management agreement	Two-shift work with within-month peaks and troughs
Yearly variable working-hour system	Article 32-4	Average within 40 hours a week over the target period (over one month, up to one year); a labor-management agreement is mandatory	Continuous operation and three-shift work with seasonal swings

The yearly system has ceilings. The limit is 10 hours a day and 52 hours a week; where the target period exceeds three months the number of working days is capped at 280 a year, and the number of consecutive working days is in principle 6 (even for a special period set by agreement, within a range that still secures one day of rest a week). These consecutive-day and weekly limits are set by Article 12-4 of the Ordinance for Enforcement of the Labor Standards Act. For choosing the system itself, see choosing between variable working hours and flextime; for concrete shift design, see peak-season shifts, Article 36 agreements and variable hours at driving schools.

The point to watch is that a variable working-hour system is a device for changing the day-by-day distribution while leaving the total untouched; it does not reduce or exempt overtime. Anything beyond the pre-set frame is treated as overtime as usual, needing a Article 36 agreement and premium pay.

How do you design night and shift allowances and premium wages?

The night premium is statutory; the shift allowance is voluntary. Because the two differ in nature, write them separately in the wage rules.

Article 37, paragraph 4 of the Labor Standards Act provides that where work is done between 10 p.m. and 5 a.m., a premium of 25% or more of the ordinary wage must be paid. A night shift on a three-shift system overlaps this band entirely, so a night premium is needed even for work within scheduled hours. By contrast, a "shift allowance" or "night-duty allowance" is not required by law; it is an allowance the company sets voluntarily to reward the burden of shift work. It is not the case that paying a shift allowance instead of the night premium suffices.

The premium rate changes with how the categories overlap.

Category	Basis	Premium rate
Overtime (statutory)	Article 37, paragraph 1	25% or more
Overtime beyond 60 hours in a month	Article 37, paragraph 1, proviso	50% or more (applied to small and medium-sized enterprises too from 1 April 2023)
Holiday work (statutory holiday)	Article 37, paragraph 1	35% or more
Night work (10 p.m. to 5 a.m.)	Article 37, paragraph 4	25% or more
Overtime and night	Article 37, paragraphs 1 and 4	50% or more (25% + 25%)
Holiday and night	Article 37, paragraphs 1 and 4	60% or more (35% + 25%)

Even if you pay a fixed-sum shift allowance, for the bands where a night premium separately arises you must either add the night premium on top, or show clearly in the wage rules that the shift allowance plainly includes the equivalent of the night premium. Whether an allowance stands in for premium wages is judged by whether what it is consideration for can be identified in the work rules and wage rules.

How far are breaks, consecutive work and rest intervals allowed?

Breaks must be at least 45 minutes where working hours exceed 6 hours, and at least 1 hour where they exceed 8 hours, given during the working hours (Article 34 of the Labor Standards Act). Even if you call a handover period a break, if you actually require the worker to monitor machinery or handle the handover, it is standby time—that is, working time. Sleep during a night shift is also working time if there is a duty to respond to calls or abnormalities.

Rest days are at least once a week, or four days over four weeks (Article 35). Where a yearly variable working-hour system is used, the consecutive-working-day limit is in principle 6 as noted above; you cannot schedule unlimited consecutive work just because you want to keep the factory running.

A rest interval between shifts (securing a set rest period from the end of one shift to the start of the next) is a duty to make efforts under Article 2, paragraph 1 of the Act on Special Measures for Improvement of Working Hour Arrangements. It was added by the work-style reform legislation and took effect on 1 April 2019. In a rotation such as day shift to night shift on three shifts, arranging the schedule so the interval does not become extremely short accords with the aim of this duty. See the rest-interval duty and how to reflect it in the work rules.

What do you write in the shift table, work rules and labor-management agreement?

With a variable working-hour system, the way it is set is itself a requirement. Omissions can void the system, so the whole period is recalculated at the plain 8 hours a day and 40 hours a week, and the excess all becomes overtime. At a minimum, cover the following.

Document	What to write
Work rules	The shift categories (day, evening, night) with start/end times and breaks, a statement that a variable working-hour system is used, and the basis for the shift and night allowances (may be in the wage rules)
Labor-management agreement (mandatory for the yearly system)	The scope of covered workers, the target period and its start date, working days and the hours of each working day, the special period, and the valid term. File with the head of the competent Labor Standards Inspection Office
Shift table (work-schedule table)	Fix each working day's hours in advance. For the yearly system, a method of setting each day's hours with the consent of the majority representative at least 30 days before the first day of the target period is also allowed

The yearly variable working-hour agreement must be filed with the head of the competent Labor Standards Inspection Office. The monthly system requires filing if set by a labor-management agreement; if set by work rules, filing the work rules (workplaces with 10 or more regular workers) suffices. A Article 36 agreement is also needed, separately from the variable system. For the basic duty to prepare work rules, see from how many employees are work rules mandatory; for the limits of a Article 36 agreement, see how far overtime can go under a Article 36 agreement. Note that managers and supervisors (Article 41, item 2) are outside the working-hours, holiday and break rules, but the night premium still applies, so even a shift-system manager needs the night-band premium. See the "manager in name only" and the night premium.

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How do you run health examinations for shift workers (those in specified work)?

A worker who constantly performs work that includes night work is, as a person engaged in specified work, subject to health examinations more frequent than the ordinary once-a-year periodic examination.

Article 45, paragraph 1 of the Ordinance on Industrial Safety and Health provides that for a worker who constantly performs the work listed in Article 13, paragraph 1, item 3, the employer must have a physician give a health examination when the worker is assigned to such work and once every six months thereafter, on the items listed in Article 44, paragraph 1 (some items, such as the chest X-ray, need be done only once a year). One of the kinds of work in Article 13, paragraph 1, item 3 (item ヌ) is "work that includes night work." So a person who constantly works on a shift system including night shifts is subject to a health examination once every six months.

Target	Frequency	Basis
General workers	Once a year	Ordinance Article 44
Those in specified work (including work that includes night work)	On assignment + once every six months	Ordinance Articles 45 and 13, paragraph 1, item 3 (ヌ)

Where the line falls for "constantly performing work that includes night work" (the yardstick of frequency and number of times) must be checked against each site's actual pattern of work. For the basic duty and cost of periodic health examinations, see the duty, cost and time of periodic health examinations. Building the extra examinations that shift work entails into the work rules and the annual labor schedule from the outset, as a health-securing measure, is the practical approach.

Frequently asked questions

Q. If we pay a shift allowance for the night shift on three shifts, do we still need a separate night premium?
A. Yes. The night premium is a statutory premium wage under Article 37, paragraph 4 of the Labor Standards Act, and work between 10 p.m. and 5 a.m. must be paid at 25% or more above the ordinary wage. A shift allowance is an allowance the company sets voluntarily and is not a legal duty. If a shift allowance is to cover the night premium, the wage rules must show distinctly that the allowance includes the equivalent of the night premium and that it does not fall below the premium for the actual night-work hours. The name of the allowance alone does not extinguish the premium duty.

Q. With a yearly variable working-hour system, may we have unlimited consecutive work during a busy season?
A. No. Even under a yearly variable working-hour system, the limit is 10 hours a day and 52 hours a week, and the number of consecutive working days is in principle capped at 6 (Article 12-4 of the Enforcement Ordinance). Even where a special period is set by agreement, it is limited to a range that secures one rest day a week. Where the target period exceeds three months, working days are capped at 280 a year. Beyond these frames the variable system's requirements are not met, and the excess needs overtime premiums and a Article 36 agreement.

Q. Since the working-hours rules do not apply to a shift-system manager, is the night allowance also unnecessary?
A. The working-hours, break and holiday rules do not apply to managers and supervisors (Article 41, item 2), but the night premium (Article 37, paragraph 4) does. So even where a person managing a shift-system line qualifies as a manager and supervisor, the hours actually worked between 10 p.m. and 5 a.m. need the night premium. And if the reality does not amount to a manager and supervisor despite the title, overtime and holiday premiums arise too. Whether someone is a manager and supervisor is judged on the reality.

Q. What happens if the agreement or work-rule provisions for the variable system are inadequate?
A. The variable working-hour system is treated as void, and the target period's hours are recalculated at the plain 8 hours a day and 40 hours a week. As a result, the excess on long working days that were within the frame under the variable system all becomes subject to premium wages as overtime. For the yearly system, a labor-management agreement, filing with the head of the competent Labor Standards Inspection Office, and fixing the target period, working days and each day's hours are requirements. Because defects in how it is set are hard to correct later, it is important to prepare the documents before introduction.

Basis for this article

• Labor Standards Act (Act No. 49 of 1947), Article 32 — statutory working hours of 40 hours a week and 8 hours a day
• Article 32-2 — the monthly variable working-hour system (set by work rules or a labor-management agreement; averaging within 40 hours a week over a period of up to one month)
• Article 32-4 — the yearly variable working-hour system (by a labor-management agreement; averaging within 40 hours a week over the target period of over one month up to one year; setting the scope of workers, the target period, the special period, the working days and each day's hours and the valid term, filed with the head of the competent Labor Standards Inspection Office)
• Ordinance for Enforcement of the Labor Standards Act, Article 12-4 — for the yearly system, the 10-hour-a-day and 52-hour-a-week limits, the 280-day-a-year working-day cap where the target period exceeds three months, and the consecutive-working-day limit (in principle 6; for a special period, within a range that secures one rest day a week)
• Labor Standards Act, Article 34 — breaks (45 minutes where over 6 hours, 1 hour where over 8 hours, given during working hours); Article 35 — rest days (one a week or four over four weeks)
• Article 37, paragraph 1 — premium wages for overtime and holiday work (overtime 25% or more; overtime beyond 60 hours a month 50% or more, applied to SMEs too from 1 April 2023; holiday 35% or more); paragraph 4 — where work is done between 10 p.m. and 5 a.m., a premium of 25% or more of the ordinary wage must be paid
• Article 41, item 2 — the working-hours, break and holiday rules do not apply to a person in a managerial or supervisory position; the night premium (Article 37, paragraph 4) applies
• Act on Special Measures for Improvement of Working Hour Arrangements (Act No. 90 of 1992), Article 2, paragraph 1 — the employer's duty to make efforts to set a rest interval (a period from the end of work to the start of work) and other necessary measures; added by the work-style reform legislation (Act No. 71 of 2018) and effective 1 April 2019
• Ordinance on Industrial Safety and Health (Ministry of Labour Ordinance No. 32 of 1972), Article 45, paragraph 1 — a health examination on assignment and once every six months, on the Article 44, paragraph 1 items, for a worker constantly performing the work in Article 13, paragraph 1, item 3 (some items once a year); Article 13, paragraph 1, item 3 (ヌ) — "work that includes night work"
• Provisions checked on e-Gov Law Search on 1 November 2026. The yardstick for "constantly performing work that includes night work," the setting of a special period, and whether a fixed allowance meets the equivalent of premium wages must be confirmed for each site's actual pattern of work

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 designing the monthly and yearly variable working-hour systems for two- and three-shift manufacturing work, preparing and filing the labor-management agreement, reflecting the night premium and shift allowance in the wage rules, arranging shifts including rest intervals, and the annual plan for health examinations of those in specified work. Negotiation or litigation over unpaid premium wages in an individual case is not handled by this office; we refer you to a lawyer (Bengoshi). Where 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.

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).