Japan

Employer of Record (EOR) in Japan

Only 299 EUR per employee per month

Rivermate's Employer of Record (EOR) solution helps companies hire remote employees in Japan . We take care of global payroll, taxes, benefits, compliance and HR activities. So you can focus on growing your business. Our Employer of Record (EOR) solution is beneficial to companies that want to hire remote employees in a breeze. On this page you will find employment information for Japan.

Employer of Record people
A coin
Currency
Japanese Yen
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Capital
Tokyo
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Region
Asia
Megaphone
Language
Japanese
Hire remote employees
Population
126476461
A pile of gold
GDP
$4.872 trillion
Line graph
GDP growth
0.0171
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Ease of doing business
78
Planet earth
World GDP share
0.0602

1. Grow your team in Japan with Rivermate as your Employer of Record (EOR) / PEO

Payroll, benefits, taxes, and compliance can be difficult to manage in Japan , particularly if you don't have established local relationships. You can hire employees in Japan effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global Employer of Record (EOR) solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

2. Summary

Japan is an East Asian island nation. It is located in the northwest Pacific Ocean, bounded on the west by the Sea of Japan, and stretches from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south. Japan is part of the Ring of Fire, with 6852 islands totalling 377,975 square kilometers (145,937 square miles); the five major islands are Hokkaido, Honshu (the "mainland"), Shikoku, Kyushu, and Okinawa. Tokyo is the nation's capital and biggest city, with Yokohama, Osaka, Nagoya, Sapporo, Fukuoka, Kobe, and Kyoto as prominent cities.

Japan is the world's tenth most populous nation, as well as one of its most densely inhabited and urbanized. Three-fourths of the country's topography is hilly, squeezing its 125.5 million people on narrow coastal plains. There are 47 administrative prefectures and eight traditional regions in Japan. With almost 37.4 million inhabitants, the Greater Tokyo Region is the world's most populated metropolitan area.

Japan has been inhabited since the Upper Paleolithic era (30,000 BC), but the earliest documented reference of the archipelago is in a Chinese chronicle (the Book of Han), which was completed in the second century AD. Between the fourth and ninth centuries, Japan's kingdoms were united under an emperor and the imperial court located in Heian-ky. Political authority was controlled by a succession of military dictators (shogun) and feudal lords (daimyo) beginning in the 12th century and enforced by a class of warrior nobles (samurai). Following a century of civil conflict, Japan was reunified in 1603 under the Tokugawa shogunate, which pursued an isolationist foreign policy. A US navy drove Japan to open commerce to the West in 1854, leading to the collapse of the shogunate and the restoration of imperial rule in 1868. During the Meiji era, the Empire of Japan adopted a Western-style constitution and embarked on an industrialization and modernization program. Japan invaded China in 1937 and joined World War II as an Axis power in 1941, amid a surge in militarism and foreign expansion. After defeat in the Pacific War and two atomic bombs, Japan surrendered in 1945 and was under Allied occupation for seven years, during which it established a new constitution and formed a military alliance with the United States. Japan has retained a unitary parliamentary constitutional monarchy with a bicameral legislature, the National Diet, under the 1947 constitution.

Japan is a major power and a member of various international organizations, including the United Nations (since 1956), the OECD, the Group of Twenty, and the Group of Seven. Despite having relinquished its ability to declare war, the government retains Self-Defense Forces that are among the world's most powerful. After WWII, Japan saw unprecedented growth in an economic miracle, becoming the world's second-largest economy by 1972, but has subsequently stagnated in what is known as the Lost Decades. The country's economy is the third-largest by nominal GDP and the fourth-largest by PPP as of 2021. Japan has one of the world's longest life expectancies, ranked "extremely high" on the Human Development Index, despite population reduction. Japan has made enormous contributions to science and technology as a worldwide leader in the automobile, robotics, and electronics sectors. Japan's culture, including its art, food, music, and popular culture, which includes strong comic, animation, and video game industries, is highly recognized across the globe.

Hiring talented employees in a short span is not an easy task. Partnering with an Employer of Record (EOR) like Rivermate in Japan is your best option, giving your organization enough time to focus on other aspects of international expansions like project management and inventory management. The EOR takes care of all the compliance and legal issues while helping you speed up hiring using their knowledge of domestic employment practices and virtual onboarding tools. Top EORs also have provisions for the e-signing of documents to enable faster onboarding.

3. Public holidays

4. Types of leave

There is no information about the types of leave for this country.

Paid time off

Employees are entitled to a certain amount of paid sick days depending on their period of service:

After six months of service, you will be entitled to ten days of paid leave.

After 1.5 years of service, you will be entitled to 11 days of paid leave.

After 2.5 years of service, you will be entitled to 12 days of paid leave.

After 3.5 years of service, you will be entitled to 14 days of paid vacation.

After 4.5 years of service, you will be entitled to 16 days of paid leave.

After 5.5 years of service, you will be entitled to 18 days of paid leave.

After 6.5 years of service, you will be entitled to 20 days of paid leave.

Employees are allowed to accumulate up to two years of accrued sick time.

Public holidays

There are 16 public holidays this year. Although there are no formal provisions for public holidays to be charged, it is standard practice to grant such days as paid vacation days.

When a national holiday occurs on a Sunday, the next working day is designated as a public holiday.

Sick days

There is no such thing as forced sick leave in Japan. When an employee becomes ill, they take advantage of their accrued holiday time.

Maternity leave

Maternity leave in Japan is 14 weeks. This is split into six weeks prior to the birth and eight weeks after the birth. The woman will return to work before her maternity leave ends if she has been cleared by a doctor.

The woman is paid two-thirds of her base wage and is compensated by social security.

Paternity leave

Employees who have worked at the same company for at least a year are eligible for a year of paid leave.

Parental leave

Childcare leave can be taken by either the mother or the father in Japan, and it begins the day after the maternity leave ends. Childcare leave is protected by workers' compensation and can be used up until the day before the child turns one year old. If all parents take child care leave, the leave is extended until the child reaches the age of one year and two months.

Other leave

Employees in Japan are entitled to bereavement leave if a member of their immediate family dies. An employee is entitled to five days of leave for the loss of a father, mother, spouse, or child, and three days for the death of a grandparent, grandchild, sibling, child's spouse, or spouse's parent.

Furthermore, if the employee is in charge of funeral preparations, they may seek an extra two days' vacation. Employees may also take Family care leave, which is an unpaid absence of up to three months to care for a spouse, kid, parent, or grandparent.

5. Employment termination

There is no information about employment information for this country.

Termination process

Terminating full-time employees is difficult under Japanese labor legislation. Employees who do not wish to leave may argue and pursue negotiations, which normally result in compensation of at least one month's income for each year worked. 30 days notice is necessary prior to dismissal.

Notice period

The company must give 30 days' notice or pay the employee in lieu of notice.

Probation period

Probationary periods in Japan typically last 3 to 6 months.

Severance pay

Although there is no statutory severance payment, employers should follow socially acceptable terms due to the difficulties associated with terminating an employee.

6. Working hours

There is no information about the working hours for this country.

General working schedule

In Japan, the standard workweek runs from Monday to Friday and includes 40 hours of work per week, unless otherwise agreed upon with a union or a representative of local employees. The agreement must specify the maximum number of hours of overtime work permitted.

Overtime

Employers are required to compensate employees who work more than 40 hours per week. If the employee is a manager, he or she is expected to work overtime without compensation from the company.

If an employee is regularly expected to work overtime, a written agreement must be in place and filed with the Labor Inspection Office.

Overtime pay at the basic rate is 125 percent of the base hourly wage. Work on a rest day is compensated at 135% of the base hourly wage. Overtime paid late at night (between 10:00pm and 5:00am) is 150 percent of the base hourly wage. On a rest day, late night overtime pays 160 percent of the base hourly wage. Overtime work exceeding 60 hours per month is compensated at 150 percent of the base hourly wage. Overtime in excess of 60 hours per month is compensated at 175 percent of the base hourly wage.

Currently, small to medium-sized businesses are exempt from the last two rates. Additionally, “persons in supervisory or management positions or those who handle confidential matters” are generally exempt from overtime.

7. Minimum wage

There is no information about the minimum wage for this country.

Japan’s hourly minimum wage depends on the region. Currently, the region with the highest minimum wage is Tokyo whose employees are paid 985 Yen per hour while the lowest is Kagoshima whose employees are paid 761 Yen in an hour.

8. Employee benefits

There is no information about the employee benefits for this country.

The state provides universal healthcare, but employees may be required to pay for some medical treatments and procedures out of pocket. Japan's statutory health insurance contribution program covers 98.3 percent of the population, with the remaining 1.7 percent covered by the Public Social Assistance Program. Enrollment is required for both citizens and resident non-citizens. Approximately 59 percent of the population is covered by employment-based plans.

Every employed person is covered by social health insurance, to which employers and employees each contribute 5% of their salary.

In Japan, it is critical to provide a safe and harmonious workplace. Employers are required by law to provide all employees with annual physicals and checkups. Employers may also be required to provide stress assessments depending on the type of work.

9. Taxes

There is no information about the taxes for this country.

Corporate tax

Domestic companies and foreign corporations are the two types of corporations in Japan. The revenue produced throughout the fiscal year serves as the tax basis for calculating corporation taxes. Corporation tax, local corporate tax, corporate inhabitant tax (both prefectural and municipal), business tax, and special local corporate tax are the major kinds of corporate income tax in Japan.

The National Corporation Tax is a national tax imposed on earnings after deducting expenditures and is collected via self-assessment. In Japan, a special reduced rate of 15% is in effect. All income above JPY 8 million will be taxed at a rate of 23.20 percent.

A national direct tax is the local company tax (chihhjinzei). This is presently set to 10.3%.

Corporate Inhabitant Taxes (hjinjminzei) are prefectural and municipal taxes levied in the prefecture and municipalities where the corporation has its headquarters. These taxes are calculated as a percentage of the national Corporation tax before tax credits, as well as a per capita charge based on the amount of capital and the number of workers.

Individual income tax

The tax rate is determined based on the taxable income. Like in other countries, taxable income is the total earnings minus a basic exemption, exemptions for dependents and various types of deductions, such as deductions for insurance premiums, medical expenses and business expenses of the self-employed.

For earners with a taxable income of less than 1.95 million yen, the tax rate is 5 percent.

For earners with a taxable income of between 1.95 to 3.3 million yen, the tax rate is 10 percent of the taxable income minus 97,500 yen.

For earners with a taxable income of between 3.3 to 6.95 million yen, the tax rate is 20 percent of the taxable income percent minus 427,500 yen.

For earners with a taxable income of between 6.95 to 9 million yen, the tax rate is 20 percent of the taxable income percent minus 636,000 yen.

For earners with a taxable income of between 9 to 18 million yen, the tax rate is 33% of taxable income minus 1,536,000 yen.

For earners with a taxable income of between 18 to 40 million yen, the tax rate is 40% of taxable income minus 2,796,000 yen.

For earners with a taxable income beyond 40 million yen, the tax rate is 45% of taxable income minus 4,796,000 yen.

Individuals also pay prefectural income taxes (4 percent of taxable income), and municipal income taxes (6 percent of taxable income).

VAT, GST and sales tax

When a commercial firm transfers products, performs services, or imports items into Japan, a consumption tax (value-added tax or VAT) is imposed. The relevant tax rate is 10%. Exports and some services provided to non-residents are tax-free. Certain transactions, such as the sale or lease of property, the sale of securities, and the supply of public services, are exempt from taxes.

10. VISA and work permits

There is no information about VISA and work permits for this country.

Foreign people who wish to work in Japan must first get a work visa from their nearest Japanese embassy or consulate. There are several statuses for residence visas, each of which allows the bearer to work solely in the particular sector. A university degree or considerable professional experience in the particular sector is believed to be required to qualify for a working visa, which normally needs an employer to sponsor.

For administrative purposes like as social security, taxes, and disaster response, all foreign employees need a 'Individual Number'.

11. Employer Of Record service terms

There is no information about the Employer of Record (EoR) service terms for this country.

Employment contracts

Companies with more than ten workers must prepare a contract that contains wage information, hours of work, breaks, rest days and leaves, shift timings, and other employment terms and conditions. The contract of employment must be written in English.

For part-time work, an employment contract is required, and it must contain eligibility for wage raises and incentives, as well as eligibility for retirement.

With Rivermate being your Employer of Record (EoR) in Japan, you do not have to worry about the employment contracts, as we take care of that.

Minimum assignment length

Most job contracts in Japan are for an indefinite amount of time, with a three to six-month probationary phase. Employers are not compelled to do pre-hire background checks, although they may do so if they so want.

Payment currency

Japanese Yen (JPY)

United States Dollar (USD)

13.Opening a subsidiary in Japan

There is no information about the working hours for this country.

How to set up a subsidiary

Decide on the kind of company structure to utilize before beginning the Japan subsidiary creation procedure. The four most prevalent are as follows:

(a) Godo-Kaisha: A company structure comparable to an LLC in the United States.

(b) Goshi-Kaisha: A business with a limited liability.

(c) Gomei-Kaisha: A general partnership organization

(d) Kabushiki-Kaisha (KK): A joint-stock corporation

The KK model is the most common corporate structure in Japan, and it is ideal for international firms wishing to create a subsidiary.

In both the KK and Goshi-Kaisha models, liability is restricted to the assets contributed by equity investors. Both may be established using a similar procedure:

1. Check to see whether the name you wish to use is available. The corporate name must be used by branch offices, however subsidiaries may use whatever name they desire.

2. Choose and register the representatives for the firm.

3. Open an office and bank accounts in Japan to pay staff.

Subsidiary laws

According to Japanese subsidiary legislation, a KK must have at least three directors. One should be recognized as a representative director and should be in possession of the corporate seal. This director will serve as the company's representative in transactions. Furthermore, at least one of the three directors must be Japanese.

13. Why choose Rivermate as your Employer of Record / PEO in Japan

Establishing an entity in Japan to hire a team takes time, money, and effort. The labor law in Japan has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into Japan simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record (EOR) solutions in Japan give you peace of mind so you can focus on running your business. Please contact us if you'd like to learn more about how Rivermate can help you hire employees in Japan via our Employer of Record (EOR) / PEO solution.

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