Japan Employment Law & Compliance Guide for Employers
Key employment laws in Japan: what employers need to know
Employment in Japan is governed mainly by the Labor Standards Act and the Labor Contracts Act, with social insurance, tax and immigration rules in separate statutes. Two points often surprise foreign employers: no one may work overtime until a signed 36 Agreement has been filed with the Labour Standards Inspection Office, and a dismissal can be void even when 30 days’ notice is given. This page summarises the core employer rules, with official sources for each point.
Japan employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | Set per prefecture. FY2026 rates take effect between 1 October and 2 December 2026: national weighted average JPY 1,177 an hour; Tokyo JPY 1,280 an hour from 1 October 2026. Prefectural rates range from JPY 1,085 to JPY 1,280. | MHLW – FY2026 regional minimum wage reports |
| Standard working hours | 40 hours a week and 8 hours a day. At least one rest day a week (or 4 days in 4 weeks). Breaks of 45 minutes for days over 6 hours and 60 minutes over 8 hours. | Labor Standards Act (Japanese Law Translation) |
| Overtime pay | Overtime requires a filed 36 Agreement. Premiums: 25%, rising to 50% beyond 60 hours a month; statutory rest-day work 35%; night work (10pm–5am) +25%. Caps: 45 hours a month and 360 a year; special clause maximum 720 a year and under 100 in any month. | MHLW – Overtime cap rules (Work Style Reform) |
| Paid annual leave | 10 days after 6 months' service with 80% attendance, rising to 20 days after 6.5 years; pro-rated for short-hour part-timers. Employers must ensure staff entitled to 10+ days take at least 5 days a year. Unused days carry over one year. | Labor Standards Act, Art. 39 (Japanese Law Translation) |
| Public holidays | 16 national holidays (18 days off in 2026 including substitute days). The Labor Standards Act does not require them to be paid days off; the work rules or contract decide. Most employers close on them. | Cabinet Office – National holidays |
| Sick leave | No statutory paid sick leave. After 3 consecutive days off, health insurance pays a sickness allowance of two-thirds of standard daily pay from day 4, for up to 1 year and 6 months in total. | Japan Health Insurance Association – Sickness allowance |
| Maternity and parental leave | Maternity leave: 6 weeks before birth (14 for multiples) and 8 weeks after. Childcare leave until the child turns 1 (up to 2 if no daycare place); fathers can also take up to 4 weeks within 8 weeks of birth. Employment insurance pays 67% for 180 days, then 50%. | MHLW – Childcare leave benefits |
| Probation period | No statutory maximum; 3 to 6 months is common and is set in the contract or work rules. During the first 14 days dismissal needs no notice; after that the 30-day notice rule applies and dismissal still needs reasonable grounds. | Labor Standards Act, Arts. 20–21 (Japanese Law Translation) |
| Notice period | Employer: 30 days' notice or at least 30 days' average wages in lieu (or a mix). Notice does not make a dismissal valid; it must also be objectively reasonable (Labor Contracts Act, Art. 16). Employees on open-ended contracts may resign with 2 weeks' notice. | Labor Standards Act, Art. 20 (Japanese Law Translation) |
| Severance pay | None required by law. A retirement allowance (taishokukin) is owed only if the contract, work rules or a collective agreement provides one. Negotiated separation packages are common when ending employment by agreement. | Labor Standards Act, Art. 89 (Japanese Law Translation) |
| Employer social contributions | About 15–17% of pay: pension 9.15%; health insurance about 4.6–5.3% (Tokyo 4.925%) plus 0.81% nursing care for ages 40–64; child levies 0.475%; employment insurance 0.85%; accident insurance 0.25–8.8%. Caps: pension JPY 650,000, health JPY 1.39 million monthly. | Japan Health Insurance Association – FY2026 premium table (Tokyo) |
| Employee social contributions | About 14.7–15.5% of pay: pension 9.15%; health insurance half the prefectural rate (Tokyo 4.925%); nursing care 0.81% at ages 40–64; child support contribution 0.115% (from April 2026 pay); employment insurance 0.5% (FY2026 general rate). | Japan Health Insurance Association – FY2026 rates |
| Income tax on salaries | National income tax 5–45% progressive plus a 2.1% surtax, withheld monthly and settled at a December year-end adjustment. Local inhabitant tax of about 10% is deducted from pay from June, based on the prior year's income. | National Tax Agency – Income tax rates |
| Mandatory bonuses and 13th-month pay | None required by law. Summer and winter bonuses are customary and become payable if the contract or work rules fix them. Bonuses attract social insurance contributions and income tax withholding. | Labor Standards Act (Japanese Law Translation) |
| Work permits for foreign nationals | A status of residence that permits the job, e.g. Engineer/Specialist in Humanities/International Services or Specified Skilled Worker. The employer usually applies for a Certificate of Eligibility; standard processing is 1–3 months. Hires and departures must be reported to Hello Work. | Immigration Services Agency – Certificate of Eligibility |
| Employment contract requirements | Key terms must be given in writing at hiring (electronically if the employee asks): term and renewal rules, workplace and duties including scope of change, hours, wages, termination. No language rule. Sites with 10+ workers must file work rules. | MHLW – Working conditions disclosure rules (April 2024) |
Employer obligations in Japan, topic by topic
Filter by primary service relevance
Does an employment contract in Japan have to be in writing, and what must it contain?
How many hours can employees work in Japan, and when is overtime allowed?
What is the minimum wage in Japan, and how must salaries be paid?
How much paid leave must employers give in Japan?
How much does social insurance and payroll tax cost an employer in Japan?
How can an employer dismiss an employee in Japan, and what notice is owed?
Can a company in Japan hire a foreign national, and which residence status is needed?
Can a foreign company engage contractors in Japan instead of employees?
Key employment laws in Japan and official sources
- Labor Standards Act (Act No. 49 of 1947) — Sets minimum working conditions: hours, overtime premiums, annual leave, maternity leave, notice of dismissal, wage payment and work rules.
- Labor Contracts Act (Act No. 128 of 2007) — Governs formation and change of employment contracts, the test for valid dismissal and conversion of fixed-term contracts to open-ended ones.
- Minimum Wage Act (Act No. 137 of 1959) — Provides for regional and specified minimum wages and the employer’s duty to pay and display them.
- Health Insurance Act (Act No. 70 of 1922) — Requires enrolment of employees in health insurance and sets sickness and childbirth allowances.
- Employees’ Pension Insurance Act (Act No. 115 of 1954) — Requires enrolment of employees in the employees’ pension scheme and sets the 18.3% contribution rate.
- Income Tax Act (Act No. 33 of 1965) — Sets income tax rates and the employer’s duty to withhold tax from salaries and run the year-end adjustment.
- Immigration Control and Refugee Recognition Act (Cabinet Order No. 319 of 1951) — Defines statuses of residence that allow work, including Specified Skilled Worker, and penalises illegal employment.
- Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators (Freelance Act, Act No. 25 of 2023) — Sets written-terms, payment and termination-notice duties for businesses that engage individual freelancers.
FAQs: hiring employees in Japan
Can a foreign company hire employees in Japan without a local entity?
Not directly in most cases. Social insurance, labour insurance and payroll registrations are made by an employer with a presence in Japan, so a foreign company normally sets up a subsidiary or branch first. The alternative is an Employer of Record, a Japanese company that becomes the legal employer, runs payroll and enrols the employee, while the foreign company directs the day-to-day work. Contractor arrangements are possible only where the person is truly independent.
How much does an employee cost in Japan on top of gross salary?
Employer social insurance adds roughly 15–17% of salary. For a Tokyo office employee this covers pension 9.15%, health insurance 4.925% (plus 0.81% nursing care at ages 40–64), child-related levies of about 0.48%, employment insurance 0.85% and workers’ accident insurance from 0.25%. Pension contributions stop at monthly pay of JPY 650,000. Bonuses also attract contributions, and commuting allowances are customary.
What is the minimum wage in Japan in 2026?
Japan sets a minimum wage for each prefecture. The FY2026 rates take effect between 1 October and 2 December 2026, with a national weighted average of JPY 1,177 an hour and a range of JPY 1,085 to JPY 1,280. Tokyo’s rate is JPY 1,280 an hour from 1 October 2026, up from JPY 1,226. The rate of the prefecture where the employee works applies.
How much notice and severance does an employer owe when dismissing an employee in Japan?
The employer must give 30 days’ notice or pay at least 30 days’ average wages in lieu. No severance is required by law unless the work rules or contract provide a retirement allowance. However, notice alone does not make a dismissal lawful: it must be objectively reasonable and socially appropriate, a high bar in practice. Most employers therefore negotiate an agreed resignation with a separation package.
Can a company hire a foreign national in Japan, and what permit is needed?
Yes. The worker needs a status of residence that permits the job, most often Engineer/Specialist in Humanities/International Services, or Specified Skilled Worker for designated shortage sectors. For hires from abroad, the employer usually applies for a Certificate of Eligibility, with standard processing of 1 to 3 months. Every hire and departure of a foreign worker must be reported to Hello Work. A new Employment for Skill Development system starts on 1 April 2027.
Is it risky to engage contractors instead of employees in Japan?
Yes, if the contractor works like an employee. Worker status depends on the facts, such as control over tasks, hours and place of work, not on the contract title. Misclassified contractors can claim overtime pay, paid leave, social insurance and dismissal protection. Genuine freelancers are covered by the Freelance Act since November 2024, which requires written terms, payment within 60 days and 30 days’ notice for ending longer engagements.
Related NNRoad resources for Japan: Employer of Record in Japan · Payroll in Japan · Hiring foreign employees in Japan · Contractors and on-demand talent in Japan · Japan employer cost calculator
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Regulation Updates in Japan
Notice on Submission of Supporting Documents for Periodic Notifications by Specified Skilled Worker Host Organizations
What it is: A new requirement that Specified Skilled Worker host organizations must attach specified supporting documents to their periodic notifications.
What it changes: Starting in May 2026, the submission of supporting documents becomes an attached part of periodic notifications, creating new documentary obligations for specified skilled worker work permits.
Who is affected:
- Specified Skilled Worker host organizations
- Employers and registered support organizations involved with Specified Skilled Worker work permits
What employers should do:
- Prepare to attach the specified supporting documents to periodic notifications
- Operationalize the process for submitting these attached documents with periodic notifications
Notes: Effective month: 2026-05.
Revisions to the Ordinance for Landing Permission Standards, etc., concerning the 'Business Manager' residence status
What it is: Revisions to the Ordinance for Landing Permission Standards, etc., concerning the ‘Business Manager’ residence status.
What it changes: The revisions tighten eligibility by requiring at least one full-time employee and expert confirmation of the business plan and other stricter criteria that directly affect employers sponsoring or operating entities and their work permits.
Who is affected:
- Employers sponsoring or operating entities under the Business Manager residence status
- Workers associated with those sponsorships
What employers should do:
- Prepare to demonstrate the existence of at least one full-time employee and obtain expert confirmation of the business plan as part of compliance for Business Manager sponsorships
- Review internal staffing and business-planning processes to align with the new criteria
Notes: Effective month: 2026-05.
Sep 2025: Results on Employer Abuse of Persons with Disabilities (FY2024)
In FY2024, Japan’s Ministry of Health, Labour and Welfare released comprehensive results on employer-perpetrated abuse of persons with disabilities, highlighting the importance of proactive measures and new policies to protect vulnerable employees in the workplace.
Update first published on NNRoad in Sep 2025. The current rules are summarised in the sections above.
Jul 2025: Japan Reviews Equal Pay Law Amid Ongoing Gender Wage Gap
Five years after enforcing its equal pay for equal work legislation, Japan’s labour council re-evaluates wage equity as disparities between genders and job types remain entrenched.
Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.
Discover the latest employment and compliance updates in Japan — helping you stay ahead in a changing regulatory landscape.