Onboarding Japanese employees can be a real asset to businesses expanding their operations in the country. The first step to realizing this is to be familiarized with the Japanese labor regulations. The following section shall guide you through the onboarding process.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
There is no required language in Japanese employment contracts, provided it is written in a medium that all parties understand. However, most employers use the Japanese language for these documents.
13th Month Pay
13th month pay is customary in Japan. Most employers offer these incentives for their employees as a winter bonus, usually around December.
Employee Benefits
Japanese employees are entitled to numerous benefits during their employment. Below are some of them: Health & Medical Insurances Holidays & Annual Leave Maternity & Paternity Leave Sickness & Special Ability Leave Pensions
Payroll Cycle
Employees in Japan are paid monthly.
Minimum Wage
Minimum wage in Japan varies with location, ranging from 790 JPY to 1,072 JPY.
Overtime Pay
The standard working hours in Japan are 8 hours per day and 40 hours per week.
Overtime is legal in the country, with a cap of 45 hours per month and 360 hours per year.
The overtime pay varies as per the table below
Time and date
|
Additional Rates
|
Overtime and night-time (22:00 – 05:00)
|
25%
|
Weekends and holidays
|
35%
|
Night-time continuing from overtime
|
50% |
Holidays continuing from night-time
|
60% |
Employer Payroll Cost
| Category |
Tax Rate |
| Health Insurance |
4.95% |
| Welfare Pension |
9.15% |
| Employment Insurance |
0.55% |
| Child Allowance |
0.36% |
| Worker’s Accident Compensation Insurance |
Varies on the type of business |
Employee Payroll Cost
| Category |
Tax Rate |
| Health Insurance |
4.905% |
| Welfare Pension |
9.15% |
| Unemployment Insurance |
0.5% (Upto March 2023) |
| Child Allowance |
0.36% |
Employee Income Tax
| Taxable Income ( JPY) |
Tax Rate |
Deduction ( JPY) |
Tax on base amount ( JPY) |
| 0–1,950,000 |
5% |
0 |
0 |
| 1,950,000–3,300,000 |
10% |
97,500 |
97,500 |
| 3,300,000–6,950,000 |
20% |
427,500 |
232,500 |
| 6,950,000–9,000,000 |
23% |
636,000 |
962,500 |
| 9,000,000–18,000,000 |
33% |
1,536,000 |
1,434,000 |
| 18,000,000–40,000,000 |
40% |
2,796,000 |
4,404,000 |
| 40,000,000 and above |
50% |
4,796,000 |
13,204,000 |
VAT
The standard VAT rate in Japan is 10%. However, few goods and services are levied a VAT of 8%.
Termination Process
Employers terminating employees must issue a termination notice specifying the reasons. In cases of immediate dismissal, notice is not required, but employers must provide a "notice allowance" equivalent to 30 days' wages.
Notice Period
A notice period of up to 30 days is generally observed in Japan.
According to the Japan Immigration Authority, foreign workers can legally work in the country if they have secured a Japanese work visa. Below are the types of visas in Japan:
- Regular Japan Work Visa
- Japan Highly Skilled Professional Visa
- Japan Working Holiday Visa