Hire in Japan
Japan PEO &
Employer of Record
Hire & manage teams remotely in Japan without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Business Language
Japanese
Salary Currency
Japanese Yen (JPY)
Payroll tax
14.98% - 21.43%
Payroll Cycle
Monthly
Time zone
UTC +9
Capital city
Tokyo
Hire Employees in Japan
NNRoad provides employer of record (EOR) & professional employment organization (PEO) services to ensure that your business in Japan complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.
The NNRoad Advantage ☺
Pay as you go
No set-up or overhead costs to global expansion.
Global account manager
One point of contact for all of our 50+ serviced countries and regions.
Compliance
Ensured compliant contracts and operations.
Fast Onboarding
Start working with your remote employees/contractors within a week.
Foreigner Visas
NNRoad assists with overseas foreign hires visa needs.
Platform
Access your payroll reports and employee pay stubs on our portal.
Employer of Record in Japan
Employer of Record (EOR) services are for companies who do not have a legal entity in Japan, but who want to hire localy. Employment and full liability are outsourced to NNRoad.
01.
Candidate Selection
You interviews & select the candidates you want to hire in Japan.
02.
Employee Onboarding
We sign a local labor contract with your employees based in Japan.
03.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Japan.
04.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Japan.
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in Japan
Professional Employment Organization (PEO) services are for companies who have a legal entity in Japan, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
01.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Japan.
02.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Japan.
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in Japan
Employee Income Taxes:
Individual income tax rates in Japan are based on progressive tax brackets.
The tax year in Japan runs from January 1 to December 31, and tax returns must be filed by March 15 of the following year. The standard deduction for the tax year is JPY 380,000, while the taxable income is calculated based on one’s salary and any other sources of income such as investment profits.
The tax rate ranges from 5% to 45%, with the maximum rate applied to those earning over JPY 40 million per year. Additionally, there are various deductions and credits available to taxpayers, such as deductions for spouse, dependents, and charitable donations, which can lower one’s overall tax liability.
Tax Brackets
5%: 0 – 1,950,000 JPY
10%: 1,950,000 – 3,300,000 JPY
20%: 3,300,000 – 6,950,000 JPY
23%: 6,950,000 – 9,000,000 JPY
33%: 9,000,000 – 18,000,000 JPY
40%: 18,000,000 – 40,000,000 JPY
45%: >40,000,000 JPY
10%: 1,950,000 – 3,300,000 JPY
20%: 3,300,000 – 6,950,000 JPY
23%: 6,950,000 – 9,000,000 JPY
33%: 9,000,000 – 18,000,000 JPY
40%: 18,000,000 – 40,000,000 JPY
45%: >40,000,000 JPY
Sample Calculation
Yearly income = 10,000,000 JPY
33% * 1,000,000 = 330,000
23% * 2,050,000 = 471,500
20% * 3,650,000 = 730,000
10% * 1,350,000 = 135,000
5% * 1,950,000 = 97,500
330,000+471,500+730,000+135,000 = 1,666,500
Yearly income tax = 166,500 JPY
33% * 1,000,000 = 330,000
23% * 2,050,000 = 471,500
20% * 3,650,000 = 730,000
10% * 1,350,000 = 135,000
5% * 1,950,000 = 97,500
330,000+471,500+730,000+135,000 = 1,666,500
Yearly income tax = 166,500 JPY
Employer Costs in Japan
Employer costs in Japan can include a variety of expenses related to hiring and maintaining employees. These costs may include salaries and wages, social security contributions, health insurance premiums, and other benefits such as housing allowances and bonuses.
Employers may also be responsible for paying a portion of the cost for employment insurance and workers’ compensation insurance. In Japan, there is also a mandatory government-administered pension system, known as the “Kousei Nenkin,” which requires both employees and employers to contribute a portion of their income to the program.
Overall, the cost of employing workers in Japan can be relatively high compared to other countries, due to the extensive benefits and protections offered to employees under Japanese law. However, many employers find that the investment in their workforce pays off in terms of increased productivity and loyalty from employees.
Employer Contribution
Employer costs vary in Japan, but the maximum employer contribution ranges between 14% & 15.5% of the employee’s salary.
Employee Contribution
Employee costs vary in Japan, but the maximum employee contribution ranges between 15% & 17% of the employee’s salary.
Benefits & Insurance in Japan
Pension Fund
The pension plan is a government-administered program that requires both employees and employers to contribute a portion of their income. Unemployment insurance provides financial support to workers who have lost their job, while workers’ compensation insurance covers medical expenses and lost wages in case of a workplace injury or illness.
Healthcare Insurance
In Japan, employees are entitled to a range of benefits and insurance coverage, which are meant to protect their health, well-being, and financial security. Some of the most common benefits provided by employers include health insurance, pension plans, unemployment insurance, and workers’ compensation insurance. Health insurance, which is mandatory in Japan, covers a wide range of medical expenses and is typically split between the employer and employee.
In addition to these benefits, many employers also offer additional perks such as housing allowances, bonuses, and paid leave to their employees. These benefits and insurance programs are designed to provide workers in Japan with a high level of protection and support, making it a highly attractive place to work for many people.
Working Hours in Japan
Working hours in Japan are regulated by the Labor Standards Act, which sets the maximum regular working hours per week at 40 hours, excluding overtime. However, it is common for many employees in Japan to work well beyond the standard 40 hours per week, with long hours being a cultural norm in many industries. This phenomenon, known as “karoshi,” or “death from overwork,” has become a serious issue in Japan, leading the government to implement measures aimed at reducing excessive overtime and improving work-life balance for employees.
Despite these efforts, many workers in Japan still regularly work more than 60 hours per week, and it is not uncommon for employees to put in long hours of overtime on a regular basis. Despite the high workload, Japan is still renowned for having a highly productive and efficient workforce, making the issue of excessive working hours an ongoing challenge for the country.
Working Hours Per Week
The work week in Japan is 40 hours per week and 8 hours per day. Although specific industries vary & overtime laws are nuanced.
Termination Laws in Japan
Termination laws in Japan are governed by the Labor Standards Act and the Civil Code, which set out the legal requirements and procedures for terminating an employment relationship. In general, employers are required to provide employees with a reasonable notice period prior to termination, unless the employee has engaged in serious misconduct. There are also restrictions on terminating an employee during a probationary period, and on laying off employees in mass terminations.
Additionally, employees who have been wrongfully terminated may be eligible for compensation. Employers must also follow strict procedural requirements when terminating an employee, including conducting an investigation and providing an explanation of the reason for termination. These laws are designed to protect the rights of employees in Japan and ensure that terminations are carried out in a fair and reasonable manner. Nevertheless, the strict legal requirements and procedures surrounding termination in Japan can make it challenging for employers to manage their workforce effectively.
Severance
Severance is oftentimes negotiated in Japan. Japanese law does not mandate severance packages.
Notice Period
It is mandatory for employers inn Japan to provide a 30 days notice prior to termination.
Employment Contract in Japan
An employment contract in Japan is a legally binding agreement between an employer and an employee that sets out the terms and conditions of the employment relationship. The contract typically includes details such as the job description, salary, working hours, benefits, and any other conditions of employment. Employment contracts in Japan are regulated by the Labor Standards Act and the Civil Code, which set minimum standards for working conditions and employment benefits.
In general, employment contracts are based on a “lifetime employment” model, meaning that once an employee is hired, they are expected to remain with the company until retirement. This model has traditionally been the norm in Japan, although in recent years there has been a trend towards a more flexible, non-permanent employment structure. Despite this shift, employment contracts remain an important aspect of the labor market in Japan, providing workers with stability and security, and allowing employers to effectively manage their workforce.
Employment Contract
Employment in Japan requires a labor contract written in Japanese and spelling out the salary and benefits of the job.
Probation Period
Probation is common in Japan and last from three months to one year. Terminating an employee on probation in Japan must be accompanied by legitimate reasons such as performance or company financials.
Types of Leaves in Japan
There are several types of leave available to employees in Japan, including annual leave, personal leave, and special leave. Annual leave is the most commonly used type of leave and allows employees to take time off for personal or leisure purposes. Personal leave is typically granted for emergencies or important personal matters, such as caring for a sick family member. Special leave, on the other hand, is available for a range of special circumstances, such as maternity leave for expectant mothers, and bereavement leave for employees who have lost a family member.
In addition to these standard types of leave, many companies in Japan also offer additional leave options, such as study leave for employees who wish to pursue further education, and sabbatical leave for workers who want to take an extended break from work. These various types of leave help to ensure that employees in Japan have a healthy work-life balance, and allow them to take time off for important personal and family matters.
Annual Leave
Employees working at a firm for 6 months with an attendance record of 80% or more are entitled to a minimum of 10 days of paid annual leave.
Paid annual leave increases by 1 day per year for the first 2 years of employment and by 2 days per year after the first two years, capped at 20 days per year. Employees are entitled to carryover unused annual leave for 1 year.
Sick Leave
There are no mandatory sick leave entitlements in Japan, but employers may have a sick leave policy.
Maternity Leave
Female employees are entitled to 14 weeks (6 weeks before and 8 weeks after birth) maternity leave at 2/3rds of normal salary. Covered by Social Security.
Paternity Leave
New fathers in Japan take up to 4 weeks of paternity leave after the birth.
Unpaid Leave
Parents in Japan may take unpaid childcare leave, family care leave, and in the case of death of a direct family member.
Public Holidays in Japan
Japan has a number of public holidays throughout the year, many of which are based on traditional cultural and religious events. Some of the most notable holidays include New Year’s Day, Coming of Age Day, National Foundation Day, and Health and Sports Day. There are also several religious holidays celebrated in Japan, including Christmas, which is not a national holiday but is still widely observed by many people, particularly in the commercial sector.
There are also several “floating” holidays, which are granted to employees in addition to their regular annual leave. These floating holidays can be taken at any time and are meant to provide employees with additional flexibility and time off.
Overall, the public holidays in Japan are a valuable opportunity for workers to take a break and spend time with family and friends, and play an important role in preserving and promoting traditional cultural and religious practices.
Public Holidays
Resources