☑️ The Basics

Currency: Japanese yen (Rate)

Public Holidays: 17 public holidays (see here)

Employer Taxes: Up to 24.66% of gross salary

Official Language: Japanese

Payroll frequency: Monthly

Three things to know about employing in Japan

Employees in managerial positions are expected to work overtime and the company is not obligated to pay extra for this work.
Termination of employment can be difficult in Japan and employers will generally seek to obtain the employee's resignation before handing out a termination notice. In some cases, financial incentives can be offered to encourage employees to resign.
There is no payment for sick leave in Japan. For short-term cases, employees use their paid vacation to take leaves of absence.

Employment in Japan

Notice Period

The notice period for resigning employees can range from two weeks to a month.

In case of dismissals, the employer must provide 30 days’ notice or payment in lieu of the notice period.

However, employers will generally seek to obtain the employee's resignation before handing out a termination notice. In some cases, financial incentives can be offered to encourage employees to resign.

Termination & Severance

Employers are not required to make severance payments, but they can be negotiated into contracts beforehand.

Probationary period

Probationary periods in Japan typically last three to six months.

Minimum Wage

Hourly minimum wages in Japan depend on the region and industry.

IP protection and non-compete agreements

Non-compete agreements must be negotiated beforehand and be reasonable in scope.

Employers are not required to compensate employees to enforce the agreement.

Working Hours

Eight hours daily, 40 hours weekly

Overtime

Any work exceeding 40 hours a week is considered overtime, and is paid at an additional rate to the hourly base salary.

Overtime (typically over eight hours a day): additional 25%
Weekends and Holidays: an additional 35%
Night-time (continuing from overtime): additional 50%
Holiday (continuing from night-time): additional 60%

Overtime work cannot exceed

Five hours per day
45 hours per month
360 hours per year.

Employees in managerial positions can be expected to work overtime without extra pay.

Paid Holidays

The minimum number of paid vacation days depends on the length of service:

6 months: 10 days paid vacation earned
1.5 years: 11 days paid vacation earned
2.5: 12 days paid vacation earned
3.5 years: 14 days paid vacation earned
4.5 years: 16 days paid vacation earned
5.5 years: 18 days paid vacation earned
6.5 years: 20 days paid vacation earned

Employees may accumulate up to two years of unused paid vacation.

Japan has a compulsory 5-days Paid Holiday Rule. This legislation requires companies of all sizes and industries to ensure that employees who are given 10 or more days of paid annual leave take at least 5 of these days per year starting after the first 6 months of continuous employment. Employers can be penalized for not ensuring employees take a minimum of 5 days.

Sick pay and time off

In Japan, there is no mandatory sick leave. When an employee gets sick, they use their paid vacation to take leave of absence.

After three days of absence, employees can claim benefits of two-thirds of the applicable standard wage (calculated according to a specific formula) under national health insurance coverage. This benefit can be claimed up to a period of 18 months.

Parental leave

Employees are entitled to unpaid maternity leave of 14 weeks, divided into six weeks before the birth and eight weeks after. They can claim up to 2/3rd of their base salary through social insurance.

Either parent can take child-care leave, which starts at the end of the maternity leave and lasts till the day the child turns 1. As with maternity leave, parents can claim up to 2/3rd of their base salary through social insurance.