Employment Laws and Regulations
According to Japanese law, companies that have 10 or more employees in a workplace must create work rules and submit them to their local Labor Standards Inspection Office. Work rules detail the working conditions you maintain for your employees, including things like wages, working hours, holidays, company rules, and procedures for handling violations of rules. The Labor Standards Inspection office can give you guidance on whether your work rules cover all the necessary information and fall in line with the law. Labor Standards officials can also inspect your business to ensure you’re providing safe working conditions.
Work Week
The standard working hours in Japan is 8 hours per day. Maximum working hours is 44 hours per week. Work week is Monday-Friday.
Statutory Holidays
16 national holidays. No legal requirements to pay for the statutory holidays, but is common in Japan to make it as paid days off. It the holiday falls on a Sunday, the next working day will be a holiday instead.
Sick Leave
Sick leave is not mandatory. Employees often use their annual leave to cover sick leave or claim social insurance.
Maternity Leave
Pregnant employees are entitled to maternity leave within 6 weeks of the expected birth date, and 8 weeks after birth. An employer is not allowed to have a female employee work within 8 weeks after giving birth, except if both:
- She wishes to resume her duties after 6 weeks after giving birth.
- The resumption of the work will not cause any problems, as certified by a doctor.
It is not required that employers pay for maternity leave, unless the employment contract or work rules state otherwise. Usually, the maternity payment is made by the Social Insurance based on the National Health Insurance rates, which are currently 420,000 JPY per child. However, suppose the employee is enrolled in the employees’ Health Insurance. In that case, they may receive a Maternity Allowance of 2/3rds of the regular salary rate from 42 days before birth until 56 days after delivery.
Childcare Leave
An employee is entitled to receive childcare leave from the following day after maternity/paternity leave ends to the day before a child becomes one year old. On a certain condition, the period could be extended to the day a child becomes one and a half years old.
Childcare leave benefits:
- JPY 420,000 of Lump-sum benefit for Childbirth
- Exemption of social insurance premium
- Maternity allowance: About 2/3 of monthly salary during the maternity/paternity leave
- Childcare leave benefit: about 2/3 of monthly salary during the childcare leave.
Paternity Leave
Beginning 1 October 2022, male employees will be entitled to a paid paternity leave (amount yet to be determined) of up to four weeks that may be taken within the eight weeks following the childbirth, subject to a two weeks’ notice to their employer. Male employees will be able to take paternity leave as a single uninterrupted period or split it into two periods. In addition, child care leave entitlement can be taken twice in separate instalments. Paternity leave benefits will be payable by the Japanese social security at the same rate as maternity leave (67% of salary).
Payroll
Salary are usually paid on the 25th of each month.
Minimum Wage Laws
Different regions and industries have their own minimum wages.
Overtime
Employees who work extra hours/work during the night/work during statutory days are entitled to overtime pay.
- Overtime (typically over 8 hours a day): additional 25.00%
- Night-time (22:00 – 05:00): additional 25.00%
- Weekends and Holidays: an additional 35.00%
- Night-time (continuing from overtime): additional 50.00%
- Holiday (continuing from night-time): additional 60.00%
Paid Time Off
Employees are entitled to 10 days of annual leave once they have worked for six months’ time. After that, each additional year of service will increase one more day of annual leave. The minimum annual leave an employee can get is 20 days, who services the company for up to six and a half years. Any additional annual leaves is up to the company. Unused annual leave will expires automatically after 2 years.
Supplementary Benefits
All employees are entitled to free annual physicals checkups and stress checkups provided by the company.
Bonus
No legal requirements.
Income Tax
In Japan, permanent resident taxpayers (generally Japanese nationals and foreigners who have lived in Japan for more than five of the past ten years, or who have applied for permanent residence status based on one of the fast track procedures recently available) are taxed on their worldwide income. Non-resident taxpayers (generally a foreigner who has worked in Japan for less than 12 months) subject to a flat 20% tax on all Japan-based income. Non-permanent resident taxpayers (generally a foreigner who has worked in Japan with an employment contract for more than 12 months) are taxed on their income other than foreign-source income (in particular, potentially, on certain capital gains) that are not remitted into Japan plus potentially part of their foreign-sourced income that is paid in or remitted to Japan.
Each year in December or January there will be an annual tax reconciliation taking into account total salary income, dependents, etc.
| Total amount of taxable income for Non-Residents/Residents | Tax Rate | Amount of Deduction |
| Not more than ¥1,950,000 | 5% | None |
| Over ¥1,950,000 and not more than ¥3,300,000 | 10% | ¥97,500 |
| Over ¥3,300,000 and not more than ¥6,950,000 | 20% | ¥427,500 |
| Over ¥6,950,000 and not more than ¥9,000,000 | 23% | ¥636,000 |
| Over ¥9,000,000 and not more than ¥18,000,000 | 33% | ¥1,536,000 |
| Over ¥18,000,000 and not more than ¥40,000,000 | 40% | ¥2,796,000 |
| Over ¥40,000,000 | 45% | ¥4,796,000 |
*Note- these figures are accurate as of January 2021, please Japan team update latest.
- Resident
Resident tax is a tax paid to the municipality where you live in Japan. It consists of two types, prefectural and municipal taxes. The formula for calculating the residence tax is as follows.
Municipal Tax Amount = Income Rate+ Per Capita Rate
What is the income rate?
The amount to be paid according to the amount of income. Basically, the income amount of the previous year × 10% (6% municipal tax + 4% prefectural tax).
What is the per capita rate?
Amount paid by people living in the same local government regardless of their income. There are regional differences but is around 5,000 yen.
- Standards and ranges for foreign workers to pay municipal tax
The resident tax applies to individuals with addresses in local governments regardless of nationality. Whether there is an address is determined is based on January 1 of that year. For example, foreign workers who have been working in Japan since February 1, 2022, but did not have an address in Japan as of January 1, 2022, will not be subject to 2022 residence tax.
In addition, the income rate for municipal tax is applied on all income earned in the year from January 1 of the previous year. In other words, for foreign workers who have no previous year’s income, it won’t apply.
Japan has four different kinds of employer-mandated social insurances:
- Workers’ Accident Compensation Insurance
- Employment Insurance:
- Health Insurance and Nursing Care Insurance
- Employees’ Pension Insurance
Enrolment is compulsory for all employees, with a portion of the costs paid by the, and some by the employer.
The total cost to an employer is around 16.24% of salary/bonuses for employees aged over 40 and slightly less at 15.375% of salary/bonuses for employees under 40, with specific ceilings based on individual conditions.
Immigration
All foreigners working in Japan must have the appropriate permit from the Japanese Immigration Department. In some cases, it may be possible to enter under a visa waiver program or on a visitor’s visa to attend business meetings and initial research activities. However, this does not constitute permission to work.
Foreign nationals applying for a work permit in Japan must apply for and obtain a work visa prior to entering the country and commencing employment. If the new employee already has a valid and appropriate work visa, the company can file a simple change of employer notification within two weeks of the start of work.
If a new work visa is required, a Certificate of Eligibility (CoE) must first be obtained from the Immigration Department in Japan. This can take 4-8 weeks. If we can get expedited processing, it will be faster, which usually means 2-4 weeks. There are several categories by which immigration authorities evaluate applications, including, but not limited to:
- Intra-Company Transferees
- Engineers/Specialists in Humanities/International Services
- Business Managers
- Highly Skilled Professionals
The work visa is usually issued for only one year when first applied for, but can be valid for up to 3 years. The CoE is valid for three months, and holders must travel to Japan within three months of its issuance.
Foreign nationals with Work Visas will apply for admission to Japan at the Japanese port of entry. After approval by the border official, a residence card is issued to all long-term visa holders (more than three months) at most major airports. The residence card contains all basic identification, a photograph, and any restrictions on the foreigner’s work activities.
There is a relatively new points-based visa type ( Highly Skilled Foreign Professional Visa ) that, if eligible, can be issued for up to 5 years and can provide expedited permanent residence and other benefits.
REGISTRATION
Employee: Foreign nationals that receive a Residence Card at the port of entry must register at the local municipal office within 14 days once they have a permanent address. They must also report any subsequent address changes to the local municipal office within 14 days of each move. Residence Cardholders do not have to apply for a re-entry permit prior to leaving Japan, provided they return within one year.
Employer: Companies must notify the Labor Department upon the hiring or termination of each foreign employee.
Employees in Japan enjoy extensive labour protection regulated by the government. However, it should also be noted that cultural norms of lifetime employment often play a significant role in the relationship between employer and employee.
An employee must be provided with an employment contract that includes certain terms and conditions. A company may amend this contract at your request to include specific terms, as long as they are acceptable under Japanese law. It is possible to have a fixed-term contract. However, if the fixed term is extended beyond five years, the employee may request that the contract be changed to a permanent contract.
Employers with ten or more employees are required to establish ‘work rules’ and file them with the Labour Inspectorate. The work rules usually cover wages, working hours, leave arrangements, termination procedures, and dispute resolution.
An employee must generally give 30 days’ notice if they wish to terminate their employment (this may vary depending on the terms of the contract). Employers may also include a 30-day notice period in a contract for firing an employee or making a payment in lieu of notice. However, termination by the employer is extremely complex and often time-consuming (in Japan, termination “at will” is not permitted). In many countries, problems that would justify termination do not necessarily justify termination in Japan. Unfair termination can result in substantial severance pay and possibly reinstatement with back pay. Note that for employees who have been employed on a fixed-term contract for a period of less than five years, it is usually relatively easy to terminate employment at the end of the fixed-term contract. However, if the contract is terminated early, payment for the entire term of the contract may be required.
Japan’s Statutory Holidays
| Public Holidays | Date (2024) |
|---|---|
| New Year’s Day | 1 Jan |
| Coming of Age Day | Second Monday of January |
| National Foundation Day | 11 Feb |
| The Emperor’s Birthday | 23 Feb |
| Vernal Equinox | 20 March |
| Shōwa Day | 29 April |
| Constitution Memorial Day | 3 May |
| Greenery Day | 4 May |
| Children’s Day | 5 May |
| Sea Day | Third Monday of July |
| Mountain Day | 11 Aug |
| Respect for the Aged Day | Third Monday of September |
| Autumnal Equinox Day | 22 Sept |
| Sports Day | Second Monday of October |
| Culture Day | 3 November |
| Labour Thanksgiving Day | 23 November |