Hire employees
and contractors in Japan

• Capital city

  Tokyo

• Currency

  Yen (JPY)

• Language spoken

  Japanese

• Population size

  125,620,000 (est. 2021)

• Ease of doing business

  Very Easy (2020)

• Cost of living index

  87.77 (2021)

• Payroll frequency

  Monthly

• VAT – standard rate

  5%

• GDP - real growth rate

  0.7% (2019)

• 

  Supplementary private insurance
• 

  Supplemental dental insurance
• 

  Supplementary vision insurance
• 

  Additional paid holidays
• 

  Flexible work schedule
• 

  Pension scheme
• 

  Life insurance
• 

  Other insurance

• Employer

  • 9.15% - Pension contribution
  • 4.935% - Health Insurance Contribution (or 5.83% if 40 years or older)
  • 0.6% - Unemployment insurance
  • 0.25% - 8.8% - Work injury
  • ~0.36% - Family allowance

• Employee

  • 9.15% - Pension contribution
  • 4.935% - Health insurance contribution
  • 0.3% - Unemployment insurance

• Personal income tax rates

  • 5% - Up to ¥1.95M ($17,629.67)
  • 10% - ¥1.95 – ¥3.3M ($17,629.67 - $29,834.82)
  • 20% - ¥3.3M – ¥6.95M ($29,834.82 - $59,579.24)
  • 23% - ¥6.95M – ¥9M ($59,579.24 - $81,367.70)
  • 33% - ¥9M – ¥18M ($81,367.70 – 162,735.41)
  • 40% - ¥18M – ¥40M ($162,735.41 - $361,634.24)
  • 45% - Over ¥40M (Over $361,634.24)

Paid
time off

Employees earn paid vacation days based on their tenure, starting after they’ve spent six months working with an employer, and can accrue up to two years of paid vacation.

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

Public
holidays

There are 16 public holidays in Japan and although it’s not obligatory for employers to pay employees on public holidays, it’s widely practiced.

Sick
days

Japanese employees are not explicitly entitled to any paid leave entitlement but can use their paid vacation in lieu of sick leave.

Maternity
leave

Female employees are entitled to 14 weeks of paid maternity starting six months before delivery and lasting until eight months, and are compensated at a rate equivalent to 2/3 of their normal salary, paid out by the labor insurance office.

Paternity/Parental
leave

New parents can embark on parental leave once maternity leave ends, until their child turns one, or one year and two months, if both partners opt for the parental leave.

Both parents are entitled to tax-exempt parental leave benefits equivalent to 2/3 of their normal wages, paid by the government labor insurance office. Male employees who have worked for the same employer for at least a year are entitled to 12 months paid leave.

Other
leave

• Bereavement leave: employees are entitled to five days of paid leave for the death of any 1st-degree relative, three days off for 2nd-degree relatives, and two days off for the death of 3rd-degree relatives.
• Hospitalization leave: Parents can take up to three unpaid months off annually to nurse sick or injured relatives.
• Menstruation leave: Employers are obligated to provide unpaid time off for female employees who opt out of work due to their health condition during their menstrual period. This is statutory leave mandated by government legislation.
• Civil duty leave: Workers can take unpaid time off work to vote, perform jury duty, or attend to their civil obligations.

Termination process

In Japan, terminating employee contracts can be demanding, and employees can dispute and only accept to be let go with a severance package equivalent to a month’s pay for every year worked.