Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Japanese and use the Yen currency (JPY).
Working Hours
The standard working hours within Japan are 8 hours per day, 40 hours per week.
Overtime
All work above the standard weekly working hours is paid as overtime and regulated by employment contract/collective agreements. In general, if an employee is expected to work overtime regularly, a written agreement must be filed with the Labour Inspection Office. When an employee is requested to work overtime or work on holidays, the maximums are 5 hours per day, 45 hours per month, and 365 hours per year.
Overtime work of up to 60 hours per month must be at least 25% of the normal hourly wage and overtime work that exceeds 60 hours per month, must be at least 50% of the normal hourly wage. Employees in managerial and supervisory positions as defined under the Labor Standards Act are exempt from the aforementioned, however, the late-night work allowance is still applicable.
Overtime payment is calculated as an additional payment to the hourly base salary as follows:
- Overtime (typically over 8 hours a day): additional 25.00%
- Night-time (22:00 – 05:00): additional 25.00%
- Weekends and Holidays: an additional 35.00%
- Night-time (continuing from overtime): additional 50.00%
- Holiday (continuing from night-time): additional 60.00%
Public Holidays
They are 16 public holidays in Japan. While there are no legal requirements to pay for public holidays, it is common to grant those days as paid days off.
If a national holiday falls on a Sunday, the next working day will become a public holiday. In addition, companies are usually closed from December 29th to January 3rd.
For the year 2024:
- 1 Jan: New Year’s Day (Monday)
- 8 Jan: Coming of Age Day (Monday)
- 11 Feb: National Foundation Day (Sunday)
- 23 Feb: Emperor’s Birthday (Friday)
- 20 Mar: Vernal Equinox Day (Wednesday)
- 29 Apr: Shōwa Day (Monday)
- 3 May: Constitution Memorial Day (Friday)
- 4 May: Greenery Day (Saturday)
- 5 May: Children’s Day (Sunday)
- 15 Jul: Marine Day (Monday)
- 11 Aug: Mountain Day (Sunday)
- 16 Sep: Respect for the Aged Day (Monday)
- 23 Sep: Autumnal Equinox Day (Monday)
- 14 Oct: Sports Day (Monday)
- 3 Nov: Culture Day (Sunday)
- 23 Nov: Labor Thanksgiving Day (Saturday)
Paid Time Off Mandatory Vacations
Paid leave in Japan is set in the employment contract as dependent upon the years of employment. This paid leave is in addition to any public holidays.
- Employees with up to six months of service are entitled to 10 days of paid leave
- Employees with up to one and a half years’ service are entitled to 11 days of paid leave
- Employees with up to two and a half years of services are entitled to 12 days of paid leave
- Employees with up to three and a half years of services are entitled to 14 days of paid leave
- Employees with up to four and a half years of services are entitled to 16 days of paid leave
- Employees with up to five and a half years of services are entitled to 18 days of paid leave
- Employees with up to six and a half years of services are entitled to 20 days of paid leave
Unused days expire after two years.
Sick Leave
Sick leave is not mandatory; some companies may introduce their own sick leave policies, and employees often use their holiday to cover sick leave or claim social insurance.
Maternity and Paternity
Maternity Leave
All female employees are eligible for maternity benefits, consisting of 14 weeks paid leave, six weeks before the due date, and eight weeks after.
The maternity payment is made by the Social Insurance based on the National Health Insurance rates, which are currently 420,000 JPY per child. However, suppose the employee is enrolled in the employees’ Health Insurance. In that case, they may receive a Maternity Allowance of 2/3rds of the regular salary rate from 42 days before birth until 56 days after delivery.
Paternity Leave
The father is entitled to paid paternity leave for up to one year after the birth as childcare leave. Paternity leave is referred to as ‘childcare leave’ in Japan, and new father employees are entitled to this benefit. However, the employee does not receive a salary while on leave unless stated in the employment contract. They are entitled to a partial allowance from social security.
Male employees are entitled to four weeks’ leave, in one or two installments, within eight weeks after birth (Childcare at Birth Leave). Benefits will be payable by social security at the same rate as maternity leave (67% of covered pay). This new Childcare at Birth Leave is in addition to the existing government-paid childcare leave entitlements for both parents, which may also now be taken in one or two separate installments (previously only one).
Childcare Leave
Childcare leave can be taken by the mother or the father and starts from the day after the maternity leave ends. Labor insurance covers childcare leave, and an employee can take childcare leave until the child is one year old. If both parents take childcare leave, the leave is then extended to when the child is one year and two months old.
Companies with 1,000 or more employees are required to publicly disclose annually the rate at which their staff take childcare leave.
Paternal Leave
Childcare leave can be taken by the mother or the father and starts from the day after the maternity leave ends. Labor insurance covers childcare leave, and an employee can take childcare leave until the child is one year old. If both parents take childcare leave, the leave is then extended to when the child is one year and two months old.
Other Leave
In Japan, in the event of the death of an immediate family member, an employee is entitled to bereavement leave. For the death of a father, mother, spouse, or child, an employee is entitled to 5 days of leave and three days for the death of a grandparent, grandchild, sibling, child’s spouse, or spouse’s parent.
In addition, when the employee is the person in charge of funeral arrangements, they can request an additional two days’ leave.
Employees can also take family care leave, which is an unpaid leave to care for a spouse, child, parent, or grandparent for up to 93 days per family member concerned.
Employees with a child under three years old have certain rights. If they ask to be excused from unscheduled work, they should not be required to work beyond their regular hours. If they wish to adopt a reduced working hour system, their request should be granted. Furthermore, if an employee has a preschool-aged child and asks to be excused from unscheduled work, they should not be required to work more than 24 hours of overtime in a month or 150 hours in a year.
Employee Severance and Terminations
Termination Process
The termination process varies according to the employment agreement and collective agreement in place. It is based on the type of contract, the job role, the region, and the reason for termination. Due to the complexity of termination in Japan, dismissal is almost always done via a mutual agreement and with additional compensation.
Notice Period
The notice period in Japan is usually 30 days, and if notice isn’t given, the employer can provide payment in lieu.
Severance Pay
There are no statutory requirements for severance payments in Japan. Given the severe limitations on the employer’s right to terminate an employee, most employees are offered a severance payment in exchange for a waiver and voluntary resignation.
Probation Period
The probation period in Japan for permanent employees is generally between 3 and 6 months.
Payroll Cycle
The payroll cycle in Japan is generally monthly.
The national minimum wage in Japan is based on prefecture. The minimum hourly wage ranges between 896 JPY and 1,113 JPY. For Tokyo is 1,113 JPY, Osaka is 1,064 JPY, and Kyoto is 1,009 JPY.
13th Salary
In Japan, it is customary to pay a “13th month,” or even “14th month” salary as a summer bonus paid in June and as a winter bonus paid in December. However, more international companies today are adopting a straightforward 12 month pay period setup.
Contributions
Employer Payroll Contributions
Non-residents are subject to a national income tax on gross compensation with no deductions available. A non-resident taxpayer may be subject to the local inhabitant’s tax at a rate of 10% if they are registered as a resident as of January 1st of the current year.
VISA
Before arriving in Japan, foreign nationals who want to work in Japan need a work visa from their local Japanese Embassy or consulate. There are many different statuses for residence visas allowing the holder to only work in the specified industry. It is expected that a university degree or extensive professional experience in the specialist field is needed to qualify for a working visa, which usually requires an employer to sponsor.
All Foreign workers need an ‘Individual Number’ for administrative procedures for social security, taxation, and disaster response.
VAT
The standard rate of VAT in Japan is 10.00%.