Everything You Need to Know About Hiring in Japan

Here’s where you get started with human resources best practices and hiring in Japan.

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Last updated at November 29, 2022
beautiful scenery in the country of japan

Japanese Currency

Japanese Yen (JPY)

The Capital of Japan

Tokyo

Time Zone in Japan

GMT+9

Important Facts About the Country of Japan

The Official Language of Japan

The most widely spoken language in Japan is Japanese, which is divided into a large number of dialects. The dialect spoken in Tokyo is considered standard Japanese.

An Overview of Japan’s Legal System

The modern Japanese legal system is derived from the civil law system, following the model of 19th Century European legal systems. Japan’s system is especially influenced by the legal codes of Germany and France. Japan established its legal system when imperial rule was restored in 1868 as part of the Meiji Restoration. The Meiji Constitution served as the organic law of the Japanese empire, being in effect from 1890 to 1945. Japan underwent major legal reform following World War II. Notably, the 1947 Constitution was drawn up under the Allied Occupation, with significant American influence. Japan’s current legal system is a hybrid of continental and American law. Both the Civil Law concepts and the more recent Common Law influences are affected by traditional Japanese values.

The Unique Culture of Japan

Japanese culture has many unique and interesting aspects. There is a mix of both modern and traditional elements that are reflected in Japan’s cuisine, architecture, performing arts, fashion, anime, manga and geisha. Japan is rich in history, with deep traditions dating back thousands of years. At the same time, Japanese society is always in a state of rapid change, continuously evolving with new trends in fashion and technology.

Japanese culture pushes the boundaries of what is possible. It has perplexed observers for decades as to how Japan can be so advanced in terms of technology and infrastructure, while at the same time wedded to traditional cultural approaches. Japanese companies are innovative and disruptive, whilst retaining strong alignment with traditional hierarchical structures, risk aversion and detail obsession.

Human Resources in Japan at a Glance

What to Know About Employment Law in Japan

The scope of Japan’s labor law framework is defined by the Japanese Civil Code. Article 622 defines employment contracts, article 632 defines a contract for work and article 643 defines a contract for mandate. The parties are free to decide the functional nature of their contracts. However, labor rights apply regardless of the label in the contracts.

Workers in Japan enjoy significant protection under the country’s employment laws and through well-established court precedents. The guidelines and notices issued by the Japanese Ministry of Health, Labor and Welfare (MHLW) also tend to be employee-friendly. In addition, cultural norms and societal expectations, such as the traditional concept of ‘lifetime employment,’ play important roles in driving the employer-employee relationship.

The Necessity of an Employment Contract in Japan

Employers in Japan must provide employees with certain terms of employment in writing. Japanese employment contracts are short and simple. They are intended to supplement labor laws and work rules. An English-only contract is acceptable but it’s more common to have both Japanese and English. If a contract is in two languages, it should state which version is to be used in the case of a dispute.

Japanese Contract Terms Requirements and Restrictions

An employer and an employee are free to execute a fixed-term contract, which does not need to be renewed unless the parties agree.

However, when fixed-term employment contracts (those which started after April 1st, 2013) are renewed to reach a period exceeding three years, the employee will acquire the right to request and change the relationship to open-ended. There have already been two separate legislative acts with exceptions to this maximum time period. There is an exception for employees who possess expert knowledge or skills, or who are 60 years of age or older, in which case the maximum term of the employment contract is five years.

There is a restriction against setting the retirement age below 60 years. When the retirement age is lower than 65, the employer must 1) raise the retirement age to 65, 2) establish a system to re-employ employees who wish to work past the retirement age until they reach 65 or 3) abolish the retirement age.

Guidelines for Establishing Work Rules in Japan

Employers with 10 or more employees must create work rules and file them with the Labor Standards Inspection Office. Work rules are an important part of the employment contract and must stipulate certain terms and conditions of employment, such as wages, working hours, leave, termination and disputes. Employers with fewer employees are free to develop work rules on a voluntary basis.

Work rules must be submitted to a representative of the majority of employees (or a majority union if one exists) for comments prior to filing. If there is any discrepancy between the work rules and the employment contract, the provision most favorable to the employee takes priority.

Common Probation Period Practices

The probation period is not compulsory but it is common. Typically, it lasts for three to six months and should not exceed one year. An employee can be terminated during or at the end of the probationary period but only if the termination is objectively reasonable and socially acceptable. While this test is somewhat easier to meet for probationary employees, it may still be difficult to justify the termination.

What to Know About Severance Pay in Japan

Severance Pay is not a statutory requirement in Japan. However, most MNCs will pay some sort of severance following a termination. The typical amount is one month for every year of service, plus 30 days’ notice or 30 days’ payment in lieu. Sometimes, there will also be a buyout of leave. The company may pay the severance in the form of a retirement allowance, which can offer significant tax benefits to the individual if the individual has stayed a long time with the company.

Rules Regarding Paid Leave in Japan

Newly-hired employees are generally granted 10 days’ paid annual leave following the completion of six months’ service. The entitlement rises by one day a year for the following two years and by two days a year thereafter. This entitlement can go up to a maximum of 20 days. Unused leave expires after two years and cannot be carried over unless the contract says otherwise. Employers are not required to pay out unused annual leave in cases of termination. However, it can become a part of the negotiation when an employee leaves the company.

Mandatory Overtime Payments That Adhere to Japan’s Labor Standards Law

Overtime pay is mandatory for work performed in excess of the statutory working hours. Employees who are managers and above are not usually eligible to receive overtime payments. A common workaround is for individual employment contracts to state an employee’s remuneration includes a certain amount of overtime. This is subject to the caps set out in Japan’s Labor Standards Law.

Notice Period Requirements for Employees and Employers

If leaving a company, employees are required to provide employers with a notice period of 30 days or as otherwise detailed in an employment contract.

Employers must provide at least 30 days’ advance notice of termination or offer a payment in lieu of notice. However, due to the difficulty in justifying a termination, many employers offer severance agreements and make additional payments in exchange for the employee’s voluntary resignation and waiver of claims against the employer. The 30-day notice period does not apply to employees terminated during the first 14 days of the probationary period.

Japan’s Rules Regarding the Termination Process & Fixed-Term Agreements

The termination process can be exceedingly difficult in Japan. An employee can only be dismissed if the employer has objectively reasonable grounds to do so. The dismissal must also not be considered unreasonable in general societal terms. Reasons of poor performance or misconduct that ordinarily justify termination in other countries may not apply in Japan.

A termination that is not justified will be deemed as an abuse of the employer’s termination rights. Such termination is a nullity. The employee will be reinstated with back pay if the employee seeks such relief.

Due to difficulties associated with terminating employees, employers are increasingly hiring employees for fixed-terms of employment. Fixed-term agreements are generally required to be for three years or less.

Rules Regarding Bonus Payments in Japan

Employers do not have to pay variable compensation (including bonuses) if the nature of the payment is discretionary. Work rules or employment contracts often provide for fixed bonus payments, typically dividing the annual salary in more than 12 installments and paying bonuses in June (‘Kaki Shoyo’) and December (‘Toki Shoyo’. In these cases, the payment is legally classified as wages and employers are legally obligated to pay it.

Standard Fees & Allowances Typically Paid By Employers

On top of salary, companies usually pay transportation fees for employees from their residence to their working place. This commuter allowance, which is generally the cost of a monthly train pass, is usually subject to a cap and is a non-taxable allowance for the employee. Any other allowances paid on top of the base salary are subject to income tax.

Calculating Statutory Costs in Japan

Employer statutory benefit contributions are approximately 15% of the salary and taxable allowances.

Important Information About Taxes and Social Security in Japan

Personal Income Tax (PIT) for Permanent Residents and Non-Residents

Permanent resident taxpayers in Japan are taxed on their global income. Non-resident taxpayers are taxed only on their Japan-sourced income. Non-permanent resident taxpayers are taxed on their income, other than foreign-source income that is not remitted into Japan. They can be taxed on part of foreign-sourced income that is paid in or remitted to Japan.

Personal Income Tax Rates Applicable to Taxable Income are as Follows:

Income tax rates (national):

Japan operates a progressive tax system where an individual’s tax rate increases with their income. At present, the following tax brackets apply:

 

 

Taxable Income (JPY) Tax Rate Deduction
<¥1.95 million 5% ¥0
¥1.95-3.3 million 10% ¥97,500
¥3.3-6.95 million 20% ¥427,500
¥6.95-9 million 23% ¥636,000
¥9-18 million 33% ¥1,536,000
¥18-40 million 40% ¥2,796,000
Over ¥40 million 45% ¥4,796,000

For example, a single taxpayer with a taxable income of ¥8 million would fall in the 23% tax bracket and pay ¥1.204 million in taxes (¥8M x 23% = ¥1.84M – ¥0.636M = ¥1.204M).

Calculating Local Income Taxes

Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income. This is collectively known as residence tax or inhabitant tax (‘jumin-zei’). In total, this amounts to 10% (6% prefectural and 4% municipal) of the taxpayer’s taxable income from the prior year. This applies when the taxpayer is a resident of Japan as of January 1 of the current year. For local inhabitant’s tax purposes, an equalization per capita tax is also assessed. The standard annual amount is JPY 5,000 but this may vary based on the prefecture or municipality in which the taxpayer resides. Local inhabitant’s tax is not deductible.

Non-Residents Employment Income Subject to Tax

A non-resident taxpayer’s Japan-sourced compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available. This rate includes 2.1% of the surtax mentioned previously (20% x 102.1% = 20.42%). A non-resident taxpayer may be subject to the local inhabitant’s tax at a rate of 10% if they are registered as a resident as of January 1 of the current year.

Deductions Allowed For The Calculation Of PIT

Earned income deduction: A resident taxpayer who earns income from employment is eligible for an earned income deduction for the purposes of both national income and local inhabitant’s tax. The amount of the deduction is based on the amount of the employment income and is determined by reference to a deduction table.

Personal deductions: Interest is not tax deductible. Japanese social security contributions are fully deductible. Medical expenses, regardless of where they were paid, are tax deductible. There are certain limitations.

Charitable contributions: Charitable donations designated by the Ministry of Finance in Japan are tax deductible, with certain limitations. Qualified contributions or donations that total over JPY 2,000 are deductible in calculating the national tax. The total deduction is limited to 40% of income or less than JPY 2,000. The definition of a qualified contribution is specific and very restrictive. 

Life insurance premiums (or private pension): Premiums paid to a Japanese agency in local currency are deductible to a limited extent in computing national and local inhabitants taxes.

Earthquake insurance premiums: Premiums paid for earthquake insurance are deductible for the purpose of both national and local inhabitant’s tax to a limited extent.

Mortgage deductions: Mortgage interest is not tax deductible in Japan. However, a tax credit on housing loans may be available for up to ten years when certain conditions are met. The total amount of tax credit is determined by the year in which the taxpayer started living in the property as well as mortgage balance at the end of the tax year.

Personal deduction: Resident taxpayers are entitled to a personal exemption for themselves and their dependent spouses This is set at JPY 380,000 for national income tax purposes and JPY 330,000 for local inhabitant’s tax purpose. 

Business deductions: Business expenses are tax deductible in some limited cases. An employer’s reimbursements of business expenses (such as moving, travel and entertainment expenses) do not constitute taxable income to the employee. However, these expenses must be required for the employer’s business.

PIT: Employer Requirements for Withholding Income Tax & Year-End Adjustments

Withholding income tax at source:

Employers who pay income subjected to withholding at source must pay the taxation office the amount of tax withheld at source no later than the 10th day of the month following the month that the income was paid. Regarding paying withholding tax on residents’ salaries, a special measure is provided for small businesses with fewer than 10 persons on the payroll. This allows them to pay withholding income tax in six-month installments. Alternatively, they can twice a year (by July 10th and by January 20th) with professional fees added..

Year-end adjustment on withheld income tax:

The year-end adjustment is for the calculation of the income tax done by the employer. During the year, employee tax is withheld each month from the employee’s salary. This is based on the rates published by the tax office. At the end of the year, the exact tax liability of the employee is calculated based on his her special situation. This may vary depending on circumstances, such as the number of dependents. An adjustment is made so the total amount of tax withheld during the year equals the tax liability of the employee. The amount of tax withheld from employees is reported annually in the withholding tax report (‘Gokeihyo’) filed in January.

Employers’ Responsibilities Regarding Social Insurance

Japan has four different kinds of insurance systems, which companies are legally obliged to take part in. All workers that meet certain criteria are covered by the insurance. 

  1. Workers’ Accident Compensation Insurance: covers any illness or injury at work or while commuting to/from work. 
  2. Employment Insurance: provided to workers who become unemployed. This helps to maintain stable employment, such as providing financial aid and subsidies. 
  3. Health Insurance and Nursing Care Insurance: covers medical and nursing care expenses incurred by workers. 
  4. Employees’ Pension Insurance: provides benefits for old age, death or disability.

Employers who have >101 employees need to enroll part-time employees in social insurance coverage.

Social Security System Monthly Salary Cap (JPY) Employer Contribution Employee Contribution
Pension Insurance 650,000 9.15% 9.15%
Children’s Fund 650,000 0.36%
Health Insurance 1,390,000 4.905% 4.905%
Long Term Care Insurance (over 40 yrs. old) 1,390,000 0.82% 0.82%
Unemployment Insurance 0.85% 0.50%
Worker’s Compensation 0.3%
Total   16.240% 15.280%

*The above table serves as a broad guideline. Actual rates charged by GoGlobal will differ. 

Workers’ Accident Compensation Insurance and Employment Insurance are collectively known in Japan as labor insurance. Health, Nursing Care and Employees’ Pension Insurances are collectively referred to as social insurance.

A company must enter these insurance systems when first incorporating or hiring staff by submitting labor and social insurance notification forms to the relevant authorities. The company usually pays insurance premiums by deducting the portion of the premiums payable by employees from their wages and paying these together with the portion of the premiums payable by the employer to the applicable authorities. 

Social insurance premiums are deducted from a worker’s monthly salary. Pension and health premiums are calculated as a percentage of the ‘standard salary.’ Standard salary is determined by first taking the average compensation of the three previous months. This average is then applied to a standard salary table that outlines a single amount. This is called the ‘standard salary’ for any salary in that taxed range. The standard salary is capped. The maximum standard salary is JPY 650,000 for pension and JPY 1,390,000 for health. Unemployment and workers’ accident compensation insurance premiums are calculated as a percentage of the actual compensation instead of the standard salary. 

Bonus payments are subject to the above insurances. However, specific rules apply depending on the frequency and regularity of the payments. There are also annual caps placed on premium payments pertaining to bonuses.

Rules Regarding Pension Insurance Contributions

All residents contribute to pension insurance. This premium is revised every April and is determined by factors such as price fluctuation and real wage index. Salaried workers under the age of 70 pay a percentage of their standard salary. The premium for salaried workers is 18.30%, paid half by the employer and half by the employee.

The pension benefit is paid once the insured individual is 65. They must also be unemployed and have paid pension premiums for at least 10 years. The benefit amount will depend on the individual’s total contribution.

Non-Japanese workers who have lived and worked in Japan for less than 10 years may apply to claim a lump sum payback on their national pension when they leave Japan and will no longer be eligible for Japanese pension benefits. However, this only applies for those who have been covered by employees’ pension insurance for at least six months. The application must be sent within two years after leaving Japan. 

Employers pay a child allowance premium (0.36%) along with the pension premium. This premium funds the government program that administers a childcare allowance to Japanese residents with children.

What to Know About Health Insurance and Long Term Care Insurance in Japan

Health insurance provides medical coverage for all insured residents. Long-term care insurance provides elderly care benefits. It also administers allowances in cases where the insured individual experiences childbirth, injury, sickness and death. National health insurance in Japan insures non-salaried residents under the age of 75. Employees’ health insurance covers salaried workers under 75 of years of age as well as their dependents under 75. Upon turning 75, both non-salaried and salaried persons will become insured under the Latter-Stage Elderly Healthcare System.  

National Health and Employees’ Health insurances cover 70% of medical expenses for persons under 70 and for those who are 70 to 74 with a standard salary of JPY 280,000 or more. Otherwise, the government covers 80% of medical expenses for those who are aged 70 to 74 with a standard salary below JPY 280,000 and 90% for those over 75. If the total monthly medical costs of a household exceed a certain threshold, the exceeded amount will be reimbursed. The maximum threshold is determined by the insured person’s compensation and age.

Like pension, Employees’ Health insurance premiums are calculated based on standard salary. The percentage depends on the employer’s registered prefecture. For example, Tokyo’s rate is 9.84%, with half paid by the employer and half by the employee. Persons ages 40 to 64 are subject to an additional 1.8% premium on top of their health premium for long term care insurance. The employer and the employee each pay half. 

Japan’s Parameters for Eligibility and Receipt of Unemployment Insurance

Unemployment insurance provides allowances for unemployment, childcare and family care leave. 

The length of time for receiving unemployment allowance depends on age, termination reason and the period for which one has paid unemployment insurance premiums. The waiting period for the first allowance payment is four weeks if the company has terminated the employee. If the employee quits on his or her own accord, there is a waiting period of up to three months. Allowance is paid monthly following the waiting period, provided the person can prove they are actively searching for a job.

Representative directors are not eligible for this insurance, as they are not engaged by an employment agreement. Rather, they are covered under a service contract. Directors serving on the board of directors are also not eligible for this insurance. However, directors who simultaneously function as an employee, such as a high-ranking employee with a title like department head, are eligible. 

The premium rate varies according to the employer’s industry type and the employer is responsible for paying a greater percentage than the employee. For example, if an employer is in a general industry type (meaning the employer is not in agriculture, forestry, fishery, sake production or the construction industry), the employer will pay a 0.60% premium and the employee 0.30%.

Rules About Eligibility and Receipt of Workers Accident Compensation Insurance

Worker’s accident compensation insurance provides medical care allowances for work and commuting-related injuries, diseases and deaths. It also provides compensation allowances for unpaid medical leave periods exceeding four days. 

The same rule of exception applies for directors as with unemployment insurance but there are two ways in which representative directors and directors may become eligible. One way is to apply for special enrollment, which has several requirements such as industry type and number of employees. The second way is to gain unemployment insurance eligibility as a director who simultaneously serves as an employee. Representative directors are not eligible for unemployment insurance and will therefore not qualify for this second method.

Premiums are covered by the employer. The rate, which depends on the employer’s industry type, can vary from 0.25% to 10.3%. Common industry types are finance, insurance and real estate (0.25%), warehousing and security (0.7%) as well as wholesale/retail trade, restaurant, and lodging (0.4%).

Employers pay an additional 0.002% premium for asbestos insurance, which funds healthcare relief for asbestos-related injuries. 

Alternative Health Unions Available to Employers in Japan

While most employers register with public health insurance, alternative health unions exist for particular industries. In this case, employers will opt out of the standard health insurance scheme. Premiums are usually cheaper and the benefits are at a higher level than the standard scheme. Employers can only enroll if certain requirements are met.

Employers can also enroll in a pension fund, which provides employees with enhanced pension benefits upon reaching pensionable age. 

Availability of Pension Funds and Supplemental Insurances in Japan

401K: Most employers simply use the government pension scheme, but some multinational companies will employ an equivalent of a 401K plan in Japan, managed by a third party. The employer would set the thresholds and matching scheme and engage a third party. Typically, there are minimum headcounts required to employ such a plan in Japan.

Most smaller MNC employers do not provide supplemental insurances since the standard insurances cover most items. However, some larger MNCs do provide life insurance/top up insurance and travel insurance. Directors and Officers Liability (D&O) Insurance is common as well for senior executives.

What Employees Need to Know About Working in Japan

Information Regarding Salary Payments

Wages must be paid to workers:

  • in currency
  • directly and in full
  • at least once a month 
  • on a fixed date

It is common practice to pay between the 25th – 31st of the month for the current month salary. If salary is paid in arrears, it’s usually paid by the 10th of the following month.

Options for Providing Payslips to Employees

Employers can provide employees with payslips online, as a PDF or by paper.

Japan’s Laws Regarding Timesheets and Record Keeping

Pursuant to the Labor Standards Law, the following records must be maintained at each workplace for three years:

  • a wage ledger, showing paid amounts and the basis of calculation (including hours worked)
  • a workers’ roster
  • other related documents on hiring and compensation

Important Holiday Allowance Requirements

The maximum work week in Japan is six days a week. Employers are required to offer a minimum of one holiday a week. This one-day holiday does not need to be any particular date. It is also not compulsory to offer public holidays as company holidays. However, it is common practice to provide two company holidays a week (usually Saturday and Sunday) plus public holidays if such a holiday falls on a weekday. Japan celebrates around 16 national holidays yearly. In addition, most companies are closed from December 29 through January 3, even though only January 1 is a national holiday. Many Japanese companies also close for up to one week in August to observe Obon holidays.

Labor Laws, Annual Leave, and Paid Vacation Days

Under Japan’s labor laws, all full-time employees are guaranteed the minimum 10 days of paid annual leave per year after serving an initial six months of employment. This is offered irrespective of race or gender. Employees are required to have been present for at least 80% of the hours they were supposed to be working.

The statutory minimum number of paid vacation days per year, in addition to the company holidays, are:

Length of Continuous Service 6 months 1st year and 6 months 2nd year and 6 months 3rd year and 6 months 4th year and 6 months 5th year and 6 months 6th year and 6 months onward
Number of entitled annual leave days 10 11 12 14 16 18 20

Usually, the full entitlement of annual leave for a given year is granted on either the annual anniversary of employment or on a standard day each year that applies to all employees.

Following the introduction of special rules applicable to high-level professionals on April 1st, 2019, qualifying employees will have to take holidays of no less than 104 days and no less than four days every four weeks. Employers must grant employees at least one yearly holiday consisting of two weeks in a row as well as other prescribed health support.

 

Policies Regarding Sick Leave for Employees

  • In general, there is no statutory sick leave in Japan. When employees are ill, they apply their paid vacation time to take a leave of absence. Some foreign companies grant sick leave to their employees as an extra benefit. There is no requirement to grant sick leave unless the work rules or employment contract state otherwise. 
  • Employees absent from work due to non-work related sickness or injury are not entitled to pay from their employer.
  • Employees are covered by workers’ accident insurance in the cases of injury, illness, disability or death resulting from employment. There are a number of benefits available in the case of a work-related accident.  
  • Under employees’ health insurance coverage, employees are entitled to two-thirds of the applicable standard wage as illness/injury allowance after three days of absence for 18 months. This is calculated according to a specific formula. However, if the employer pays any wages during this period, the allowance will be reduced by the amount the employee receives.
  • Termination is rarely an immediate option and work rules often include a suspension period (e.g. from three to six months) during which the employee does not perform his or her duties but maintains a contractual relationship with the employer. If the employee recovers during this period and can return to work, he or she will be reinstated. If the employee does not recover from their condition within this period, the employer can then provide notice of termination. The duration and reasons for suspension can vary.

Rights & Prohibitions Regarding Maternity Leave in Japan

  • Before birth: Expecting mothers are entitled to a maternity leave of six weeks before childbirth or within fourteen weeks in cases where the mother is expecting two or more children.
  • After birth: Employees cannot work before eight weeks have passed since childbirth. However, after six weeks have passed since the birth, the employee can submit a request to work. The employer can allow the employee to perform duties that are approved by a doctor.
  • It is not mandatory to pay an employee during maternity leave. If no wages are paid, the employee is paid two-thirds of her base wage for up to 14 weeks from her health insurance. If paid from health insurance, this allowance is non-taxable.
  • Employers are prohibited from treating a female employee disadvantageously because of maternity leave, as per the Act on Equal Opportunity and Treatment Between Men and Women in Employment. Therefore, employees can resume the same job with the same working conditions after maternity leave.

Entitlements & Wages Paid During Paternity Leave

Male employees are entitled to 4 weeks of flexible paternity leave. This leave can be taken within the first 8 weeks after childbirth, and applications to the Employer must be submitted at least 2 weeks in advance. Wages are paid by social security at the same rate as maternity leave (two-thirds of base wage).
The new regulation creates an environment to make it acceptable for working fathers to take paternity leave.

Japan’s Allowances for Child Care Leave

  • An employee raising a child (biological or adopted) less than one year old must be allowed to take parental leave until the child reaches one year of age. 
  • If both the father and mother take child care leave, the leave period is extended until the child reaches one year and two months. 
  • The leave period may be extended until the child reaches two years if one of the following situations exist:
    • The employee wants to register with daycare but is unable to, or
    • The employee’s spouse that was caring for the child and was planning to continue to do so after the child turns one year old cannot do so due to their death, injury or illness.
  • It is not mandatory to pay the employee during child care leave. If no wages are paid or only a partial wage below 80% of base wage is paid, the employee will be paid from half to two-thirds of their base wage from their unemployment insurance.

Child care leave can be taken on an hourly basis. In this case, the hourly leave must commence from the employee’s usual daily start time or end at the daily finish time. 

Employees who work for four hours or less per day are also entitled to take child care leave on an hourly basis. 

Child care leave is entitled to all permanent employees, including employees who have not fulfilled one continuous year of service. However, employees on fixed-term contracts must complete at least one year of continuous service to be entitled.

Employees who take childcare leave are exempted from social insurance premiums on the month when childcare leave starts, if the leave is >14 days in the same month.

Guidelines on Nursing Care Leave for Employers & Employee

It is not mandatory to pay an employee during nursing care leave. If no wages are paid or only a partial wage below 80% of base wage is paid, the employee is paid 40-80% of the base pay from their unemployment insurance.

An employee can take nursing care leave on an hourly basis. However, the hourly leave must commence from the employee’s usual daily start time or end at the daily finish time. Employees who work for four hours or less per day are also entitled to take child care leave on an hourly basis.

Other Common Reasons to Grant a Leave of Absence

It is common to offer leave for marriage, death of a relative, etc. These provisions should be defined in the Rules of Employment.

Benefits to the Employee in Japan

Popular Japanese Neighborhoods for Residents and Foreigners

Specific neighborhoods in Tokyo are comfortable and foreigner-friendly, making them popular among expats. These neighborhoods include Minato-ku (Aoyama, Azabu, Roppongi and Shirokane), Meguro-ku (Nakameguro and Jiyugaoka), and Shibuya-ku (Hiroo, Daikanyama and Ebisu). In Yokohama, the popular area is Naka-ku. There are a range of international schools, shops and restaurants with English-speaking staff. Expats can decide on the best place to live based on where they work, access to schools for their children and the type of lifestyle they lead.

Public Transportation for Getting Around Japan

Japan’s vast network of public transportation, especially trains and the Shinkansen, provides a fast and efficient way of reaching your destination, whether traveling near or far.

World-Class Japanese Cuisine

Dining in Tokyo or any of Japan’s large cities offers an unforgettable experience. In addition to the wide selection of Japanese food, you can find world-class international cuisine including a particularly good selection of Chinese, Italian, French and Indian restaurants.

Tokyo is known for its cuisine and high-quality restaurants, having retained its position as the city with the most Michelin-starred restaurants in the world for 15 years in a row.

Rates & Rules Regarding Overtime Pay in Japan

For non-exempt employees, the maximum work hours are 40 hours a week at eight hours a day.

In order for the employer to demand overtime work, a labor-management agreement (36 Agreement) that provides for the maximum overtime work to be performed must be concluded with the union or the employee representative. This agreement must be submitted to the respective labor standards inspection office. Minimum rates for overtime work in Japan must be paid as follows:

Overtime work up to 60 hours per month: 25% of the hourly base pay

Overtime work exceeding 60 hours per month: 50% of the hourly base pay

Late night pay (work performed between 10 p.m. and 5 a.m.): 25% of the hourly base pay

Holiday pay (work performed on the legal holiday): 35% of the hourly base pay

Benefits Expats Commonly Receive When Working in Japan

Expats in Japan will typically receive a cost of living allowance (COLA), annual home leave, international school, club memberships and housing under the tax efficient legal rent scheme. Some will have a car allowance. Additional security and drivers are rare.

Qualifications for Receiving an Annual Health Check Benefit

Employees over 35 years old registered under the social insurance general system “Kyokai Kempo” are entitled to receive benefits for an annual physical check up at any hospitals designated by ‘Kyokai-kempo’ (協会けんぽ). The cost owed by the employee for this check up is around JPY 7,000. More advanced check ups are available for additional fees.

Recent Changes In Employment Related Laws

The package of work-style reform bills passed by Parliament on June 29, 2018 amended the Labor Standards Law and other employment-related laws. The provisions came into force between April 2019 and April 2020.

The three pillars of the reform are as follows:

1. Overtime will be capped at 45 hours a month and 360 hours a year. If there is a temporary surge in work, the annual limit may be increased to 720 hours. However, this is also subject to a monthly maximum of 80 hours. The overtime worked is averaged over a period of consecutive two, three, four, five and six months and is subject to an absolute maximum of 100 hours a month. Specific businesses are exempted, including new technology research and development (R&D). Penalties will apply in the case of breach, with imprisonment up to six months or a fine of up to JPY 300,000. These rules will apply to Article 36 labor management agreements covering periods from or after April 1, 2019. There will be a five-year moratorium for certain businesses (e.g. building and construction) and a one-year moratorium for small and medium-sized enterprises (SMEs).

  • Employees entitled to at least 10 days of annual paid leave will have to take at least five days off.
  • A work interval system has been introduced from April 2019, aimed at ensuring an adequate time span between two working days.

2. There is an exemption for high-level professionals, which is called the white-collar exemption. This category can be exempted from overtime allowance, holiday work and late-night work compensation requirements by an agreement. This subject to certain formalities, labor management committee resolution, filing with the authorities and individual consent. To qualify, employees must earn at least JPY 10.75 million a year and be engaged in clearly defined work requiring specific skills. These employees must take not less than 104 days off a year and will be subject to other measures to secure their wellbeing and good health. This includes health checks for those working in excess of certain working hours.

3. The equal work, equal pay principle applies to regular and non-regular employees. The Law on the Improvement of Employment Management for Part-Time Workers and Fixed-Term Contract Workers, the Employment Contract Law and the Workers Dispatch Law were amended to address unreasonable disparities and discrimination between regular and non-regular employees (including dispatched workers). The changes become effective as of April 1st, 2020, with a partial one-year moratorium for SMEs.

Information Regarding Visas and Foreign Workers

General Requirements and Procedures for Foreign Workers

Procedure for obtaining approval: Foreign nationals need to apply for and obtain a certificate of eligibility (‘Zairyu Shikaku Nintei Shomei Sho’) in Japan from the immigration authority office. A foreign national must apply for a certificate of eligibility at the immigration authority office in person if he or she happens to be in Japan. This can also be done through his or her prospective employer or qualified representative, such as an attorney or administrative scrivener.

The foreign national also needs to obtain a visa from the Japanese consulate or embassy in the country where he/she resides. In order to be employed, the foreign national must show a certificate of eligibility. Upon arriving at the airport in Japan, the foreign national must show the certificate of eligibility at immigration control and receive a seal of landing permission. Also called a working visa, this seal is stamped in his or her passport and residence card (‘Zairyu Kaado’).

On arriving in Japan, the foreign national must notify the local city office of his or her place of residence.

There are no formal quotas giving preferences to Japanese or other nationals’ applications. The time required from application to issuance of the certificate of eligibility is around one to three months. This will depend on factors such as the time required for any inquiries to an application or the necessary submission of additional documents.

The time required from application to issuance of a working visa is about one week.

If the employee continues to stay in Japan under the same residence card (‘Zairyu Kaado’), he or she must apply to renew the period of stay before the expiration of the current period of stay.

Types of Visa Required for Both Short- and Long-Term Visitors

Short-term stay visa, up to 90 days: holders can engage in business meetings or training. Depending on the country, this visa is automatically issued on arrival. Some countries require pre-application and authorization.

For longer-term stays, one needs to apply for a certificate of eligibility, which has a processing time of four to 12 weeks. Once the COE is issued, this must be converted into an actual visa within three months.

Common visa types

  • engineer/specialist in humanities/international services
  • intra-company transferee visa (generally used for employees assigned to work in Japan from overseas)
  • highly skilled visa – highly skilled professional visa

Working Visa Restrictions

Working visas only cover work requiring a high level of professional knowledge or skills. It is therefore not possible for foreigners to engage in manual or simple labor under a working visa, unless they have a visa granted according to the family status (e.g. spouse or child of Japanese national, long term resident, etc.), a trainee visa or are part-time workers on student or dependent visas.

Public Holidays Recognized by Japan in 2022

S.No Occasion Date
1 New Year’s Day January 1st
2 Coming-of-Age Day January 10th
3 National Foundation Day February 11th
4 Emperor’s Birthday February 23rd
5 Vernal Equinox Day March 21st
6 Shōwa Day April 29th
7 Constitution Memorial Day May 3rd
8 Greenery Day May 4th
9 Children’s Day May 5th
10 Marine Day July 18th
11 Mountain Day August 11th
12 Respect for the Aged Day September 19th
13 Autumn Equinox Day September 23rd
14 Health and Sports Day October 10th
15 Culture Day November 3rd
16 Labour Thanksgiving Day November 23rd

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