The new ways in which the global market is gradually opening up, it has presented opportunities for employers to connect with the right candidates in Japan. However, it is a task that requires an Employer of Record to take care of all the legalities and compliances.
We at Globalization Solutions offer an extensive range of corporate and employment solutions to help your business with global expansion. In addition to assisting you in streamlining your business expansion, we also help you with end-to-end recruitment solutions to deploy strategic sources for hiring and onboarding skilled and fresh professionals!
Hiring in Japan
Hiring in Japan can be a challenging process because of its bilingual population and professionals with limited talents. However, Japan has a booming economy in the employment market. An Employer of Record Japan will assist you in establishing an entity that complies with all legal norms and compete effectively in the fast Japanese market.
Keeping in mind the workplace culture, etiquettes, and general cultural traits, the hiring and firing processes are extremely challenging in Japan. The Japanese are very heedful of punctuality, respecting privacy, giving formal greetings, and teamwork. Choosing the best Employer of Record Japan can help you overcome these challenges and help you go through the recruitment process smoothly.
Employment Contracts in Japan
Before recruiting employees, it is crucial to know the regulations and comply with the norms in Japan. An Employer of Record in Japan will help you align with the legalities and recruitment regulations by formulating a legal employment contract for your organization.
During the recruitment process, employers are required to specify details regarding working hours, the content of work, probationary periods, place of work, etc., to the applicants in writing. All of these processes and paperwork can be looked after by an Employer of Record and ultimately lift the burden from the employer’s shoulder.
Type of Contracts in Japan - Despite the fact that Japanese law does not establish a specific structure for contractual arrangements, all working agreements should be documented in written form by employers. Workers should be provided with the contractual terms that are appropriate to their position. Employers can satisfy the condition by providing their employees with a formal position or documentation of the firm's work rules.
Having a formal employment contract is the best practice for employers in Japan since it clearly outlines the conditions of employment. All employees hired through Globalization Solutions are given a contract that complies with local labor laws.
Working Hours in Japan - The Japanese Labor Law allows only 8 hours a day or 40 hours per week for employees and employers cannot exceed more than that. If employees are working overtime, they are entitled to 25% of the payment on a working day and 35% on holiday. Employees working over 60 hours per week are entitled to 50% of the pay.
Public holidays in Japan - Employees in Japan are granted the day off on 16 public holidays, including:
• 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
Compensation - The current minimum hourly wage rate in Japan is 940 JPY ($8.50). The minimum wage rates are different in different locations in Japan.
Bonuses - The bonuses are paid twice a year in Summer and Winter in Japan. Employees are entitled to fix discretionary bonuses by employers.
Probationary Period - The probation periods in Japan range from three to six months and cannot exceed more than one year. Employees can be terminated only on the grounds of some objectively reasonable or socially acceptable cause.
Termination and Severance - There is no statutory severance payment required in Japan. During employee termination, a 30-day notice of dismissal must be provided to the employee or payment instead of the notice. The cause of termination should be reasonable. Generally, valid causes of termination can be fraud (false qualifications), theft, violence, or non-work-related illness or injury.
As an employer in Japan, you have to provide the valid steps taken to avoid termination, such as performance feedback, warnings, training sessions, etc. Termination due to economic conditions is another reasonable cause of employee termination. In such cases, you must prove that the economic condition called for the downsize, your efforts to avoid termination and that the employees subject to termination were hired in a reasonable manner.
When it comes to managing employment contract terms, perks, and employee costs, we here at Globalization Solutions are experts. We also handle any necessary severance or termination settlements. As Japan's employment regulations evolve, we keep you informed.
Japan Compensations & Benefits
Complying with the legalities regarding employee benefits and entitlements can be difficult for you as an employer in Japan. The Employer of Record can lend a helping hand in staying legally compliant with the recruitment laws in Japan. With an Employer of Record, you do not have to be burdened with unpleasant paperwork and spend your productive time in complex clerical tasks.
Japan Compensation Law - There are regional and city-specific compensation laws in Japan. Japan has a number of high-pay cities, with Tokyo having one of the highest min wages at 958 Yen. It is customary in Japan to pay workers monthly rather than weekly or fortnightly. Wages are often modest at the beginning of a career, but advancement opportunities are available for those with experience. A mix of experience and talent is often required for promotion. A 13-month bonus is not required in Japan, unlike many Asian nations.
Guaranteed benefits - Employers in Japan typically utilise supplementary bonuses to attract new hires since pay might be fairly low at the outset. After six months of employment, employees in Japan are entitled to 10 days of paid yearly leave as part of their benefits package. For the next two years, employees will earn an additional one day of paid time off every year. Every year after that, they are entitled to a span of 20 days of paid vacation.
Maternity Leave - The maternity leave spans 6 weeks prior to the expected birth date up to 8 weeks after birth. Both male and female employees can apply for childcare leave that commences after the Maternity leave ends and continues till the child reaches age 1. The maximum duration of the childcare leave cannot exceed 1 year. When both parents are on childcare leave, the leave is extendable up to the age of 1 year and 2 months.
Paternity Leave - Fathers are permitted to take a year of paternity leave, which may be taken in two installments. The first of them may begin as soon as eight weeks after the baby is born.
Annual Leaves - In Japan, an employee's yearly leave obligation is related to the number of months that he or she has worked for the organization. The annual leave allowance is ten days after six months of work, and it rises to twenty days after 6.5 years on the job or longer.
Sick Leave - There is no specific sick leave in Japan. However, employees use their paid vacation leaves as sick leave in Japan. Some MNCs or foreign companies grant sick leave to employees as a special benefit.
Health Benefits - Employers do not have to offer any specific health benefits to their employees. In Japan, all employees enrolled in the Social Insurance system benefit from the national healthcare coverage. They can seek treatment from any medical institution they prefer and pay only 30% of the cost of treatment.
Pension Benefits - Employees aged 65 or over are entitled to the Social Statutory Pension with a minimum of 10 years of contribution to Social Insurance. JPY 620,000 per month is the ceiling contribution for the pension benefits.
As your employer of record in Japan, we make sure to abide by all legal obligations and provide you with all insights about employee compensation to help you to make a competitive employment offer.
Taxes in Japan
Income tax is levied on residents and non-residents of their Japanese source of income. Residents of Japan are levied 55.97% as Personal Income tax. Non-residents are levied a flat 20.42% as tax on income.
Residents of Japan living over 1 year (as of 1st January), are liable to pay the Inhabitant tax at the rate of 10%.
Sales Tax - The current sales tax rate is 10% in Japan.
Corporate Tax - The current corporate tax rate is 30.62% in Japan.
VAT - The prevailing consumption tax or VAT is 8% in Japan.
Payroll Deductions and Contributions
Proper payroll administration is necessary to organize and manage the compensations of employees based on the total hours they have worked. An updated payroll administration system is vital for higher profits and smoother global expansion. An Employer of Record Japan can assist you in the administration of central taxes like income tax, social security, sales tax, VAT, etc., and comply with the norms laid down by the National Tax Agency Japan.
As an Employer of Record, we at Globalization Solutions help our clients manage their payroll in Japan while taking care of all HR and tax problems for them so they can focus on their business.
Rates for social security and Medicare withholding
Employers’ contribution to social security is 16.24%. Employees withheld 15.28% from the Gross Monthly Salary. The interest rate for late submission of social security is 4.83% for the first three months and increases to 14.6% for the next three months.
Social Insurance TaxThe social Insurance tax in Japan comprises of:
- Social Pension- prevailing pension rate is 18.30%
- Health Insurance- 9.84% in Tokyo (amount changes regionally)
- Child upbringing- the current rate is 0.36%
- Nursing Insurance- the current rate is 1.80% all over Japan
Employment laws in Japan
The employment laws in Japan formulated by the Labor Standards Law (LSL)and Labor Contract Law (LCL), protect the rights of the workers by providing them with the right to work in improved working conditions and focusing on the problem of long working hours.
With the best Employer of Record Japan, you as an employer can comply with all the rules and regulations laid down by the Japanese government in the Labor Standards Law. From organized administration of legal employment contracts to labor law compliance, a Japan Employer of Record can assist you in doing business in Japan with ease and efficiency.
Japan Employer of Record Features and Benefits for the Employer
Employers are often in charge of all legal elements of their worker’s employment. This procedure will likely be more time-consuming if you are in a new nation.
At Globalization Solutions, we have a wealth of knowledge and expertise dealing with the payroll and tax systems in Japan, as well as other local rules and regulations. We can assist you with a variety of tasks.
- A solution that is specifically designed to meet the demands and future ambitions of your firm.
- Local professionals can provide you with all of the information you need about the Japanese market.
- Offering EOR best practices in the areas of taxation, agreements, costs, and social security benefits
- Hiring with lightning speed and with efficiency
- Start your operations within days.
Japan Employer of Record Features and Benefits for the Employee
Your company's most important asset is its employees. They are responsible for keeping the motivation up, and it is thus critical to develop a solid agreement that is acceptable to both the employees and the employer.
Globalization Solutions as your Japan Employer of Record is responsible for ensuring that your workers are satisfied with the terms of the employment contract. A wide range of excellent perks as well as a dependable and legally acceptable hiring process are available because of our extensive network and team of professionals. We will see to it that they have a good time by providing them with:
- Quick and clear onboarding.
- A written employment contract that complies with local laws and requirements.
- A monthly payment that is agreed upon and paid on time.
- Great benefits such as pensions and insurances.
- The presence of a frequent point of contact
- Details and counseling on changes in local rules that are up to date are provided
Why Globalization Solutions?
If you're a business owner looking forward to expanding your business to Japan, undergoing all the processes and expenses to solidify the whole setup is not the only option! We at Globalization Solutions are here to help you in getting started with your business operations in Japan with our comprehensive employment solutions.
We are a team of proficient expansion and proliferation experts, and so we can efficiently accelerate the expansion of your business into the Japanese market. Be it your requirement for dealing with employee taxes, visa application benefits, insurance sponsorship applications for other transactions, we are here at your service
Contact us today to expand the horizons of your business's successful reach across the Japanese markets