Hire Employees in Japan: 2026 EOR, Payroll and Employment Guide

A kabushiki kaisha takes four to eight weeks including notarised articles, capital deposit and registration, and a representative with a Japanese address is required in practice.

Enrolment with the pension office and Hello Work follows, and work rules must be filed once headcount reaches ten. An EOR reaches payroll in two to four weeks.

EOR to enter and to hire a first team. Entity once Japan is settled — many clients expect a local presence before contracting.

Contractors on gyomu itaku are requalified where the client directs the work, sets the hours or supplies the equipment. Reclassification brings retroactive social insurance and, more importantly, the full dismissal protection that makes ending the relationship difficult.

Contributions are calculated on standard monthly remuneration grades, not actual pay. Salary is mapped to a grade and the rate applies to that, so pay near a grade boundary rounds up.

The two main schemes cap at very different levels: pension at ¥650,000 of standard remuneration and health at ¥1,390,000. A senior hire therefore stops accruing pension cost long before health cost.

New for April 2026: the child and childcare support levy at 0.23%, split between employer and employee, collected alongside health insurance and rising in stages to 2028.

Employment insurance fell for 2026. From 1 April the general-business rate is 1.35% of pay, down 0.1 points — 0.50% from the employee and 0.85% from the employer. The employer pays more because it alone funds the employment-stability and skills-development programmes. Construction and agriculture carry higher rates.

Four representative profiles on standard monthly remuneration. Salaries are illustrative market midpoints, not GX operating data. The figures exclude bonuses, which in Japan are large — commonly two to six months of salary a year — and attract contributions separately. Budget them on top. For real market data on your roles, ask for a costing.

Monthly payroll, typically paid on the 25th for the current month. Withholding covers national income tax; local inhabitant tax works differently — it is assessed on the prior year’s income and collected from June to May of the following year, so a first-year employee pays none and a leaver may owe a lump sum.

Standard remuneration grades are reviewed each year in the April to June period, with the new grade applying from September.

National income tax runs 5% to 45%, withheld monthly and reconciled in the December year-end adjustment.

Local inhabitant tax works differently and catches employers out: about 10%, assessed on the prior year’s income and collected from June to May of the following year. A first-year employee pays none; a leaver may owe a lump sum on departure.

Indefinite employment is the norm. Fixed-term contracts renewed beyond five years give the employee the right to convert to indefinite status.

Probation is commonly three to six months, but it is not a free hand — dismissal during probation still requires objectively reasonable grounds, applied only slightly more flexibly than afterwards.

Work rules (shuugyou kisoku) must be filed with the Labour Standards Inspection Office once an employer has ten or more employees, and they are binding.

Forty hours a week and eight a day. Overtime is unlawful without a filed 36 Agreement — an agreement with the employee representative, submitted to the Labour Standards Inspection Office. Filing it is a prerequisite, not a formality.

Since the 2019 reform, overtime is capped at 45 hours a month and 360 a year, with limited exceptions to 720 hours annually. Premiums are 25% for overtime, 35% for holiday work, and 50% beyond 60 hours in a month.

Ten days of paid annual leave after six months of service, rising by one or two days a year to a maximum of 20 after six and a half years. Leave carries over for two years.

Since 2019 employers must ensure employees with ten or more days actually take at least five days a year — the obligation sits on the employer, and failure is penalised.

Sixteen national public holidays — more than any country in this guide. They are not statutorily paid days off under the Labour Standards Act, but almost all employers treat them as such, and the collective agreement or work rules usually require it.

Golden Week in late April and early May, and the New Year period, effectively close much of the country.

Maternity: six weeks before and eight weeks after the birth, paid by health insurance at two thirds of standard remuneration, not by the employer.

Childcare leave: up to one year, extendable to two where nursery placement is unavailable, paid by employment insurance at 67% falling to 50%. Both parents may take it, and additional benefit applies where they share.

Sick leave: there is no statutory paid sick leave. Employees typically use annual leave, and health insurance pays an injury and sickness allowance from the fourth consecutive day at two thirds of standard remuneration.

Dismissal is harder in Japan than almost anywhere. It requires objectively reasonable grounds and social acceptability, and courts apply the test strictly — poor performance alone is rarely sufficient without documented support, warnings and attempted redeployment.

For redundancy the courts apply a four-factor test: business necessity, genuine effort to avoid dismissal, reasonable selection criteria, and proper consultation. Failing any one of them typically makes the dismissal void.

Notice is 30 days or 30 days’ pay in lieu. There is no statutory severance, but negotiated exit packages are the practical norm precisely because litigation risk is high.

The Engineer / Specialist in Humanities / International Services status covers most professional hires and requires a degree or ten years of relevant experience.

The Highly Skilled Professional points system offers faster permanent residence and additional privileges for those scoring 70 or more. Allow one to three months for a certificate of eligibility, then the visa.

The recurring exposures are overtime without a filed 36 Agreement, misclassified gyomu itaku contractors, mishandling the standard remuneration grade system, and the new April 2026 support levy.

The largest is dismissal. Japan requires objectively reasonable grounds and social acceptability, and courts apply it strictly — an exit that would be routine elsewhere can be void here.

Social insurance enrolment is due within five days of the start date. The 36 Agreement must be filed before any overtime is worked, not after.

Confirm before the offer: whether the role will require overtime and the agreement is in place, the employee’s age for long-term care insurance, and whether work rules need filing at ten or more employees.