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Hiring in Japan

Hiring employees compliantly in Japan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Japan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Japan; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Need assistance hiring in Japan? Contact us about our International EOR Service

Labor Laws in Japan

Employee Probation Period

  • They are typically 2 to 6 months and should not exceed one year.

Annual Leave in Japan

  • In Japan, employers are required to grant annual paid leave of at least 10 days upon completion of 6 months’ employment.
  • The entitlement increases by 1 day per year for the following 2 years and by 2 days per year thereafter, up to a maximum of 20 days per year.
  • Unused annual leave expires after 2 years if not used
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Holidays in Japan

New Year’s Day 1st January
Coming of Age Day 13th January
Foundation Day 11th February
The Emperor’s Birthday 24th February
Vernal Equinox Day 20th March
Showa Day 29th April
Greenery Day 4th May
Children’s Day 5th May
Constitution Memorial Day 6th May
Marine Day 23rd July
Health and Sports Day 24th July
Mountain Day 10th August
Respect for the Aged Day 21st September
Autumnal Equinox Day 22nd September
Culture Day 3rd November
Labor Thanksgiving Day 23rd November


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Maternity Leave Japan

  • Maternity leave is 14 weeks (6 weeks pre natal and 8 weeks post natal).
  • It is 22 weeks in case of multiple births.

Paternity Leave Japan

  • Male employees are entitled to 4 weeks of paid paternity leave.

Sick Leave in Japan

  • An employer is not generally required to grant paid leave to an employee who is absent from work as a result of illness or injury, unless the work rules or employment contract provide otherwise.

Working Hours in Japan

  • The fixed time system is a common way of working in Japan. It's a way to work such as from 8 am to 5 pm (including an hour break) or from 9 am to 6 pm (including an hour break), 8 hours a day, and 5 days a week (Monday – Friday).
  • The standard workweek in Japan begins on Monday and ends on Friday, 40 hours per week, unless otherwise agreed with a union or via a representative of the local employees.

Overtime in Japan

  • The law limits overtime work to 45 hours per month with a maximum of 360 hours in a year.
  • Minimum overtime rates are:
    • Basic overtime rate – 125% of base hourly wage
    • Work on a “rest day” – 135% of base hourly wage
    • Late night overtime (between 10:00pm & 5:00am) – 150% of base hourly wage (25% added)
    • Late night overtime on a “rest day” – 160% of base hourly wage (25% added)
    • Overtime work in excess of 60 hours/month – 150% of base hourly wage
    • Late night overtime in excess of 60 hours/month – 175% of base hourly wage

Termination of Employment in Japan

  • Employees have a very high level of legal protection in Japan.
  • Once hired, the employer’s right to dismiss an employee is severely restricted and it is very difficult to terminate employees.
  • A dismissal will be invalid as an abuse of rights under local law if it lacks objectively reasonable grounds and is not considered to be appropriate in general societal terms.
  • Practically, it is very difficult for an employer to satisfy these requirements.
  • Termination of employees must be for a cause.
  • Acceptable grounds for termination in Japan depend on the individual circumstances of each case, but are generally:
    • Theft or violence
    • Serious insubordination – must be egregious
    • Serious and on-going poor performance after formal warnings have been given, corrective training provided and other potential positions explored
    • False information regarding skills or background that impacts performance or makes the fulfillment of duties impossible
  • Employers must give at least 30 days’ notice of dismissal or provide payment of base salary in lieu of notice.
  • It is customary for work rules to specify that an employee must give 30 days’ notice of resignation.

Notice Period in Japan

  • Under the Labor Standards Act of 1947 article 20, an employer must usually give 30 days' notice before dismissal, or pay in lieu of notice.
  • An employee is permitted to resign at any time (usually two weeks' notice is required).

Severance in Japan

  • Severance pay is not legally required
  • Collective agreements may provide for severance pay in case of dismissals.
  • However, if the suspension is for reasons attributed to the employer (e.g. temporary lay off), the employer must pay an allowance equal to at least 60% of the worker's average wage (Art. 26 of the LSL).

Japan Salary and Wages

13th / 14th Month Salary in Japan

  • Yes
  • There is a statutory requirement to pay the 13th and the 14th month salary.
  • The payroll in Japan is divided in 16 payments.
  • The 13th month is paid in December whilst the 14th month is paid in June.
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Income Tax in Japan

  • Foreign nationals arriving in Japan are considered to have established residence in Japan, unless employment contracts or other documents clearly indicate that they will stay in Japan for less than one year.
  • Permanent residents are subject to income tax on their worldwide income, regardless of source.
  • Nonpermanent residents are subject to tax on income earned in Japan (for example, employment income from services performed in Japan, regardless of payroll location) plus any non-Japan source income that is paid in or remitted to Japan.
  • Taxable employment income equals gross receipts minus an employment income deduction, which is progressive.
  • The maximum amount of such deduction is JPY 1,950,000 for income exceeding JPY 8.5 million.
  • Progressive rates up to 55% (combined national and local inhabitants tax) apply.
  • A surtax of 2.1% applies to national tax due, to help pay for recovery following the 2011 earthquake.

Taxable income (JPY)

Tax on column 1 (JPY)

Tax on excess (%)

Over (column 1)

Not over


0 1,950,000 - 5 (5.105% including surtax)
1,950,000 3,300,000 97,500 10 (10.21% including surtax)
3,300,000 6,950,000 232,500 20 (20.42% including surtax)
6,950,000 9,000,000 962,500 23 (23.483% including surtax)
9,000,000 18,000,000 1,434,000 33(33.693% including surtax)
18,000,000 40,000,000 4,404,000 40 (40.84% including surtax)
40,000,000   13,204,000 45 (45.945% including surtax)
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Social Security in Japan

  • The social insurance program in Japan consists of health insurance, nursing care insurance, pension insurance, employment insurance and workmen’s accident compensation insurance.
  • An employee whose salary or bonus, including fringe benefits, is paid in Japan by a local employer (including a Japanese branch of a foreign corporation) is generally liable to pay a share of social insurance premiums.
  • The employee’s share consists of the following contributions:


Standard premiums on monthly salary Standard premiums on bonus

Health insurance for the Metropolis of Tokyo (each prefecture has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65)

4.905% (on a maximum of JPY 1,390,000 of wages per month

4.905% (on an annual cap of JPY 5.73 million of irregular annual total payments)

Welfare Pension 9.15% (on a maximum of JPY 650,000 of wages per month) 9.15% (on a maximum of JPY 1.5 million of irregular payments per month)
Unemployment Insurance 0.3% 0.3%
Total 14.355% 14.355%
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Immigration Japan

  • Foreign nationals accepting employment in Japan must obtain a work permit (visa) at a Japanese embassy or consulate. To obtain a work permit, foreign nationals must first apply for a Certificate of Eligibility (CoE) from the Japanese Immigration Authority. The CoE is issued by the Ministry of Justice in Japan. The CoE certifies that the holder has met the criteria established for a certain status of residence in Japan
  • It is possible for expatriates to be self-employed in Japan; however, it is very difficult. The expatriate must also obtain a CoE.
  • Residence status, as defined by the Immigration Control Act, refers to the status of a foreign national under which he or she is permitted to conduct certain activities while residing in Japan.
  • The following are several of the different categories of residence status available in Japan and the activities in which each category of resident is authorized to engage:
    • Official: activities on the part of those who engage in the official business of foreign governments or international organizations recognized by the government of Japan, and activities on the part of their family members.
    • Business Manager: activities involved in conducting, investing in, or operating or managing an international trade or business, or in operating or managing a trade or business on behalf of a foreign national.
    • Legal/Accounting Services: activities involved in law or accounting, which are required to be carried out by attorneys legally recognized as foreign law specialists or by certified public accountants legally practicing foreign accounting.
    • Intra-Company Transferee: activities of personnel transferred for a limited period of time to offices in Japan from foreign offices of public or private organizations who engage in the activities included in the Engineer or Specialist in Humanities or International Services categories
    • Skilled Labor: activities requiring industrial techniques or skills in special fields based on a contract with a public or private organization in Japan.
    • Specified Skilled:
      • activities involved in work requiring a significant degree of knowledge or experience with respect to a specific industry field.
      • The Specified Skilled visa (Tokutei Ginou visa) was introduced on 1 April 2019. This visa is applicable for employees with requisite technical and Japanese language skills.
      • Foreign nationals can engage in business activities in 14 specified industrial fields, such as construction, shipbuilding and marine, automotive maintenance, nursing care, and food service.
  • Highly Skilled Foreign Professionals: may receive preferential immigration treatment based on a points-based system.
  • The period of stay for those with residential statuses is for a maximum of five years.
Need assistance hiring in Japan? Contact us about our International EOR Service

Type of Visa/Permit




Business Manager Visa
  • Curriculum Vitae
  • Documents certifying position and salary
  • Certified copy of Business License or Incorporation documents
  • Business Plan
  • Evidence of office space
  • Financial Statement
  • Original and photocopy of passport
  • Two passport-size photos
5 years maximum
  • Company paid up capital must be at least JPY5,000,000.
  • Company must have an office space in Japan.
  • Business plan must be approved by the relevant authorities.
  • Applicant must have enough salary/income to live independently in Japan.
  • Hire at least one full time employee who is either a Japanese national, or  a Permanent Resident
Intra-Company Transferee
  • Documents from the organization that will be employing the Applicant in Japan:
  • A copy of the company registration,
  • A profit and loss statement, and
  • Supporting documents that describe the company’s business.
  • Documents from the foreign organization that is sending the Applicant to Japan:
  • A copy of the company registration, and
  • Supporting documents that describe the organization’s business.
  • Documents regarding the Applicant:
  • A diploma or graduation certificate,
  • Documents certifying the Applicants professional career,
  • Documents certifying the Applicant’s duties in the foreign organization and the duration of such work,
  • Documents that certify the position the Applicant will be taking up in Japan along with details of the activity, its duration, and the associated remuneration.
5 years maximum
  • Activities of personnel transferred for a limited period of time to offices in Japan from foreign offices of public or private organizations who engage in the activities included in the Engineer or Specialist in Humanities or International Services categories
Skilled Labor
  • Evidence regarding the applicant’s experience and qualifications:
  • Resume, C/V.
  • University Diploma, Certificate of Graduate.
  • Documents which certify your work experience: e.g. Certificate of Employment issued by ex-employer.
  • Evidence regarding the applicant’s occupation in Japan, terms of employment (i.e. monthly salary, period of employment etc.)
  • Evidence regarding the employer:
  • Company Brochure or Leaflet.
  • Certificate of Company Registration (Toukibo Touhon, Toukijikou Shoumeisho).
  • Financial Statement for the last fiscal year.
5 years Maximum Activities requiring industrial techniques or skills in special fields based on a contract with a public or private organization in Japan.
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Value Added Tax (VAT) in Japan

  • In Japan, the equivalent of VAT or GST is known as Consumption Tax (‘CT’), and was introduced in January 1989.
  • Consumption tax is a national tax levied against the volume of business and through self-assessment.
  • The consumption tax rate has been raised to 10% since October 1st, 2019 for most goods and services.
  • This 10% includes a 2.2% local consumption tax rate.
  • The reduced tax rate of 8% (local consumption tax, 1.76%) is applied to sales of food and beverages, except for alcoholic drinks and dining out, and sales of newspapers published more than twice a week (under subscription contracts).


Standard Rate

Group 1083


Reduced Rate Group 1083 8%
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Mandatory Benefits in Japan

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, maternity leave, paternity leave, and notice period.
  • Statutory benefits also include social security benefits
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Mandatory Benefits overview

  • Probationary period

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Paternity Leave

  • Notice period

  • Social Security Benefits

Payments And Invoicing

  • Individual income taxation in Japan is based on the principle of self-assessment.
  • In general, taxpayers must file tax returns to declare income and deductions and to pay the tax due.
  • However, national income tax liability of individuals compensated in yen at gross annual amounts not exceeding JPY 20 million is settled through employer withholding if income other than employment income does not exceed JPY 200,000.
  • If tax is withheld from payments to nonresidents and if the amount withheld satisfies the Japanese tax liability, the nonresidents need not file income tax returns.
  • Married persons are taxed separately, not jointly, on all types of income.
  • Income tax returns must be filed, and the final tax paid, between 16 February and 15 March for income accrued during the previous calendar year.
  • For those taxpayers who filed tax returns for the preceding year and who reported tax liabilities of JPY150,000 or more after the deduction of withholding tax, prepayments of income tax for the current year are due on 31 July and 30 November.
  • Each prepayment normally equals one-third of the previous year’s total tax liability, less amounts withheld at source.
  • To the extent that prepaid and withheld payments exceed the total tax due, they are refundable if a return is filed.

Payroll Accrual in Japan

Country Accruals Additional Information

Health insurance 5.83%
Welfare pension insurance 9.15%
Employment insurance 0.60%
Maternity leave 14weeks
Christmas Bonus 8.33%
Vacations 7.12%
Christmas Bonus over Vacations 8.33%
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Every individual who meets the prescribed conditions is expected to participate in these systems as an insured person, regardless of nationality. Individuals who are paid from outside of Japan are generally not required to participate in these systems.

Non-Japanese employees that leave Japan can claim a refund of employee national pension contributions. The employee must have paid contributions for at least 6 months to be eligible for the refund. Refunds will be given for up to 3 years of contributions. The amount of the refund depends on how long the employee made contributions and the average standard monthly remuneration.
The maximum standard remuneration for purposes of calculating the refund is JPY620,000.

Payroll Accruals Additional Information



Employment Accruals

Annual Leave In Japan, employers are required to grant annual paid leave of at least 10 days upon completion of 6 months’ employment.
The entitlement increases by 1 day per year for the following 2 years and by 2 days per year thereafter, up to a maximum of 20 days per year.
This equals 2.7% (10/365 days) of annual income
Overtime Minimum overtime rates are:
  • Basic overtime rate – 125% of base hourly wage
  • Work on a “rest day” – 135% of base hourly wage
Depends on the number of overtime hours worked
Social Security Employers must make the following social security contributions: - Health Insurance 4.95%; Welfare Pension Insurance 9.15%; Unemployment Insurance 0.6%; Workmen's accident compensation insurance 0.25% to 2.6% This equals 17.3% of annual income

Accrued Benefits in Japan

Christmas Bonus %

Based on two months bonus (the payroll is divided in 16 and on December employees receive 3/16th)

Christmas Bonus Over Vacations % 0%
Severance per Year%

Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary)

of annual salary
Vacations %

Employees are entitled to 10 days of paid annual leave (2.74% of annual salary)

Of annual
Notice %

Employees are entitled to 30 days of notice period for one year of service or more (8.24%)

Christmas Bonus Over Notifications %  
Vacations Plus %

Based on two months bonus (the payroll is divided in 16 and on June employees receive 3/16th)


Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum are equal to 52.54%


Why use Global Expansion to hire in Japan

Establishing a branch office or subsidiary in Japan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Japan labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Japan law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Japan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Japan Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.


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