Basic information
Currency：Japanese Yen JPY
Capital：Tokyo
Official Language：Japanese
Salary Payment：Monthly
Localized benefits for employees
- Social Security
- Private Healthcare – Allianz (optional)
Pay&Tax
- Minimum Wage Requirements
In Japan, the minimum wage is complex. The minimum hourly wage is set according to the region of the employee, and it can vary between ¥714 and ¥1023.
- Individual Income Tax
The individual income tax ranges from 5% to 45%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates, such as household status and the number of children.
| Gross Annual Income | Tax Rate (%) |
| Up to JPY – 1.95 million | 5% |
| Up to JPY – 3.3 million | 10% |
| Up to JPY – 6.95 million | 20% |
| Up to JPY – 9 million | 23% |
| Up to JPY – 18 million | 33% |
| Up to JPY – 40 million | 40% |
| Over JPY – 40 million | 45% |
- Payroll Cost The employer cost is generally estimated at 16.67% of the employee salary.
- Health Insurance* – 5%
- Pension Insurance* – 9.15%
- Unemployment insurance – 0.95%
- Long Term Care insurance* (over 40 only) – 0.91%
- Workers Compensation Insurance – 0.30%
- Contributions to Childcare* – 0.36%
- Asbestos Contribution – 0.002%
- Overtime Pay & Maximum Hours
Standard working hours are 8 hours per day, 40 hours per week. The standard work week is from Monday to Friday.
Overtime payment is only mandatory if the employee is not an exempt manager. For that case, overtime payment can’t be included in the salary. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 360 hours of overtime per year.
For additional hours, employees are paid at different rates according to different variables:
| Classification | Rate of increase |
| Work in excess of statutory working hours | 25% |
| Work in excess of statutory working hours exceeding 60 hours in a month | 50% |
| Work on statutory days off | 35% |
| Work late at night (between 10 p.m. and 5 a.m.) | 25% |
| Work late at night in excess of statutory working hours | 50% |
| Work late at night in excess of statutory working hours exceeding 60 hours in a month | 75% |
| Work late at night on statutory days off | 60% |
Leave policy
- Maternity Leave
Pregnant employees are entitled to 14 weeks of paid leave. 6 weeks must be taken before the child’s birth. The employee will receive 2/3 of the salary during this period, and Social Security will be responsible for this pay.
- Paternity Leave
There is no paternity leave currently required by law.
Employees can use parental leave instead.
- Parental Leave
Employees are entitled to 12 months of parental leave, including maternity/paternity leave. Both parents can decide how to distribute the time off, which should be 8 weeks after paternity and maternity leave. Either parent can take parental leave. Social security will pay 67% of the salary during this period for the first 180 days and then 50% for the remaining days.
Parental can be extended up to 2 years for at 50% pay.
- Sick Leave
Employees are not entitled by law to sick leave and it will depend on the employer’s sole discretion.
Termination
- Termination RequirementsTerminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.
Terminations in Japan can be complex. There is no at-will termination in Japan for employers outside the probation period and termination must be done for just cause.
Compliant terminations include:
- Voluntarily by the employee
- By mutual agreement
- Unilaterally by the employer based on:
- probation period
- objective grounds
- disciplinary dismissal
- performance due to unsuitability for the job
- By the expiration of the contract
- Notice Period
The minimum notice period is 30 days. This does not apply to employees that are serving a probationary period of 14 days or less.
- Severance for Employees
In Japan, there are no statutory requirements for severance payments. During the notice period, the employee will receive standard salary wages.
Statutory time off
- Paid Time Off
Full-time and Part-time employees are entitled to 10 working days of paid time off (PTO) a year. All 10 days will be given after 6 months of work. PTO doesn’t accrue monthly in Japan but increases according to the employee’s length of service in the same company. Annual paid leave leftover from one year may be carried over and taken the next year.
- Public Holidays Japan celebrates 16 national holidays National public holidays include:
- The first day of the year
- Coming of age day
- Foundation Day
- The emperor’s birthday
- Vernal Equinox Day
- Showa Day
- Constitution Memorial Day
- Greenery day
- Children’s day
- Marine day
- Mountain day
- Respect for the Aged Day
- Autumnal Equinox Day
- Sports day
- Culture Day
- Labor Thanksgiving Day
Onboarding
- Onboarding
Onboarding takes 3 business days. Documents must be completed 1 day before the start date.
Additional info
- Employment Contract Details
Contracts must be in Japanese and can be bilingual. They must be in writing and signed by both parties.
A contract must include:
- Name
- Start date
- Length of the employment
- Job description
- Duration of labor contract
- Place of work
- Nature of work to be performed
- Working hours
- Rules for shift work (if applicable)
- Whether or not work is performed in excess of the prescribed working hours
- Break times, holidays, and leave
- Methods for determining, calculating and paying wages, deadlines, and payment dates
- Rules on resignations and terminations
- Probation Period
Probation periods are not mandatory. There are no laws stipulating minimum and maximum length. However, generally, the trial period lasts between 3 to 6 months.
After completing the probationary period, it can be extended for 6 additional months.
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