Japan

Japan PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Japan to companies willing to enter the Japanese market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Japan.  However our solution allows you to start the operations in Japan within days hence save time and money.  WeHG would recruit candidates on your behalf while you maintain full operational control of their work. Thus, by law, they will be our employees, on our local payroll, 100% compliant, but they will work on your behalf.

Japan fast facts

Population, million: 126,476,461
Land area: 377,915 km²
Capital: Tokyo
Local currency: Japanese yen (YEN)

GDP per capita:$ 47200.00
GDP in currency:$ 4750.00 billion

The laws that regulate labor relations and apply to local residents also apply to foreigners.

Japan has entered into social insurance contracts with amount  of countries, including Germany, the UK, the US, Belgium, France, Canada, Australia, South Korea, Brazil, India and The Netherlands. Individuals insured under pension and social insurance plans from one of these countries may be relieved from enrolling in Japan’s pension plan and paying social security insurance fees, depending on the range of the bilateral agreement.

Hiring, Negotiating and Doing Business in Japan

Necessity of written employment contract

The contract can be completed in writing or orally. Written contracts are more common.

Different forms of engagement: employment, contracting, work with private entrepreneur

Collective agreements between hirer and a labour union may be iintegrated (expressly or impliedly) into the employment conditions.

These agreements govern:

  • Conditions of employment.
  • Salary.
  • Bonuses.
  • Working hours.
  • Health and safety.

Japan Employment Contract

Types of employment agreements

Fixed – term contracts can be concluded for 3 years. If an worker has  worked for a company for 5 years or more, the worker can apply for an  open-ended contract.

Japan working hours

40 hours per week.

Overtime

Certain standards consisted in the law are destined to moderate overtime  work. The regulation overtime work limits are:
One week: 15 hours.
Two weeks: 27 hours.
Four weeks: 43 hours.
One month: 45 hours.
Two months: 81 hours.
Three months: 120 hours.
One year: 360 hours.
Overtime work must be paid at least 35 percent above normal wages.

Vacation leave in Japan

6 months of work – 10 days of vacation
2 and a half years of work – 12 days
6 and a half years of work and more – 20 days

Japan Maternity Leave

Maternity leave is 8 weeks.

Japanese Severance Laws

A hirer can fire a worker for serious malfeasance. The minimum notice  period is 30 days. The hirer can pay wages instead of notice period.

Japan Tax

Income tax is charged at progressive rates, which range from 5% to 45%.  Hirers are accountable for withholding the appropriate income tax for theiremployees, and making a year – end control for workers who earn JPY20 million or less per year. Employees earning more than JPY20 million make the applicable year – end regulation themselves. Certain payments (which are categorised as special income, such as retirement allowance and severance pay) are subject to concessionary tax treatment.
Non – residents who earn salary income which is paid for services rendered in Japan that are not subject to withholding tax in Japan must file a tax return and pay tax at a rate of 20.42% on that salary income.

Social security contributions

Hirers must make fees into the following insurance plans:

  • The labour insurances, which comprise:
    • workers’ accident compensation insurance (which covers work-related illness and accidents);
    • unemployment insurance.
  • The social insurances, which comprise:
    • health insurance and nursing care insurance (which cover medical and nursing care expenses);
    • pension (which covers old-age and welfare benefits in the event of death or disability).

Hirers also pay child contributions to the allowance (that is, contributions  to a social welfare child benefit system that is independent from the welfarebenefits offered to workers).

Health Insurance Benefits in Japan

The employee will be insured against illness or workers’ accident indemnity insurance If the worker is unable to offer his services due to a physical or mental status unrelated to work, the hirer is allowed to finish the employment relationship. Employees on vacation due to an occupational injury or illness cannot be fired during medical treatment and for 30 days after that treatment. If the term exceeds three years, the employee may be fired. (set compensation is then payable).

Additional Benefits in Japan

In Japan, it is important to provide a safe and harmonious workplace. Hirers are required by law to conduct annual medical examinations and examinations for all workers. Depending on the type of work, the hirer may also be required to undergo stress exams.

Japan Holidays

Japan has designated 16 national holidays, partly to force employees to take holidays. Employers do not necessarily have to give a day off to employees on a national holiday, although this is common.

  • New Year’s Day
  • Coming of Age Day
  • Foundation Day
  • Vernal Equinox Day
  • Showa Day
  • Constitution Memorial Day
  • Greenery Day
  • Children’s Day
  • Marine Day
  • Mountain Day
  • Respect for the Aged Day
  • Autumnal Equinox Day
  • Health and Sports Day
  • Culture Day
  • Labour Thanksgiving Day
  • The Emperor’s Birthday

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Japan

  • Working hours in Japan

    The statutory working week is 40 hours per week or eight hours per day, excluding breaks.

  • What are the main holidays in Japan?

    • New Year’s Day
    • Coming of Age Day
    • Foundation Day
    • Vernal Equinox Day
    • Showa Day
    • Constitution Memorial Day
    • Greenery Day
    • Children’s Day
    • Marine Day
    • Mountain Day
    • Respect for the Aged Day
    • Autumnal Equinox Day
    • Health and Sports Day
    • Culture Day
    • Labour Thanksgiving Day
    • The Emperor’s Birthday
  • What are payroll taxes in Japan?

    Income tax is charged at progressive rates, which range from 5% to 45%.

    Non-residents who earn salary income which is paid for services rendered in Japan that are not subject to withholding tax in Japan must file a tax return and pay tax at a rate of 20.42% on that salary income.

     

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