Japan, an island nation in East Asia, is an archipelago of 6,852 islands in the Pacific Ocean that stretch for approximately 1,500 miles (2,400 km) in a northeast-southwest arc. Nearly the entire land area is taken up by the country’s four main islands; from north to south these are Hokkaido, Honshu, Shikoku, and Kyushu.
The country is a constitutional monarchy. Japan has a large and, to a great extent, ethnically homogeneous and heavily concentrated population in the low-lying areas along the Pacific coast of Honshu. More than 99% of the population speaks Japanese. A heavy emphasis is placed on education, and Japan is one of the world’s most literate countries. The economy of Japan is the third-largest in the world after the United States and the People’s Republic of China.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Japan.
Fast-track your talent onboarding while ensuring 100% compliance with local regulations. using an Employer of Record in Japan
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Japan, an island nation in East Asia, is an archipelago of 6,852 islands in the Pacific Ocean that stretch for approximately 1,500 miles (2,400 km) in a northeast-southwest arc. Nearly the entire land area is taken up by the country’s four main islands; from north to south these are Hokkaido, Honshu, Shikoku, and Kyushu.
The country is a constitutional monarchy. Japan has a large and, to a great extent, ethnically homogeneous and heavily concentrated population in the low-lying areas along the Pacific coast of Honshu. More than 99% of the population speaks Japanese. A heavy emphasis is placed on education, and Japan is one of the world’s most literate countries. The economy of Japan is the third-largest in the world after the United States and the People’s Republic of China.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Japan.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Japan planning:
The national holidays mentioned below are valid for the year 2026.
| January 1 | New Year’s Day | |
| January 12 | Coming of Age Day | Movable - The second Monday of January |
| February 11 | National Foundation Day | |
| February 23 | Emperor's Birthday | |
| March 20 | Vernal Equinox Day | Movable - The date of the Northward equinox in Japan Standard Time |
| April 29 | Shōwa Day | |
| May 4 | Greenery Day | |
| May 5 | Children’s Day | |
| May 6 | Constitution Memorial Day | In lieu of May 3 |
| July 20 | Marine Day | Movable - The third Monday in July |
| August 11 | Mountain Day | |
| September 21 | Respect for the Aged Day | Movable - The third Monday of September |
| September 22 | Bridge Holiday | |
| September 23 | Autumnal Equinox Day | Movable - The date of Southward equinox in Japan Standard Time |
| October 12 | Sports Day | Movable - The second Monday in October |
| November 3 | Culture Day | |
| November 23 | Labour Thanksgiving Day |
The approximate time for sharing the contract with an employee in Japan is 14 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
Social Insurance consists of:
An overview of the required contributions is presented below:
| Category | Employer Contribution | Employee Contribution | Maximum Premium |
| Health insurance | 5% | 5% | JPY 1,390,000 |
| Welfare pension insurance | 9.15% | 9.15% | JPY 650,000 |
| Employment insurance | 0.9% | 0.55% | No limit |
| Workmen’s accident compensation insurance |
|
– | No limit |
| Family allowances | 0.36% | 0.36% | JPY 650,000 |
| Long Term Care Insurance | 0.91% | 0.91% | JPY 1,390,000 |
| Business Facility Tax or Establishment Tax*** | 0.25% | – |
*Maximum per year as of 2018.
**Depends on the type of business. 0.002% is added to the above premium to fund benefits for asbestos-induced diseases.
**** Those aged between 40 and 64 (the second insured persons under long-term care insurance) are charged a nationwide uniform long-term care insurance premium rate of 1.82%.
****Business Facility Tax or Establishment Tax only applies to employers with 100 employees or more.
Employers must not have workers working more than eight hours per day for each day of the week, or 40 hours per week, excluding break periods. An employer should provide workers with at least 45 minutes of rest periods during working hours when working hours exceed six hours, and at least one hour when working hours exceed eight hours.
If an employee is expected to work overtime on a regular basis, there must be a written agreement and it has to be filed with the Labor Inspection Office.
Employees cannot be required to perform overtime exceeding 45 hours per month or 360 hours per year. In special circumstances such as unexpected orders, employers are allowed to cross the basic limit rule. However, overtime hours on statutory holidays (such as Sundays) cannot exceed 100 hours per month. The yearly extended limit rule lies at 720 hours per year.
When employees work overtime or work on holidays, an additional payment to the hourly base salary applies:
There is no mention of the probationary period in the employment law. Probation periods are, however, common in Japan and normally range from three to six months, and should not exceed one year.
If an employer wishes to dismiss a worker, the employer must provide at least 30 days advance notice. An employer not giving 30 days’ advance notice must pay the worker the average wage they would earn while working for a period of at least 30 days.
The provision of a month’s advance notice of dismissal does not apply to a worker falling under one of the following items:
Employers must not have workers working more than eight hours per day for each day of the week, or 40 hours per week, excluding break periods. An employer should provide workers with at least 45 minutes of rest periods during working hours when working hours exceed six hours, and at least one hour when working hours exceed eight hours.
If an employee is expected to work overtime on a regular basis, there must be a written agreement and it has to be filed with the Labor Inspection Office.
Employees cannot be required to perform overtime exceeding 45 hours per month or 360 hours per year. In special circumstances such as unexpected orders, employers are allowed to cross the basic limit rule. However, overtime hours on statutory holidays (such as Sundays) cannot exceed 100 hours per month. The yearly extended limit rule lies at 720 hours per year.
When employees work overtime or work on holidays, an additional payment to the hourly base salary applies:
There is no mention of the probationary period in the employment law. Probation periods are, however, common in Japan and normally range from three to six months, and should not exceed one year.
If an employer wishes to dismiss a worker, the employer must provide at least 30 days advance notice. An employer not giving 30 days’ advance notice must pay the worker the average wage they would earn while working for a period of at least 30 days.
The provision of a month’s advance notice of dismissal does not apply to a worker falling under one of the following items:
Social Insurance consists of:
An overview of the required contributions is presented below:
| Category | Employer Contribution | Employee Contribution | Maximum Premium |
| Health insurance | 5% | 5% | JPY 1,390,000 |
| Welfare pension insurance | 9.15% | 9.15% | JPY 650,000 |
| Employment insurance | 0.9% | 0.55% | No limit |
| Workmen’s accident compensation insurance |
|
– | No limit |
| Family allowances | 0.36% | 0.36% | JPY 650,000 |
| Long Term Care Insurance | 0.91% | 0.91% | JPY 1,390,000 |
| Business Facility Tax or Establishment Tax*** | 0.25% | – |
*Maximum per year as of 2018.
**Depends on the type of business. 0.002% is added to the above premium to fund benefits for asbestos-induced diseases.
**** Those aged between 40 and 64 (the second insured persons under long-term care insurance) are charged a nationwide uniform long-term care insurance premium rate of 1.82%.
****Business Facility Tax or Establishment Tax only applies to employers with 100 employees or more.
WorkMotion operates in Japan through its partner network, acting as the Employer of Record (EOR) on your behalf, so you can hire compliantly without setting up a local entity.
Here is what the process looks like from signed offer to first payslip.
WorkMotion generates an employment contract that meets Japan’s Labor Standards Act requirements.
Japanese law requires employers to expressly provide key employment terms and conditions in writing, covering:
There is no legal requirement for contracts to be in a specific language, but they must be understandable to the employee.
Courts may invalidate provisions if the employee cannot comprehend them.
WorkMotion’s contracts are drafted to satisfy these disclosure obligations in a language the employee can understand, with all mandatory clauses included from the start.
Employers are required to submit employees’ health insurance application dossiers within five days of the start of their employment to the relevant Japan Pension Service branch, including that of their dependents where relevant, and pay the applicable contribution.
WorkMotion handles this registration on your behalf, covering enrollment in Japan’s four core insurance programs:
All employers are also legally required to report the hiring or resignation of a foreign national to Hello Work.
WorkMotion manages this notification as part of the standard onboarding process.
Japanese payroll involves calculating gross salaries, withholding income taxes and social insurance contributions, processing net salary payments, and fulfilling statutory reporting obligations to the National Tax Agency and Japan Pension Service.
It is governed by the Labor Standards Act, Income Tax Act, and Social Insurance Law.
WorkMotion configures payroll in Japanese Yen, applying the correct contribution rates for each employee.
Total employer cost for an employee typically exceeds gross salary by 15–18% due to mandatory employer contributions. WorkMotion provides a transparent cost breakdown before you commit, so your finance team can forecast accurately.
Enrollment in social insurance is mandatory if an employee:
Benefits typically begin on the first day of employment. WorkMotion enrolls your employee in all applicable statutory programs from day one.
It is also customary in Japan to receive a 13th-month salary given as a summer bonus in June, and a 14th-month salary as a winter bonus in December.
WorkMotion’s team advises on market-standard supplementary benefits so your offer is competitive for the role and location.
Income tax withholding and social insurance contributions are due monthly by the 10th.
WorkMotion processes payroll on a monthly cycle, remitting all statutory contributions to the relevant Japanese authorities on time.
Year-End Tax Adjustment is mandatory for all employees, requiring accurate recalculation of annual tax liability and certificate issuance by January 31 each year.
WorkMotion handles this annual reconciliation as part of the ongoing service. No action required from your internal team.
Japan’s annual wage negotiations (Shunto) have driven wage increases of over 5% in both 2024 and 2025, the highest rates in decades.
Compliance is monitored throughout Japan by a network of regional and local Labour Standards Bureau offices, with working conditions, safety practices, and payment practices inspected regularly.
WorkMotion tracks regulatory changes and applies them to your employees’ contracts and payroll automatically. This includes:
For most companies hiring one to a handful of employees in Japan, the EOR route is faster, cheaper, and carries less ongoing administrative burden than entity setup. Here is how the two options compare.
| WorkMotion EOR | Japan Entity Setup | |
| Setup cost | Per-employee monthly fee — no incorporation costs | [TODO: verify] Estimated ¥300,000–¥600,000+ in registration, notary, legal, and translation fees, excluding office rent and ongoing compliance costs |
| Time to first hire | Days from signed contract | [TODO: verify] Typically 4–8 weeks for incorporation, plus 2–6 weeks for corporate bank account opening — before a single employee can be onboarded |
| Ongoing legal exposure | WorkMotion holds compliance responsibility as the legal employer | Your entity is directly liable for all labor law compliance, tax filings, and social insurance obligations |
| Ongoing admin burden | WorkMotion handles payroll, contributions, year-end tax adjustment, and regulatory updates | Internal team or local accountant/lawyer required for monthly filings, annual reporting, and compliance monitoring |
| Exit flexibility | Scale down or exit without entity dissolution costs | Entity dissolution in Japan is a formal, time-consuming process with its own legal and administrative requirements |
EOR is the right fit when you need to hire quickly, test the Japanese market, or keep your team lean without building local HR infrastructure.
If Japan is a side experiment, a full entity may be premature. Starting by building a team with an EOR can be the smarter move.
If Japan is strategic and long-term, entity setup is worth evaluating as you scale.
Use WorkMotion’s Employment Cost Calculator to see the full cost of hiring in Japan, including gross salary, employer contributions, and the EOR service fee, before you commit.
Japan’s employment framework is detailed, heavily employee-protective, and meaningfully different from most Western markets. These are the compliance gaps that catch foreign employers off guard most often.
Under Japanese law, a dismissal is invalid unless there are “objectively reasonable grounds” and appropriateness “in general societal terms.”
Foreign employers accustomed to at-will employment often underestimate how difficult it is to terminate an employee in Japan, even for performance reasons.
If you intend to dismiss an employee due to low performance, misconduct, or lack of cooperativeness, you are required to prove there is no room for improvement based on objective evidence, typically by implementing a Performance Improvement Plan or transferring the employee to another suitable position.
WorkMotion’s local HR and legal team guides clients through the correct process before any termination action is taken.
Under Japanese case law, a job offer (naitei) constitutes a “labor contract with a deferred commencement date and a right to rescind.”
This means once a job offer is extended, an employment contract is deemed concluded, and it may only be rescinded if an unavoidable reason arises before the commencement of work.
Foreign employers who issue offers and then withdraw them, for budget reasons, headcount freezes, or role changes, can face legal claims.
WorkMotion advises on offer language and timing to reduce this exposure.
Fixed-term contracts can be renewed indefinitely, but if a worker has been employed continuously for five years or more and their contract has been renewed at least one time, they can request to be converted to indefinite employment.
Companies that use rolling fixed-term contracts to avoid permanent employment obligations often find themselves legally required to offer indefinite contracts anyway.
WorkMotion tracks contract renewal history and flags conversion obligations before they become disputes.
In Japan, statutory paid leave automatically carries over and expires after two years from the date it is granted.
Employers cannot forfeit or delete accrued leave before that legal expiration.
A blanket “use-it-or-lose-it” policy is not lawful.
Foreign employers who apply their home-country leave policies to Japanese employees risk non-compliance.
WorkMotion’s platform tracks leave accrual and carryover in line with Japanese law.
Minimum wages in Japan are determined for each prefecture. For example, the minimum wage in Tokyo is ¥1,163 per hour as of October 2024.
A salary that clears the national floor may still fall below the applicable local rate depending on where the employee is based.
WorkMotion applies the correct prefectural minimum to every hire, regardless of location.
In Japan, bonuses and commissions are two distinct payment classifications with different tax treatments.
A bonus requires a separate calculation using a different tax table.
To be classified as a bonus, payments must be made no more than three times per year. Payments made four or more times are treated as regular monthly salary.
This distinction must be defined at the contract stage. Getting this wrong creates payroll errors and potential back-tax exposure.
WorkMotion’s payroll specialists ensure the correct classification is applied from the first payment.
A German or Dutch SaaS company wants to hire a senior backend engineer or product manager based in Tokyo, a role they cannot fill domestically due to local talent shortages.
Setting up a Japanese KK to employ one person is not viable.
WorkMotion’s EOR Japan service lets them onboard the hire in days, with a locally compliant contract and payroll in Japanese Yen, while the employee benefits from full statutory coverage from day one.
The same setup applies for hiring in other major APAC engineering hubs like India, giving teams a single partner for the region.
A UK-based fintech expanding into Asia-Pacific needs a Japan country manager or business development lead on the ground before committing to a full entity.
WorkMotion provides the legal employment infrastructure through its partner network, so the company can test market fit with a single senior hire, and scale the team once the business case is proven, without the cost and delay of incorporation.
A European e-commerce or green tech company with 50–300 employees wants to hire a logistics coordinator, customer success manager, or local partnerships lead in Japan.
They need a compliant employment relationship, not a contractor arrangement, but do not have the HR infrastructure to manage Japanese labor law in-house.
WorkMotion’s EOR Japan solution covers the full employment lifecycle, from onboarding to offboarding, through its established partner network.
Japan has a highly skilled talent pool, a complex employment framework, and a labor market where compliance mistakes carry real legal and financial consequences.
Getting the contract right, enrolling employees in the correct insurance programs, processing payroll accurately, and managing terminations within the law all require local expertise.
That expertise takes years to build and is expensive to maintain in-house.
WorkMotion provides that expertise through its partner network in Japan, so you can hire your first employee in the country without building local HR infrastructure from scratch.
Whether you need one senior hire in Tokyo or a growing team across multiple cities, WorkMotion handles the compliance so you can focus on the work.
Japanese courts apply a strict abuse-of-dismissal doctrine. Termination is invalid unless the employer can demonstrate objectively reasonable grounds and that dismissal is appropriate “in general societal terms.” In practice, this means performance-based dismissals typically require documented warnings, a formal Performance Improvement Plan, and evidence that redeployment to another role was considered and ruled out. WorkMotion’s local HR and legal team guides clients through this process before any termination action is initiated, reducing the risk of wrongful dismissal claims.
Yes, Japan sets minimum wages at the prefectural level, not just nationally. Tokyo’s minimum wage, for example, stood at ¥1,163 per hour as of October 2024, while rates in other prefectures are lower. A salary that clears the national floor may still fall below the applicable local rate depending on where your employee is based. WorkMotion applies the correct prefectural minimum to every hire, regardless of location, so you are not inadvertently non-compliant for a hire outside Tokyo.
Under Japan’s Labor Contract Act, if a worker has been employed on fixed-term contracts continuously for five years or more and their contract has been renewed at least once, they have the right to request conversion to an indefinite-term contract. Foreign employers who use rolling fixed-term arrangements to avoid permanent employment obligations often find themselves legally required to offer indefinite contracts anyway. WorkMotion tracks each employee’s contract renewal history and flags conversion obligations before they become disputes or legal exposure.
Japanese employers are required to enroll employees in four statutory programs: health insurance, employee pension insurance, unemployment insurance, and workers’ accident compensation insurance. Total employer contributions typically add 15–18% on top of gross salary, covering the employer’s share of health and pension premiums plus labor insurance levies. WorkMotion provides a transparent, country-specific cost breakdown before you commit, so your finance team can forecast the true total cost of employment in Japan accurately.
Under Japanese case law, a formal job offer (naitei) is treated as a labor contract with a deferred start date. This means once an offer is extended, an employment relationship is deemed concluded and can only be rescinded if an unavoidable reason arises before the employee’s start date. Foreign employers who withdraw offers for budget or headcount reasons can face legal claims for damages. WorkMotion advises on offer language and timing to reduce this exposure before any offer is issued.
WorkMotion operates in Japan through its established partner network, acting as the Employer of Record on your behalf, so you can hire compliantly without incorporating a local entity. From a signed offer, WorkMotion generates a locally compliant employment contract, registers the employee with the Japan Pension Service within the required five-day window, enrolls them in all applicable statutory insurance programs, and configures payroll in Japanese Yen.
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