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Employer of Record Japan | Employment Contracts and Hiring Options in Japan

Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax

An Employer of Record (EOR) in Japan is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

Discover the key considerations and essential details you should be aware of before opting for an Employer of Record (EOR) in Japan to help you with your global staffing needs.

Time zoneUTC+09:00 (JST)
Total Time zones1
Working hours per week40
Working weekMonday–Friday
Typical hours worked8
Personal Tax filing deadline15th Mar
Financial Year1 April – 31 March
Date formatyyyy-mm-dd
CurrencyJapanese Yen (¥)
VATthe standard rate is 5%

Employer Payroll Contributions in Japan

Employers% of Gross Salary
Family Allowance0.36
Health Insurance4.94 to 5.82
Unemployment Insurance0.6
Work Injury0.25 to 8.8
Total Employment Cost15.30 to 24.73

Employee Payroll Contributions in Japan

Employees% of Gross Salary
Health Insurance4.94
Total Employee Cost14.4

Minimum Wages in Japan

Minimum Wage
Minimum WageMinimum wage in Japan is 761 to 985 ¥ per hour.

Payroll Cycle in Japan

Payroll CycleMonthly
13th SalaryNot required by law.

Personal Income Tax in Japan

Income Tax
Flat rate 20.42%

Employment Contracts and Policies in Japan

When it comes to employment contracts in Japan, there is no strict requirement for a written contract. However, the employer is obligated to provide the employee with written terms and conditions of employment. Work rules, if in place, can cover many of the provisions that need to be included in the written documentation given to the employee.

Probationary periods are allowed in Japan, with no specific legal limit. Typically, probation periods range from 3 to 6 months, although excessively long probationary periods may be deemed invalid. In most cases, the maximum allowable probation period is 12 months. It's important to note that terminating employment, even during the probationary period, can be challenging in Japan.

Employers with 10 or more employees at a workplace are required to establish work rules and submit them to the Labor Standards Inspection Office. These work rules encompass various terms and conditions of employment and are considered an integral part of the employment contract. They cover aspects such as wages, working hours and breaks, holidays, termination of employment, disciplinary actions, and general matters applicable in the workplace. The working conditions specified in the work rules serve as a minimum standard that cannot be diminished by any employment agreement.

Before filing the work rules, they must be shared with a representative of the majority of employees or, if present, the labor union representing the majority of employees. While the employer is not obligated to accept employee comments (i.e., approval is not required), they must be considered in good faith. Refer to the information above regarding the submission of work rules to the Labor Standards Inspection Bureau.

Hiring Options in Japan

When it comes to hiring in Japan, there are various options available to employers. Here are the different categories and considerations:

Employee Categories:

  • Regular Employee: This is the most common category, and employees are hired for an indefinite term.
  • Fixed-term Contract Employee: Employees are hired for a specific period or project.
  • Dispatched Employee: Hiring workers through a dispatching agency is a popular option to alleviate some employment-related burdens. The dispatched workers are employees of the agency, not the hiring company. There are regulations on the positions that can be filled by dispatched employees, as well as limitations on control and duration of their employment. It's important to use reputable and licensed dispatching agencies to ensure compliance with regulations.

Employment Type:

  • Full-time: Employees work standard hours and receive benefits according to labor laws and company policies.
  • Part-time: Employees work fewer hours than full-time employees and may have different benefits and contractual terms.

Independent Contractors:

Engaging independent contractors is possible; however, caution must be exercised to avoid controlling or directing them. Treating independent contractors as employees can lead to legal implications.

It's worth noting that as of April 2013, if a fixed-term contract employee renews their contract for more than five years without a break in employment of six months or longer, they have the right to request to become an indefinite-term employee.

Regarding equal pay, since April 1, 2021, the Ministry of Health, Labor, and Welfare's Guidelines for Equal Pay for Equal Work applies to all companies in Japan. In principle, employers are prohibited from having wage or compensation disparities between dispatched workers and regular employees for the same or reasonably similar work, unless there are justifiable reasons. This regulation does not apply if a dispatching company concludes a labor-management agreement with its employees' representative, specifying how the dispatch workers' salary will be determined. However, the agreed salary decision method typically increases costs for the dispatching company, which may be reflected in their fees.

It's crucial for employers to navigate the hiring options while adhering to the labor laws and regulations in Japan.

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