2024 Guide to Hiring Employees in Japan

Key Considerations Before Hiring In Japan

Employing in Japan requires employers to own a legal entity in the country and manage payroll, tax, benefits and compliance through their own in-country resources. Grow your team in Japan with our Employer of Record solution, ensuring streamlined, compliant business expansion with no entity.

Playroll allows you to hire employee's in Japan quickly, easily and we even automate tax document collection, benefits, payroll and more.

Good To Know

Hiring in Japan offers access to a highly educated and skilled workforce known for its strong work ethic and dedication to quality.

The country's stable economy and business-friendly environment provide a solid foundation for companies seeking growth opportunities.

pan's emphasis on innovation and technology makes it an attractive location for industries ranging from automotive to electronics.

Additionally, its rich cultural heritage and reputation for reliability make it an appealing destination for businesses looking to establish a presence in the Asia-Pacific region.

Employment

Fundamental Aspects of Employment in Japan

While it is not mandatory for employment agreements to be documented to be legally binding in Japan, it is advisable to create a written employment contract that outlines key terms of the employment relationship. This includes:

Identification of both the employer and the employee
Commencement date and expected duration of employment
Specification of the basic salary, additional compensation or benefits, and payment details
Comprehensive job description, outlining duties and responsibilities

Probationary Period in Japan

Probation is not mandatory in Japan. However, they are commonly practiced and are limited to a duration of three to six months, with an upper limit of one year.

Working hours in Japan

The standard working hours in Japan are 8 hours per day, 40 hours per week.

Overtime in Japan

Limits on overtime are set at a maximum of 5 hours per day, 45 hours per month, and 365 hours per year. Overtime pay for up to 60 hours per month is at least 25% of the normal hourly wage, and for hours exceeding 60, it's at least 50%. Managers and supervisors, as defined by the Labour Standards Act, are exempt, but late-night work allowance still applies. Overtime payment rates are additional percentages of the normal hourly wage, with different rates as follows:

Overtime (typically over 8 hours a day): additional 25.00%
Nights (22:00 – 05:00): additional 25.00%
Weekends and Holidays: an additional 35.00%
Nights (continuing from overtime): additional 50.00%
Holidays (continuing from night-time): additional 60.00%

Payroll

Navigating Key Aspects of Payroll in Japan

Japan has a robust and complex payroll and tax system, and as an employer, it pays to understand payroll process basics.

1 April - 31 March

Fiscal Year in Japan

1 April - 31 March is the 12-month accounting period that businesses in Japan use for financial and tax reporting purposes.

monthly

Payroll Cycle in Japan

The payroll cycle in Japan is usually monthly, with employees being paid by the last day of the month.

1,004 JPY p/h

Minimum Wage in Japan

The minimum wage for employees in Japan is typically 1,004 JPY per hour, amounting to ~319,320 JPY per month for a typical 40 hour work week.

Minimum wages and salaries in Japan

The minimum wage differs by region. The minimum hourly wage in Tokyo is 1,113 JPY, Osaka is 1,064 JPY, and Kyoto is 1,009 JPY. The national average is 1,004 JPY per hour. These amounts may change, so it's a good idea to check the latest information.

Bonus Payments in Japan

Many employees get an extra paycheck, a 13th-month salary, given in June and December. Whether employees receive this bonus depends on the company's choice, and this applies to both part-time and full-time workers.

Taxes

Comprehensive Overview of Employment Taxes in Japan

Understanding the tax obligations for both employers and employees is crucial when operating in Japan's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Japan.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.62 - 26.74% on top of the employee salary in Japan.

Tax Rate	Tax Type

Employee Payroll Tax Contributions

In Japan, the typical estimation for employee payroll contributions cost is around 15%.

Tax Rate	Tax Type

Individual Payroll Tax Contributions

Japan's individual income tax ranges from 5% to 45% based on a progressive scale, influenced by factors like household status. Non-residents face a flat 20.42% national income tax with no deductions and potentially a 10% local inhabitant's tax if registered as residents by January 1st.

Tax Rate	Income Bracket

Pension in Japan

The retirement age is 65, and Japan has two pension programs: the National Pension and the Employees' Pension systems. Contributions from employers, employees, and the government collectively fund retirement benefits.

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Japan tailored to your needs.

Easily navigate payroll, taxes and contributions with Playroll.

Grow your distributed workforce today!

Speak to an Expert Get Started

Termination

Understanding the Protocols for Termination of Employment in Japan

When it comes to terminating employment in Japan, understanding the legal obligations regarding severance pay and contributions is essential. Below is a detailed overview of the key considerations for both employers and employees.

Termination Process

Termination depends on factors such as the employment agreement, collective agreement, contract type, job role, region, and the reason for termination. Given the complexity of termination procedures, they usually occur through mutual agreement and often involve additional compensation.

Notice Period

The standard notice period for termination is typically 30 days. If notice is not given, the employer can compensate with a payment in lieu of notice. However, this rule doesn't apply to employees serving a probationary period of 14 days or less.

Severance Pay

There are no legal obligations for employers to provide severance payments. However, due to the strict regulations on terminating employees, many employers choose to offer severance payments as a way to secure a waiver and encourage voluntary resignation from the employee.

Leave Entitlement

Annual Leave Entitlements and Company Policies in Japan

The annual leave entitlement in Japan is 10 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays in Japan

Japan observes 16 public holidays. While technically employers aren't legally obligated to pay employees on national holidays, in practice, the majority of employers do provide payment for these days.

Holiday	Date

Benefits

Japan's Benefits Built Into Playroll

Competitive benefits package in Japan

Playroll is committed to providing tailored, competitive benefits packages that are designed not only to attract but also retain top talent worldwide. Our global team of benefits experts build custom local packages to ensure your employees in Japan's needs are met. Typically our packages contain some or all of the following benefits.

Health Insurance

Pension or 401k

Life and Disability Insurance

Vision Insurance

Dental Insurance

Discounts & Perks

Playroll Supplementary Benefits For Employment In Japan

Make your benefits package in Japan a talent magnet with Playroll's local plans. We offer benefits that are compliant, comprehensive, and flexible — all at competitive rates. Speak with our local territory experts to explore the localized benefits we can offer you, while you scale your team.

Statutory benefits for employment in Japan

Playroll allows you to provide localized benefits for employees in Japan within minutes. All in one manageable online dashboard. If you'd like specific information about our benefits packages in Japan create an account or contact our global expansion team, today.

Visa

Playroll's Expertise in Facilitating Work Visas for Japan

At Playroll we're all about empowering employees to work anywhere, making mobility possible for global teams. We sponsor visas and hire the employee for you, so you don’t have to worry about payroll, taxes, and more.

It's important to note, visa support can be complicated. There are many variables that affect whether sponsorship is possible, including one’s nationality, education, marital status, and the immigration policy for the country in question.

Unfortunately, this means we can’t support visas everywhere - with that being said, we handle the entire visa process in-house, and dig into your situation to give you an overview of what to expect if we're able to help with visa sponsorship in Japan.

Playroll Immigration Support

Integrated EOR Platform

Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.

Accelerated Immigration Timeline

By leveraging dedicated support from in-house legal and compliance experts for case by case questions and more.

Hire in 50+ Countries

Accelerated Immigration Timeline

Acquiring a visa without an entity has never been easier, leverage Playroll's global coverage to sponsor and hire employees.

Hiring International Employees is Complex.

Playroll makes it easy!

Speak to an Expert Get Started

The Ultimate Guide to Hiring Employees in Japan

Key Considerations Before Hiring In Japan

Good To Know

Fundamental Aspects of Employment in Japan

Probationary Period in Japan

Working hours in Japan

Overtime in Japan

Navigating Key Aspects of Payroll in Japan

Fiscal Year in Japan

Payroll Cycle in Japan

Minimum Wage in Japan

Minimum wages and salaries in Japan

Bonus Payments in Japan

Comprehensive Overview of Employment Taxes in Japan

Employer Tax Contributions

Employee Payroll Tax Contributions

Individual Payroll Tax Contributions

Pension in Japan

Understanding the Protocols for Termination of Employment in Japan

Termination Process

Notice Period

Severance Pay

Annual Leave Entitlements and Company Policies in Japan

Public Holidays in Japan

Japan's Benefits Built Into Playroll

Competitive benefits package in Japan

Playroll Supplementary Benefits For Employment In Japan

Statutory benefits for employment in Japan

Playroll's Expertise in Facilitating Work Visas for Japan

Playroll Immigration Support

Integrated EOR Platform

Accelerated Immigration Timeline

Hire in 50+ Countries

Employer Of Record Solution For Japan

Playroll's Employer of Record Platform

FAQs about hiring in Japan

More Free Global Hiring Resources

Let's grow your distributed workforce, today.