Before hiring employees in Japan, there are a few important things you’ll need to know. Firstly, in Japan, employees are entitled to unpaid maternity leave of 14 weeks, divided into six weeks before the birth and eight weeks after. They can claim up to two thirds of their base salary through social insurance.
Employers in Japan are not required to make severance payments, but they can be negotiated into contracts beforehand.
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Get an overview of what you need to know when hiring in Japan below.
Employees in Japan work eight hours daily and 40 hours weekly.
Any work exceeding 40 hours a week is considered overtime, and is paid at an additional rate on top of the employee’s hourly base salary. The breakdown is as follows:
Overtime work cannot exceed:
Employees in managerial positions can be expected to work overtime without extra pay.
Probationary periods in Japan typically last three to six months.
The notice period for resigning employees can range from two weeks to a month.
In the case of dismissals, the employer must provide 30 days’ notice or payment in lieu of the notice period.
However, employers will generally seek to obtain the employee's resignation before handing out a termination notice. In some cases, financial incentives can be offered to encourage employees to resign.
In Japan, non-compete agreements must be negotiated beforehand and be reasonable in scope. Employers are not required to compensate employees to enforce the agreement.
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The minimum number of paid vacation days depends on the length of service:
Employees may accumulate up to two years of unused paid vacation.
In Japan, there is no mandatory sick leave. When an employee gets sick, they are required to use their paid vacation time to take a leave of absence.
After three days of absence, employees can claim benefits that equal two-thirds of the applicable standard wage (calculated according to a specific formula) under national health insurance coverage. This benefit can be claimed up to a period of 18 months.
Employees are entitled to unpaid maternity leave of 14 weeks, divided into six weeks before the birth and eight weeks after. They can claim up to two thirds of their base salary through social insurance.
Either parent can take child-care leave, which starts at the end of the maternity leave and lasts till the day the child turns one. As with maternity leave, parents can claim up to two thirds of their base salary through social insurance.
In Japan, an employer’s social contributions can be up to 24.66%. This includes pension, health insurance, unemployment insurance, work injury, and family allowance.
Employees in Japan pay between 5% and 45% in taxes depending on their income bracket. Employees also pay 14.39% in social security contributions.
Employers in Japan are not required to make severance payments, but they can be negotiated into contracts beforehand.
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
