Guide · Japan
Japan EOR Cost 2026: Employer Contributions, Total Cost and Worked Examples
Hiring in Japan through an employer of record costs three things: the gross salary, the employer’s statutory contributions, and the provider’s monthly service fee. In Tokyo in 2026, employer social insurance and labour insurance add about 15.7% of salary for an employee under 40 and about 16.5% for an employee aged 40 to 64. Bonuses, commuting allowance and overtime come on top.
What you pay for a Japan EOR hire
| Cost | What it covers | How often |
|---|---|---|
| Gross salary | The agreed monthly salary in yen, plus fixed allowances | Monthly |
| Employer contributions | Health insurance, pension, employment and accident insurance, and the child levies | Monthly, and on bonuses |
| Customary pay | Summer and winter bonuses and a commuting allowance, if agreed | Twice a year; monthly |
| EOR service fee | The Japanese employer, contracts, payroll, tax, social insurance and support | Monthly, per employee |
| Deposit | Security for payroll, returned after final settlement | Once, refundable |
| Pass-through costs | Government fees, bank charges and exchange-rate differences | When incurred |
Employer and employee contributions in 2026
| Contribution | Employer | Employee | Notes |
|---|---|---|---|
| Health insurance (Kyokai Kenpo, Tokyo) | 4.925% | 4.925% | 9.85% in total from March 2026; other prefectures and health insurance societies differ |
| Long-term care insurance | 0.81% | 0.81% | Ages 40 to 64 only |
| Child support levy (kodomo kosodate shienkin) | 0.115% | 0.115% | 0.23% in total, new from April 2026 pay |
| Employees’ pension | 9.15% | 9.15% | 18.3% in total |
| Child-rearing contribution (kodomo kosodate kyoshutsukin) | 0.36% | – | Employer only; follows the pension cap |
| Employment insurance | 0.85% | 0.5% | FY2026 general business rate; higher in construction and agriculture |
| Workers’ accident insurance | 0.25%–8.8% | – | Employer only; about 0.3% for most office work |
Sources: Japan Health Insurance Association, Japan Pension Service, MHLW employment insurance rates.
Income tax and resident tax are withheld from the employee’s pay and do not add to your cost. Resident tax is based on the previous year’s income: for someone moving from another Japanese employer the monthly deduction carries over, while a new graduate or someone new to Japan usually pays nothing until the June after their first calendar year of income in Japan.
How contributions are calculated, and where they stop
Social insurance is not charged on the exact monthly salary. The salary is placed in a band, called standard monthly remuneration, and the rate is applied to that band. Bands are set when the employee joins, reviewed each July and changed when fixed pay moves by two bands or more.
- Pension, and the employer-only child-rearing contribution, stop rising at a standard monthly pay of ¥650,000. The cap rises in steps from September 2027.
- Health insurance, long-term care and the child support levy stop at a standard monthly pay of ¥1.39 million.
- Bonuses attract contributions too: health insurance on up to ¥5.73 million of bonuses a year, pension on up to ¥1.5 million per payment.
- Employment insurance and workers’ accident insurance are charged on actual pay, with no cap.
Worked examples: three Tokyo hires in 2026
| Monthly figures (¥) | Customer support specialist, 28 | Software engineer, 34 | Country manager, 46 |
|---|---|---|---|
| Gross salary | 320,000 | 600,000 | 1,000,000 |
| Health insurance | 15,760 | 29,058 | 48,265 |
| Long-term care insurance | – | – | 7,938 |
| Employees’ pension | 29,280 | 53,985 | 59,475 |
| Child support levy and child-rearing contribution | 1,520 | 2,802 | 3,467 |
| Employment and accident insurance | 3,680 | 6,900 | 11,500 |
| Employer contributions | 50,240 (15.7%) | 92,745 (15.5%) | 130,645 (13.1%) |
| Monthly employment cost | 370,240 | 692,745 | 1,130,645 |
Kyokai Kenpo Tokyo rates, general business, accident insurance at 0.3%, standard monthly remuneration bands applied, figures rounded. Before bonuses, commuting allowance, overtime and the EOR service fee.
Also budget for
- Bonuses. Not required by law, but most Japanese employees expect a summer and a winter bonus, often worth one to several months’ salary in total. Decide whether your offer is an annual salary paid in 12 instalments or a salary plus bonuses, and write it down.
- Commuting allowance. Customary for office roles. It is free of income tax up to ¥150,000 a month for public transport, but it counts as pay for social insurance.
- Overtime. At least 25% extra, 50% beyond 60 hours in a month, 35% on statutory holidays and 25% more at night. A manager title does not by itself remove overtime pay.
- Equal-treatment pay. Dispatched employees must be paid in line with comparable staff or a published benchmark wage for the job, so very low offers may need adjusting.
- End of employment. There is no statutory severance, but most employer-initiated endings are agreed with the employee, often with a separation payment of several months’ salary.
EOR or your own company: how the costs compare
| Employer of record | Your own KK or GK | |
|---|---|---|
| Time to first hire | Weeks, once the role review is done | Usually a few months, including the bank account and registrations |
| Set-up cost | No entity costs; a refundable deposit | Registration licence tax from ¥150,000 (KK) or ¥60,000 (GK), notary fees for a KK, advisers |
| Running cost | A monthly service fee per employee | Accounting, tax filings, payroll, labour and social insurance administration, office |
| Employment cost | The same salary and contributions | The same salary and contributions |
| Best for | One to a few employees, or testing the market | A growing team and continuous local business |
How NNRoad quotes
We charge a monthly service fee per employee, and pass the employment cost through at cost. We quote after reviewing the role, because the work location, contract type, bonus and benefits change the numbers. Your proposal lists every line before you sign, and you receive one invoice in US dollars per payroll month. For a quick estimate of the statutory part, use our Japan employer cost calculator.
Questions about the cost of hiring in Japan
How much does an employee cost in Japan on top of salary?
In Tokyo in 2026, employer social insurance and labour insurance add about 15.7% of salary for an employee under 40 and about 16.5% for an employee aged 40 to 64, a little less on high salaries because the pension contribution is capped. Bonuses and a commuting allowance are usually paid on top.
Is a 13th-month salary or bonus mandatory in Japan?
No. Japanese law does not require bonuses, but they are customary, and once a bonus is fixed in the contract or work rules it must be paid. Social insurance contributions apply to bonuses.
Does the employer pay social insurance on bonuses?
Yes. Health insurance and pension contributions are charged on bonuses at the same rates, up to ¥5.73 million a year for health insurance and ¥1.5 million per payment for pension, and employment insurance applies to the full bonus.
Is commuting allowance taxable in Japan?
For public transport it is free of income tax up to ¥150,000 a month, but it counts as pay when social insurance contributions are calculated.
What does an employer of record cost in Japan?
A monthly service fee per employee on top of the employment cost. Providers price differently, so compare the full proposal line by line, including the deposit, exchange-rate handling and what happens at the end of employment.
Want a proposal for your hire?
Tell us the role, the work location and the package. We will send the employment cost in yen and US dollars and our service fee, line by line.