How to hire and pay employees in Japan
With Instahirin, your business can easily hire employees in Japan. No more worrying about local laws, complex tax systems, or managing international payroll.
Before hiring
EMPLOYEES IN The Japan
Before hiring employees in Japan, one key thing employers should be aware of is the country’s Act on the Protection of Personal Information (APPI). This law regulates how employers collect, handle, and transfer employee data especially across borders. To stay compliant, companies must obtain proper consent and implement strict safeguards when managing personal information.
Another important factor is understanding Japan’s labor laws and mandatory employee benefits. Employers must enroll employees in social insurance programs, which include health insurance, pension, unemployment insurance, and long-term care insurance. Employees are also entitled to paid annual leave, national holidays, sick leave (though not always mandatory), and overtime pay. Employment contracts must follow legal guidelines, and termination rules are strict, often requiring clear justification and advance notice.
At a glance
CURRENCY
Japanese Yen JPY
OFFICIAL LANGUAGE
Japanese
PAYROLL FREQUENCY
Monthly
EMPLOYER TAXES
15.7% - 25.2%
of gross salary
13th / 14th SALARY
N/A
Good to know
Japan provides universal healthcare through a public insurance system. All employees are enrolled in Employee Health Insurance (Shakai Hoken), jointly funded by employers and employees. It covers most medical treatments at 30% co-pay. Many employers also offer private supplementary insurance for additional benefits.
Under Japan’s Labor Standards Act, both employees and employers are required to give at least 14 days’ notice before terminating employment. In practice, 30 days’ notice is the standard for employers, or 30 days’ salary in lieu of notice. Longer notice periods may be set in employment contracts or company work rules.
Labor laws in Japan
Working hours and overtime
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.
Employment contracts
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
- Working hours
- Rules for shift work (if applicable)
Probationary period
Probation periods are common in Japan, and typically last around three months, though employers may extend them.
Calculate costs to hire internationally
Benefits and leave in Japan
Annual leave in Japan
Employers must grant employees a minimum of 10 days’ paid leave, though paid leave varies based on years of service.
- .5 years - 10 days paid leave
- 1.5 years - 11 days paid leave
- 2.5 years - 12 days paid leave
- 3.5 years - 14 days paid leave
- 4.5 years - 16 days paid leave
- 5.5 years - 18 days paid leave
- 6.5 years - 20 days paid leave
Sick leave
There are no mandatory sick leave provisions in Japan.
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.
Holidays
Japan celebrates 16 national holidays
Employer tax
In Japan, employers typically contribute around 15% to 18% of an employee’s gross salary to mandatory programs, including health insurance, pension (Employees' Pension Insurance), unemployment insurance, and long-term care insurance, with exact rates depending on company size, location, and employee age.
Individual tax
In Japan, individuals pay progressive income tax ranging from 5% to 45% on annual income, along with municipal inhabitant taxes (around 10%) and mandatory social insurance contributions (approximately 13%–15%), with total deductions varying based on income, age, and location.
Termination in The Japan
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
- 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.
Start hiring employees in
Japan
Setting up a business entity in every country you want to hire from isn’t scalable it’s time-consuming, expensive, and legally complex. In Japan, navigating strict labor laws, social insurance requirements, local tax regulations, and mandatory employee benefits can be challenging. Managing contracts, payroll, and compliance manually through spreadsheets and emails often leads to delays and costly mistakes.
With InstaHirin, you can easily manage HR, payroll, and automate compliance in Japan and 180+ countries all from one user-friendly platform so you can hire quickly and confidently without setting up a local entity.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While InstaHirin yster strives to provide current and accurate information, InstaHirin makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
