What is the Discretionary Labor System? Is it Applicable to Programmers?

In recent years, the call for work style reform has been growing louder, with various forms of work such as telework and home-based work gaining attention. Among these various work styles, there is a system known as the “discretionary labor system”. Many people may have heard the term “discretionary labor system”, but it is believed that not everyone fully understands what this work style entails. Therefore, in this article, we will first explain the discretionary labor system. Next, we will discuss whether the discretionary labor system can be applied to programmers.

What is Discretionary Labor System?

The Discretionary Labor System in Japan consists of two types: the Professional Work Discretionary Labor System and the Planning Work Discretionary Labor System. The Professional Work Discretionary Labor System is a system where, among the tasks defined by the Ministry of Health, Labor and Welfare Ordinance and the Minister of Health, Labor and Welfare Notice as tasks that require a significant amount of discretion on the part of the worker in terms of the means and methods of performing the tasks and the allocation of time, the tasks to be targeted are determined by the labor and management, and when the worker is actually put to work on those tasks, it is considered that the worker has worked for the hours predetermined by the labor and management.

On the other hand, the Planning Work Discretionary Labor System is a system that aims to improve work efficiency and productivity by placing more emphasis on results, by leaving the decision of the means of performing the tasks and the allocation of time to the discretion of the workers who are engaged in a certain range of tasks in each department of the company. For programmers, the application of the Professional Work Discretionary Labor System is an issue, so the following will explain the Professional Work Discretionary Labor System.

The Professional Work Discretionary Labor System is stipulated in Article 38-3, Paragraph 1, Item 1 of the Japanese Labor Standards Act, and is a system where, among the tasks defined by the Ministry of Health, Labor and Welfare Ordinance and the Minister of Health, Labor and Welfare Notice as tasks that require a significant amount of discretion on the part of the worker in terms of the means and methods of performing the tasks and the allocation of time, the tasks to be targeted are determined by the labor and management, and when the worker is actually put to work on those tasks, it is considered that the worker has worked for the hours predetermined by the labor and management.
※Reference (Ministry of Health, Labor and Welfare HP) https://www.mhlw.go.jp/general/seido/roudou/senmon/index.html

https://monolith.law/corporate/checkpoints-of-employment-agreement[ja]

What are the Eligible Tasks for the Discretionary Labor System?

The professional discretionary labor system requires tasks to be defined by the Ministry of Health, Labor and Welfare Ordinance (Japanese Labor Standards Act Enforcement Regulations) and the Notification of the Minister of Health, Labor and Welfare. The Ministry of Health, Labor and Welfare Ordinance and the Notification of the Minister of Health, Labor and Welfare have designated the following 19 tasks as eligible tasks.

(1) Research and development of new products or new technologies, or research in humanities or natural sciences
(2) Analysis or design of information processing systems (systems that use computers for information processing and are composed of multiple elements that form the basis for program design)
(3) Reporting or editing tasks in newspaper or publishing businesses, or reporting or editing tasks for the production of broadcast programs or cable radio broadcasts as defined by the Broadcasting Act (Law No. 132 of 1950), the Law on the Operation of Cable Radio Broadcasting (Law No. 135 of 1951), or the Cable Television Broadcasting Act (Law No. 114 of 1972)
(4) Invention of new designs for clothing, interior decoration, industrial products, advertising, etc.
(5) Producer or director tasks in the production of broadcast programs, films, etc.
(6) Invention of text related to the content, features, etc. of products in advertising, promotion, etc. (so-called copywriter tasks)
(7) Identification of problems in business operations using information processing systems, or invention or advice on methods to utilize them (so-called system consultant tasks)
(8) Invention, expression, or advice on the arrangement of lighting fixtures, furniture, etc. in buildings (so-called interior coordinator tasks)
(9) Creation of game software
(10) Analysis, evaluation of trends in the securities market, or the value of securities, or advice on investment based on this (so-called securities analyst tasks)
(11) Development of financial products using knowledge of financial engineering, etc.
(12) Professor research tasks at universities as defined by the School Education Act (Law No. 26 of 1947) (limited to those mainly engaged in research)
(13) Certified public accountant tasks
(14) Lawyer tasks
(15) Architect tasks (first-class architect, second-class architect, and wooden building architect)
(16) Real estate appraiser tasks
(17) Patent attorney tasks
(18) Tax accountant tasks
(19) Small and medium enterprise diagnostician tasks

(Ministry of Health, Labor and Welfare Website: https://www.mhlw.go.jp/general/seido/roudou/senmon/index.html[ja])

The above 19 eligible tasks are specifically defined because they require a high level of expertise and it is necessary to broadly recognize the discretion of workers.

Is it Possible to Apply the Discretionary Labor System to Programmers?

In the previous section, we discussed the types of work to which the “Japanese Discretionary Labor System for Professional Work” can be applied. But does this include programmers? In the following, we will explain whether programmers fall under the scope of work for the “Japanese Discretionary Labor System for Professional Work”.

The Work in Question

A programmer refers to a person or profession that creates programs. The main duties of a programmer involve creating source code in a programming language based on software specifications. Considering the duties of a programmer, whether the “Japanese Discretionary Labor System for Professional Work” can be applied to them or not depends on whether their work can be classified as “the analysis or design of information processing systems (a system composed of multiple elements for the purpose of information processing using electronic computers, which forms the basis for program design)”.

The Significance of the Work of Analyzing or Designing Information Processing Systems

Even when we talk about the “work of analyzing or designing information processing systems,” it is not clear from the text of the law what specific tasks this refers to. Therefore, the Tokyo Labor Bureau Labor Standards Inspection Office has published a document titled “For the Proper Introduction of the Discretionary Labor System for Professional Work[ja],” which explains the specific content of the target tasks.

What is an “Information Processing System”

In “For the Proper Introduction of the Discretionary Labor System for Professional Work,” an “information processing system” is defined as “a system composed of elements such as computer hardware, software, communication networks, and programs for processing data, with the purpose of organizing, processing, storing, and searching information.”

Firstly, in order to be called an information processing system, it must be ① “intended for the organization, processing, storage, and search of information.”
Next, it must be “composed of elements such as computer hardware, software, communication networks, and programs for processing data.”

What is the “Work of Analyzing or Designing Information Processing Systems”

Next, the “work of analyzing or designing information processing systems” is defined as “work such as (ⅰ) determining the optimal business processing method based on understanding needs and analyzing user tasks, selecting models that conform to this method, (ⅱ) designing input/output, processing procedures, etc., determining the details of machine configuration, software, etc., and (ⅲ) evaluating the system after the system is operational, discovering problems, and improving to solve them.” It is also stated that “programmers who design or create programs” are not included in the “work of analyzing or designing information processing systems.” From this, it can be inferred that general programmers are not included in the tasks subject to the discretionary labor system.

Case Study: Determining the Applicability of Discretionary Labor System to Programmers

There is a case known as the ADD case (Kyoto District Court, October 31, 2011 (Heisei 23) ruling, Labor Precedent No. 1041, p.49) that determined whether the discretionary labor system applies to programmers. Let’s introduce what this case is about.

Case Overview

Firstly, X had been working at computer company Y since its establishment in May 2001 (Heisei 13), as a system engineer under a discretionary labor system that assumed an 8-hour workday. However, from around September 2008 (Heisei 20), due to issues such as frequent errors in the customization work caused by X and his team members, X was diagnosed with depression in February 2009 (Heisei 21) and resigned from Y in March of the same year. Y sued X for damages of 20.34 million yen, claiming that X had not properly performed his duties or adhered to rules with clients. In response, X counter-sued Y for unpaid overtime, late damages, additional payments, and damages due to violation of the obligation to ensure safety.

Key Issue Related to This Article

While there are several points of contention in this case, the key issue related to this article is the “application of the professional discretionary labor system (Issue 2)”. In other words, the point of contention was whether the work X was doing fell under the “analysis or design of information processing systems”, which is a target job for the professional discretionary labor system.

Court’s Judgment

In the ADD case, the court ruled that “it cannot be said that the work X was doing was the ‘analysis or design of information processing systems’ as stated in Article 38-3 of the Labor Standards Act and Article 24-2-2-2 of the same Act’s Enforcement Regulations, and it cannot be recognized that the requirements for the application of the professional discretionary labor system are met.”

Firstly, whether or not the aforementioned target work applies is not determined formally, but objectively, it must be a job that can be judged as “a job that, due to its nature, requires the method of its execution to be largely left to the discretion of the worker engaged in the job, and it is difficult for the employer to give specific instructions regarding the determination of the means and time allocation for the execution of the job” (Article 38-3, Paragraph 1, Item 1 of the Labor Standards Act).

In the ADD case, the court ruled that “as stated by the head of department A of company F [the company that outsourced the work to Y], the work that X and other Y employees were doing was part of the system of software G, based on the instructions of company F, to be completed within a period of one to two weeks (in urgent cases, the next day or two to three days), and it cannot be denied that the discretion in the execution of the work is limited.”

In other words, in the ADD case, the work that X was doing in the first place had limited discretion in its execution, and it was judged that the professional discretionary labor system could not be applied to X. As a result, the existence of about 6 million yen in unpaid overtime was recognized.

Summary

We have explained the concept of the ‘Japanese Discretionary Labor System for Professional Work’ and whether it can be applied to programmers. As we have discussed in this article, strict criteria must be met for the ‘Japanese Discretionary Labor System for Professional Work’ to be applicable to programmers. Those who are under this system as programmers need to carefully examine whether they truly meet the requirements for its application. Furthermore, company representatives who have applied or are considering applying this system to their programmers must thoroughly verify its applicability. As these decisions require expert judgment, it is advisable to consult with a lawyer who is an expert in this field.