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:  125,702,827 (2022)

Capital: Tokyo

Currency: Japanese yen (JPY)

Land Area: 377,974 Km²

Language: Japanese (official)

GDP per capita: $ 42,928 (nominal)

Japan’s economy is a well-developed example of a free market economy. It ranks third globally in terms of nominal GDP and fourth globally in terms of purchasing power parity (PPP). It belongs to the G7 and the G20 and is the second-largest developed nation in the world.

In Japan, foreigners are subject to the same laws that govern labor relations for locals. While numerous nations, including Germany, the UK, the US, Belgium, France, Canada, Australia, South Korea, Brazil, India, and the Netherlands, have social insurance agreements with Japan. Depending on the scope of the bilateral agreement, people covered by pension and social insurance plans from one of these nations may not be required to join Japan’s pension plan or pay social security insurance premiums.

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 a private entrepreneur

Collective agreements between the hirer and a labour union can (expressly or tacitly) be incorporated into the terms and conditions of employment. These agreements regulate: Conditions of employment, salary, bonuses, working hours and Health and safety

Japan Employment Contract

Types of employment agreements

Fixed-term contracts can be concluded for 3 years. If a 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 levied at progressive rates ranging from 5% to 45%. The borrowers are responsible for withholding the appropriate income tax for their employees and for year-end inspection for employees earning JPY 20 million or less per year. Employees earning more than JPY 20 million make their own applicable year-end rules. Certain payments (which are categorized as special income, such as retirement benefits and severance pay) are subject to preferential tax treatment. Non-residents who receive salary income paid for services rendered in Japan that are not subject to withholding tax in Japan must apply to 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 insurance, which comprises:
  • workers’ accident compensation insurance (which covers work-related illness and accidents);
  • unemployment insurance.
• The social insurance, which comprises:
  • 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 of the welfare benefits offered to workers).

Health Insurance Benefits in Japan

The employee has health or work injury insurance. If the worker is unable to perform his or her services due to a physical or mental condition unrelated to the work, the hirer may terminate the employment relationship. Employees who are on vacation due to an accident at work or an occupational disease cannot be dismissed during medical treatment and for 30 days after such treatment. If the term of office exceeds three years, the employee can be dismissed. (then a fixed fee is 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.