Japan PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Japan without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by our Japan PEO, while the new hires and headquarter teams focus on your business goals. Using a Japan PEO is the fastest and most efficient way to develop a workforce in Japan.
When hiring employees in Japan, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Japanese labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Japan. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Japan - Country Overview
Japan is located in the Northern Hemisphere, west of the Pacific Ocean, and has a diverse geography and cultural heritage. Japan is a commercial center with several high-tech and specialized hubs, such as the electronic and automotive industries. The electric bullet trains that connect the islands represent technological advancement and progress.
Japanese Yen (¥)
Parliamentary Constitutional Monarchy
Employment Contracts in Japan
In Japan, a labor contract can either be in writing or verbal. Written employment contracts are not mandatory in Japan, however, the Labor Contracts Act advises employers to enter into written agreements whenever possible.
Some of the details typically mentioned in the written contract include:
- Employment rules
- Other working conditions
- and more
The different types of employment relationships are:
- Permanent Employment – Per Japan’s Labor Contracts Law, employment contracts concluded indefinitely are considered permanent.
- Fixed-Term Contracts – Fixed-term contracts in Japan cannot be longer than three years unless the employee has the expert knowledge, advanced skills, or experience, or is 60 years of age or older. The contract may be valid for up to 5 years in such cases.
- Temporary Employment – The Worker Dispatching Act governs temporary employment in Japan. Temporary employment contracts with the same employer in the same job can be valid for a maximum of 36 months. Employers can hire temporary workers through temporary staffing agencies, which set their wages.
In Japan, a probationary period lasts up to 3 months.
Working Hours in Japan
Employers cannot allow employees to work more than 8 hours per day (or 40 hours per week), except for rest periods. These hours, however, may be extended in exceptional circumstances, up to a maximum of 10 hours per day. In such cases, the employer must first obtain permission from the appropriate government agency.
Employee Leave in Japan
Employees in Japan are entitled to the following leaves:
- Annual leave in Japan – Employees in Japan are entitled to at least ten days of paid annual leave if employed for a minimum of six months. Employees who have been with the same company for at least a year after the 6-month completion date are entitled to an additional day of statutory annual leave.
- Maternity leave in Japan – Maternity leave in Japan is 14 weeks long, with six weeks of prenatal leave and eight weeks of postnatal leave.
- Sick leave in Japan – Employees in Japan are only entitled to sick leave if they are ill or injured at work, and the employer is required to cover the costs of medical treatment.
The following are the statutory national holidays observed in Japan:
- January 1 – New Year’s Day
- January 11 – Coming of Age Day
- February 11 – National Foundation Day
- February 23 – Emperor’s Birthday
- March 20 – Spring Equinox
- April 29 – Shōwa Day
- May 3 – Constitution Memorial Day
- May 4 – Greenery Day
- May 5 – Children’s Day
- July 22 – Sea Day
- July 23 – Sports Day
- August 8 – Mountain Day
- August 9 – Day off for Mountain Day
- September 20 – Respect for the Aged Day
- September 23 – Autumn Equinox
- November 3 – Culture Day
- November 23 – Labor Thanksgiving Day
Employee Termination in Japan
Employers must offer at least 30 days’ notice prior to terminating an employee, or offer a severance payment in lieu of notice, regardless of the length of the employee’s service. Employees on probation who have worked for less than 14 days are exempt from the requirement of a notice period in Japan.
Global Mobility in Japan
There are typically the following categories of visas in Japan:
- Working visas
- Non-working visa
- Family-related visas
- Tourist visa
In Japan, there are usually four types of work permits in Japan:
- Highly skilled professional visa
- General work visa
- Working holiday visa
- Specified skills work visa
Employee Benefits in Japan
The National Pension Law governs Japan’s national retirement system. The National Pension Scheme is available to all residents of Japan, including foreigners, and is divided into the following three categories:
- Category I consists of Japanese citizens aged 20 to 59
- Category II consists of people covered by Employees’ Pension Insurance or Mutual Aid Pensions
- Category III consists of dependent spouses of Category II insured people
Social insurance, often known as social welfare, is a government-mandated insurance program that provides financial help to the elderly, disabled, injured, and unemployed.
Some examples of social insurance programs in Japan are:
- Dependents’/Survivors Benefit – If a person insured under the National Pension System dies, the surviving spouse who takes care of the deceased’s dependent children, as well as the dependent children themselves, are eligible for a survivor’s pension. To be eligible, children must be 18 years old or younger, or up to 20 years old if they have a disability.
- Life and Disability Insurance/Benefit – A person who suffers a work-related illness or injury and remains disabled after treatment and recovery receive compensation under the Labor Standards Act.
- Unemployment Insurance – In Japan, anyone who has been unable to find work may be eligible for unemployment benefits, including job applicant benefits (basic allowance, skill acquisition allowance, lodging allowance, injury, and disease allowance).