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Key Country Facts

Currency: Japanese Yen (JPY)

Time zone: GMT +9

Capital city: Tokyo

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

Employment Contracts

The scope of Japanese labour law 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, but labour rights apply regardless of the label in the contracts.

Employers must provide employees with certain terms of employment in writing. Japanese employment contracts are short, simple, and usually supplemented with the work rules. 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 would be used in case of a dispute.

Employer and 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, which started after April 1st, 2013, are renewed to reach a period exceeding five years, the employee will acquire a right to request and change the relationship to open-end. There have already been two separate legislative acts with exceptions to this maximum time period.

Japan Holidays

There are 18 public holidays in Japan:

  • New Year’s Day – January 1
  • Coming-of-Age Day – January 11
  • National Foundation Day – February 11
  • Emperor’s Birthday – February 23
  • Vernal Equinox Day – March 20
  • Shōwa Day – April 29
  • Constitution Memorial Day – May 3
  • Greenery Day – May 4
  • Children’s Day – May 5
  • Marine Day – July 19
  • Mountain Day – August 11
  • Respect for the Aged Day – September 20
  • Autumn Equinox Day – September 23
  • Health and Sports Day – October 11
  • Culture Day – November 3
  • Labour Thanksgiving Day – November 23

Vacation

Under Japan’s labour 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, irrespective of race or gender, and were 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:

Sick Leave

In general, there is no sick leave rights in Japan. When employees get sick, they use their paid vacation to take leave of absence.
Some foreign companies grant sick leave to their employees as a special benefit. There is no requirement to grant sick leave unless the work rules or employment contract stated otherwise. Employees who are absent from work due to non-work related sickness or injury are not entitled to pay from their employer.

Maternity/Paternity Leave

Before birth: Maternity leave of six weeks before childbirth or within fourteen weeks in the case of two or more expected children must be granted to expecting mothers.
After birth: Employees cannot work before eight weeks have passed since childbirth. However, once six weeks has passed since childbirth, an employee can submit a request to work, and the employer can allow her 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 from her health insurance.
There’s no statutory requirement for Paternity leave at present.

Termination/Severance

The termination process can be exceedingly difficult. An employee can only be dismissed if the employer has objectively reasonable grounds to do so, and the dismissal would not be considered unreasonable in general societal terms.

Poor performance or misconduct that justifies termination in other countries often does not warrant 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, and 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.

Bonus

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

Japan Social Insurance

Japan has four different kinds of insurance system 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 and helps to maintain stable employment, such as providing financial aid and subsidies.
  3. Health Insurance and Nursing Care Insurance: cover medical and nursing care expenses incurred by workers.
  4. Employees’ Pension Insurance: provides benefits for old age, death or disability.
Social Security System Monthly Salary Cap
(JPY)
 Employer Contribution  Employee Contribution
Pension Insurance          620,000 9.15% 9.15%
Children’s Fund          620,000 0.36%
Health Insurance       1,390,000 4.935% 4.935%
Long Term Care Insurance (over 40 yrs. old)       1,390,000 0.895% 0.895%
Unemployment Insurance  – 0.60% 0.30%
Worker’s compensation  – 0.3%                        –
Total 16.240% 15.280%

Japan Health Insurance Law

Health insurance provides medical coverage for all insured residents, and long-term care insurance provides elderly care benefits. It also provides allowances in cases of childbirth, injury, sickness and death.

National Health Insurance insures non-salaried residents under the age of 75. Employees’ Health Insurance covers salaried workers under 75 and their dependents under 75. Both non-salaried and salaried persons become insured under Latter-Stage Elderly Healthcare System upon turning 75.

This information does not constitute legal advice.

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