The applicability of a managerial supervisor as defined in Article 41 of the Labor Standards Law is determined by comprehensively considering the following points.
1. duties, responsibilities and level of authority
2. working style – existence and extent of discretionary working hours and working time management
3. wages and other benefits

◆duties, authority and level of responsibility
Whether or not a person is considered a managerial supervisor is not determined solely by his/her position or title within the company. It is determined based on whether or not the employee is actually in a “position that is integral to management.

◆working style
The following provisions apply to the working style.
“The actual working conditions must also be such that they do not conform to the regulations on working hours, etc.”
Managers and supervisors need to have discretion in their own work. This is because strict time management is not conducive to management decisions and responses.

◆wages and other benefits
“Wages and other benefits appropriate to the position.”
Managers and supervisors must be treated appropriately for their position. Due to the importance of their duties, they need to be treated appropriately in terms of salary, bonuses, position benefits, etc., compared to regular workers. Even if the annual salary is 6 or 7 million yen, it may be argued that the employee is not a managerial supervisor.

Thus, the requirements for “supervisors” under the Labor Standards Law are quite strict for companies, and it is extremely rare for a manager of a small or medium-sized company to fall under this category if the case goes to court.

◆Scrutiny from the Labor Standards Inspection Office
The Labor Standards Inspection Office will take immediate action in cases of ordinary unpaid overtime. However, as the issue of managers and supervisors is considered to be a matter of the company’s personnel rights, the officer may urge the matter to be resolved in court or to implement improvements in the form of guidance.
It is therefore important for a company to provide clarity on how it positions its managers and supervisors within the organization and to set out its stance on overtime payment to employees other than managers and supervisors.