Employer of Record in Japan

Guide to Hiring Employees in Japan

Your guide to hiring employees in Japan, covering the employment landscape, working customs, and local labor laws.

Capital City

Tokyo

Currency

Japanese Yen

 (

¥

)

Timezone

GST +9

Payroll Frequency

monthly

Tax Year

1 April - 31 March

Employer Tax

16.20%

Languages

Japanese

Leave The hiring to a local expert

Hire in Japan with ease—our experts handle employment and compliance for you.

Enquire Now

How to Hire In Japan

Hiring in Japan for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Japan in the following three ways:

  • Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Japan.
  • Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Japan’s labor laws and tax regulations.
  • Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

Hiring in Japan offers access to a highly educated and skilled workforce known for its strong work ethic and dedication to quality.

The country's stable economy and business-friendly environment provide a solid foundation for companies seeking growth opportunities.

pan's emphasis on innovation and technology makes it an attractive location for industries ranging from automotive to electronics.

Additionally, its rich cultural heritage and reputation for reliability make it an appealing destination for businesses looking to establish a presence in the Asia-Pacific region.

How to Employ In Japan

Businesses can only operate smoothly in Japan if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Japan below, to avoid any compliance issues.

Employment Contract Requirements

While it is not mandatory for employment agreements to be documented to be legally binding in Japan, it is advisable to create a written employment contract that outlines key terms of the employment relationship. This includes:

  • Identification of both the employer and the employee
  • Commencement date and expected duration of employment
  • Specification of the basic salary, additional compensation or benefits, and payment details
  • Comprehensive job description, outlining duties and responsibilities

Onboarding Process

We can help you get a new employee started in Japan quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Japan

The standard working hours in Japan are 8 hours per day, 40 hours per week.

Overtime in Japan

Limits on overtime are set at a maximum of 45 hours per month, and 365 hours per year. Managers and supervisors, as defined by the Labour Standards Act, are exempt, but late-night work allowance still applies. Overtime payment rates are additional percentages of the normal hourly wage, with different rates as follows:

  • Overtime (typically over 8 hours a day): additional 25.00%
  • Nights (22:00 - 05:00): additional 50.00%
  • Weekends and Holidays: an additional 35.00%

Probation Period in Japan

Probation is not mandatory in Japan. However, they are commonly practiced and are limited to a duration of three to six months, with an upper limit of one year.

A collage of people in various careers

Payroll Management in Japan

Fiscal Year in Japan

1 April - 31 March is the 12-month accounting period that businesses in Japan use for financial and tax reporting purposes.

Payroll Cycle in Japan

The payroll cycle in Japan is usually monthly, with employees being paid by the last day of the month.

Minimum Wage in Japan

The minimum wage for employees in Japan is typically 1,064 JPY per hour, amounting to ~187,264 JPY per month for a typical 40 hour work week.

Bonus Payments in Japan

Although not mandatory, many employees get an extra paycheck, a 13th-month salary, given in June and December. Whether employees receive this bonus depends on the company's choice, and this applies to both part-time and full-time workers.

Overview of Employment Taxes in Japan

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.2% on top of the employee salary in Japan.

Tax TypeTax Rate
Pension (applied on salary up to 650,000 JPY per month)9.15%
Health Insurance (applied on salary up to 1.39 million JPY per month). Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65 (generally 1.57%).4.99%
Unemployment Insurance0.65%
Nursing Care Insurance (applied on salary up to 1.39 million JPY per month for individuals between age 40 and 64)0.80%
Family Allowance (applied on salary up to 650,000 JPY per month)0.36%
Work Injury0.3%

Employee Payroll Tax Contributions

In Japan , the typical estimation for employee payroll contributions cost is around 15.34%.

Tax TypeTax Rate
Pension9.15%
Health Insurance (applied on salary up to 1.39 million JPY per month)4.99% (Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65)
Nursing Care Insurance (applied on salary up to 1.39M JPY per month)0.9%
Unemployment Insurance0.3%

Individual Income Tax Contributions

Japan's individual income tax ranges from 5% to 45% based on a progressive scale, influenced by factors like household status. Non-residents face a flat 20.42% national income tax with no deductions and potentially a 10% local inhabitant's tax if registered as residents by January 1st.

Income BracketTax Rate
0 - 1.95 million JPY5%
1.95 million JPY - 3.3 million JPY10%
3.3 million JPY - 6.95 million JPY20%
6.95 million JPY - 9 million JPY23%
9 million JPY - 18 million JPY33%
18 million JPY - 40 million JPY40%
40 million JPY And above45%

Pension in Japan

The retirement age is 65, and Japan has two pension programs: the National Pension and the Employees' Pension systems. Contributions from employers, employees, and the government collectively fund retirement benefits.

Info Icon

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Japan tailored to your needs.

CTA Image showing employees in various countries across the globe
Employee Cost Calculator

Get an instant breakdown of the true costs of hiring in Japan.

Calculate Now Default Icon Hover Icon

Leave Entitlements And Company Policies In Japan

Mandatory Leave Entitlement in Japan

The annual leave entitlement in Japan is 10 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Japan

Japan observes 16 public holidays. While technically employers aren't legally obligated to pay employees on national holidays, in practice, the majority of employers do provide payment for these days.

HolidayDate
New Years Day1 January
Coming of Age DayJanuary, day changes yearly
National Foundation Day11 February
Emperors Birthday23 February
Vernal Equinox DayMarch, day changes yearly
Shōwa Day29 April
Constitution Memorial Day3 May
Greenery Day4 May
Childrens Day5 May
Marine DayJuly, day changes yearly
Mountain Day11 August
Respect for the Aged DaySeptember, day changes yearly
Autumnal Equinox DaySeptember, day changes yearly
Sports DayOctober, day changes yearly
Culture Day3 November
Labour Thanksgiving Day23 November

Paid Time Off in Japan

The allocation of paid leave is specified in employment contracts and is based on the length of employment and unused days expire after two years. The entitlements are as follows:

  • Up to six months of service: 10 days of paid leave
  • Up to one and a half years of service: 11 days of paid leave
  • Up to two and a half years of service: 12 days of paid leave
  • Up to three and a half years of service: 14 days of paid leave
  • Up to four and a half years of service: 16 days of paid leave
  • Up to five and a half years of service: 18 days of paid leave
  • Up to six and a half years of service: 20 days of paid leave

Maternity Leave In Japan

Female employees are entitled to 14 weeks of paid maternity leave. A mandatory 6-week period must be taken before the child's birth. During maternity leave, the employee will receive approximately 2/3 of their salary, and Social Security is responsible for providing this payment.

Paternity Leave In Japan

Although not mandatory, most companies offer fathers four weeks off after their child is born, known as Childcare at Birth Leave. They can take it all at once or in two parts within eight weeks of the birth. Social security pays 67% of their salary during this time.

Sick Leave In Japan

Sick leave is not mandatory by law. While some companies may implement their own sick leave policies, it is not a universal requirement. Employees usually resort to using their vacation days to cover sick leave or make claims through social insurance systems.

Parental Leave In Japan

Parental leave, known as childcare leave, is available to both mothers and fathers in Japan. It begins the day after the conclusion of maternity leave for a maximum of one year. Labour insurance provides coverage, allowing employees to take this leave until their child reaches one year of age. Companies with 1,000 or more employees are obligated to disclose annually the rate at which their staff takes childcare leave

Bereavement Leave

Employees are entitled to paid leave of five days for the death of a 1st-degree relative, three days for 2nd-degree relatives, and two days for 3rd-degree relatives.

Menstruation Leave

Female employees have the right to unpaid time off during their menstrual period for health reasons. This is a statutory leave mandated by government legislation.

Employment Termination and Severance Policies in Japan

Termination Process in Japan

Termination depends on factors such as the employment agreement, collective agreement, contract type, job role, region, and the reason for termination. Given the complexity of termination procedures, they usually occur through mutual agreement and often involve additional compensation.

Notice Period in Japan

The standard notice period for termination is typically 30 days. If notice is not given, the employer can compensate with a payment in lieu of notice. However, this rule doesn't apply to employees serving a probationary period of 14 days or less.

Severance in Japan

There are no legal obligations for employers to provide severance payments. However, due to the strict regulations on terminating employees, many employers choose to offer severance payments as a way to secure a waiver and encourage voluntary resignation from the employee.

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Copied to Clipboard

Woman with glasses
Woman with glasses

Take your business to new places

Employer of Record for Japan

  • hire icon Hire employees without entity setup.
  • handshake icon Full compliance, we assume 100% liability.
  • gift icon Handle local payroll and benefits seamlessly.
  • headphones icon 24/5 responsive real-human support.
  • money icon Transparent pricing, no hidden fees.

FAQS

FAQs About Hiring In Japan

Playroll makes growing your team in Japan effortless. Ready to start?

The HR Platform built to scale your global team.

Employer of Record in [State]

Guide to Hiring Employees in [State]

Your guide to hiring employees in [State], covering the employment landscape, working customs, and local labor laws.

Capital City

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Employer Tax

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Leave The hiring to a local expert

Hire in Japan with ease—our experts handle employment and compliance for you.

Enquire Now

How to Hire In Japan

Hiring in Japan for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Japan in the following three ways:

  • Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Japan.
  • Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Japan’s labor laws and tax regulations.
  • Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

Hiring in Japan offers access to a highly educated and skilled workforce known for its strong work ethic and dedication to quality.

The country's stable economy and business-friendly environment provide a solid foundation for companies seeking growth opportunities.

pan's emphasis on innovation and technology makes it an attractive location for industries ranging from automotive to electronics.

Additionally, its rich cultural heritage and reputation for reliability make it an appealing destination for businesses looking to establish a presence in the Asia-Pacific region.

How to Employ In Japan

Businesses can only operate smoothly in Japan if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Japan below, to avoid any compliance issues.

Employment Contract Requirements

While it is not mandatory for employment agreements to be documented to be legally binding in Japan, it is advisable to create a written employment contract that outlines key terms of the employment relationship. This includes:

  • Identification of both the employer and the employee
  • Commencement date and expected duration of employment
  • Specification of the basic salary, additional compensation or benefits, and payment details
  • Comprehensive job description, outlining duties and responsibilities

Onboarding Process

We can help you get a new employee started in Japan quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Japan

The standard working hours in Japan are 8 hours per day, 40 hours per week.

Overtime in Japan

Limits on overtime are set at a maximum of 45 hours per month, and 365 hours per year. Managers and supervisors, as defined by the Labour Standards Act, are exempt, but late-night work allowance still applies. Overtime payment rates are additional percentages of the normal hourly wage, with different rates as follows:

  • Overtime (typically over 8 hours a day): additional 25.00%
  • Nights (22:00 - 05:00): additional 50.00%
  • Weekends and Holidays: an additional 35.00%

Probation Period in Japan

Probation is not mandatory in Japan. However, they are commonly practiced and are limited to a duration of three to six months, with an upper limit of one year.

A collage of people in various careers

Payroll Management in Japan

Fiscal Year in Japan

1 April - 31 March is the 12-month accounting period that businesses in Japan use for financial and tax reporting purposes.

Payroll Cycle in Japan

The payroll cycle in Japan is usually monthly, with employees being paid by the last day of the month.

Minimum Wage in Japan

The minimum wage for employees in Japan is typically 1,064 JPY per hour, amounting to ~187,264 JPY per month for a typical 40 hour work week.

Bonus Payments in Japan

Although not mandatory, many employees get an extra paycheck, a 13th-month salary, given in June and December. Whether employees receive this bonus depends on the company's choice, and this applies to both part-time and full-time workers.

Overview of Employment Taxes in Japan

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.2% on top of the employee salary in Japan.

Tax TypeTax Rate
Pension (applied on salary up to 650,000 JPY per month)9.15%
Health Insurance (applied on salary up to 1.39 million JPY per month). Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65 (generally 1.57%).4.99%
Unemployment Insurance0.65%
Nursing Care Insurance (applied on salary up to 1.39 million JPY per month for individuals between age 40 and 64)0.80%
Family Allowance (applied on salary up to 650,000 JPY per month)0.36%
Work Injury0.3%

Employee Payroll Tax Contributions

In Japan , the typical estimation for employee payroll contributions cost is around 15.34%.

Tax TypeTax Rate
Pension9.15%
Health Insurance (applied on salary up to 1.39 million JPY per month)4.99% (Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65)
Nursing Care Insurance (applied on salary up to 1.39M JPY per month)0.9%
Unemployment Insurance0.3%

Individual Income Tax Contributions

Japan's individual income tax ranges from 5% to 45% based on a progressive scale, influenced by factors like household status. Non-residents face a flat 20.42% national income tax with no deductions and potentially a 10% local inhabitant's tax if registered as residents by January 1st.

Income BracketTax Rate
0 - 1.95 million JPY5%
1.95 million JPY - 3.3 million JPY10%
3.3 million JPY - 6.95 million JPY20%
6.95 million JPY - 9 million JPY23%
9 million JPY - 18 million JPY33%
18 million JPY - 40 million JPY40%
40 million JPY And above45%

Pension in Japan

The retirement age is 65, and Japan has two pension programs: the National Pension and the Employees' Pension systems. Contributions from employers, employees, and the government collectively fund retirement benefits.

Info Icon

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Japan tailored to your needs.

CTA Image showing employees in various countries across the globe
Employee Cost Calculator

Get an instant breakdown of the true costs of hiring in Japan.

Calculate Now Default Icon Hover Icon

Leave Entitlements And Company Policies In Japan

Mandatory Leave Entitlement in Japan

The annual leave entitlement in Japan is 10 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Japan

Japan observes 16 public holidays. While technically employers aren't legally obligated to pay employees on national holidays, in practice, the majority of employers do provide payment for these days.

HolidayDate
New Years Day1 January
Coming of Age DayJanuary, day changes yearly
National Foundation Day11 February
Emperors Birthday23 February
Vernal Equinox DayMarch, day changes yearly
Shōwa Day29 April
Constitution Memorial Day3 May
Greenery Day4 May
Childrens Day5 May
Marine DayJuly, day changes yearly
Mountain Day11 August
Respect for the Aged DaySeptember, day changes yearly
Autumnal Equinox DaySeptember, day changes yearly
Sports DayOctober, day changes yearly
Culture Day3 November
Labour Thanksgiving Day23 November

Paid Time Off in Japan

The allocation of paid leave is specified in employment contracts and is based on the length of employment and unused days expire after two years. The entitlements are as follows:

  • Up to six months of service: 10 days of paid leave
  • Up to one and a half years of service: 11 days of paid leave
  • Up to two and a half years of service: 12 days of paid leave
  • Up to three and a half years of service: 14 days of paid leave
  • Up to four and a half years of service: 16 days of paid leave
  • Up to five and a half years of service: 18 days of paid leave
  • Up to six and a half years of service: 20 days of paid leave

Maternity Leave In Japan

Female employees are entitled to 14 weeks of paid maternity leave. A mandatory 6-week period must be taken before the child's birth. During maternity leave, the employee will receive approximately 2/3 of their salary, and Social Security is responsible for providing this payment.

Paternity Leave In Japan

Although not mandatory, most companies offer fathers four weeks off after their child is born, known as Childcare at Birth Leave. They can take it all at once or in two parts within eight weeks of the birth. Social security pays 67% of their salary during this time.

Sick Leave In Japan

Sick leave is not mandatory by law. While some companies may implement their own sick leave policies, it is not a universal requirement. Employees usually resort to using their vacation days to cover sick leave or make claims through social insurance systems.

Parental Leave In Japan

Parental leave, known as childcare leave, is available to both mothers and fathers in Japan. It begins the day after the conclusion of maternity leave for a maximum of one year. Labour insurance provides coverage, allowing employees to take this leave until their child reaches one year of age. Companies with 1,000 or more employees are obligated to disclose annually the rate at which their staff takes childcare leave

Bereavement Leave

Employees are entitled to paid leave of five days for the death of a 1st-degree relative, three days for 2nd-degree relatives, and two days for 3rd-degree relatives.

Menstruation Leave

Female employees have the right to unpaid time off during their menstrual period for health reasons. This is a statutory leave mandated by government legislation.

Employment Termination and Severance Policies in Japan

Termination Process in Japan

Termination depends on factors such as the employment agreement, collective agreement, contract type, job role, region, and the reason for termination. Given the complexity of termination procedures, they usually occur through mutual agreement and often involve additional compensation.

Notice Period in Japan

The standard notice period for termination is typically 30 days. If notice is not given, the employer can compensate with a payment in lieu of notice. However, this rule doesn't apply to employees serving a probationary period of 14 days or less.

Severance in Japan

There are no legal obligations for employers to provide severance payments. However, due to the strict regulations on terminating employees, many employers choose to offer severance payments as a way to secure a waiver and encourage voluntary resignation from the employee.

Back to Top

Copied to Clipboard

Woman with glasses
Woman with glasses

Take your business to new places

Employer of Record for Japan

  • hire icon Hire employees without entity setup.
  • handshake icon Full compliance, we assume 100% liability.
  • gift icon Handle local payroll and benefits seamlessly.
  • headphones icon 24/5 responsive real-human support.
  • money icon Transparent pricing, no hidden fees.

FAQS

FAQs About Hiring In Japan

Playroll makes growing your team in Japan effortless. Ready to start?

The HR Platform built to scale your global team.