Japan offers a deep, highly skilled workforce with a strong emphasis on job security and a shared social-insurance system. All-in employer cost runs around 1.16x the gross salary. Here is what to know before your first Japanese hire.
Employment runs under the Labour Standards Act and related laws, with work rules required for larger workplaces and mandatory enrolment in health, pension, and labour insurance. Dismissal is difficult and must be objectively reasonable.
Minimum wages are set by prefecture and revised each year, with a weighted national average above JPY 1,000 per hour*.
Monthly payroll, with semi-annual bonuses (in summer and winter) a strong custom in many companies.
Around 16 public holidays a year, several of which move to create long weekends.
Written terms and, for larger workplaces, work rules are required. Probation is commonly three to six months, though dismissal during it still needs a reason.
Employer social-insurance contributions add roughly 15-16% on top of salary across health, pension, and labour insurance.
Health and pension contributions are split roughly evenly with the employee and apply up to monthly standard-remuneration grades.
Employees pay national and local income tax plus their insurance share, withheld at source with a year-end adjustment. Withholding is the employer's responsibility, which under EOR means ours.
Ten paid days after six months, rising with tenure to 20, with at least five days a year that the employer must ensure are taken.
Six weeks before and eight weeks after birth, with a benefit through health insurance.
Childcare leave up to the child's first birthday (extendable), with an allowance through employment insurance.
There is no separate statutory paid sick leave; employees typically use annual leave, with health-insurance injury-and-sickness allowance for longer absences.
At least 30 days' notice or pay in lieu is required, and dismissal must be objectively reasonable and socially acceptable or it is void.
There is no statutory severance, though retirement-allowance and settlement payments are common by policy or practice.
Commonly three to six months, but dismissal during it still needs a valid reason.
A contractor working like an employee can be reclassified, triggering back social insurance and employee protections.
*All figures are estimates from public sources (2025-26), pending ops verification - same basis as the EOR cost calculator. Not tax or legal advice.
Compliant Japanese employment contract, payroll, and social insurance, handled. One invoice, flat $499 per month.