JAPAN PEO & EOR
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DID YOU KNOW
- Japan’s terrain is extremely unique. The nation itself is an archipelago which is mostly made up of stunning mountains and vast forests.
- Japan’s capital city Tokyo is the most populated city in the world.
- Despite having increasing numbers of expatriates throughout the nation, Japan’s population is still around 98.5% Japanese.
- Japan has an extremely high life expectancy rate, coming in second place globally after Hong Kong.
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Working in Japan
Financial Year Dates
Japan’s financial year runs from 1st April till 31st March
Minimum Wage
The minimum wage in Japan is 1054 JPY/hour
Standard Working Hours
Japan has a work time of 8 hours a day and 40 hours per week (excluding breaks).
The standard hours are 9:00 to 6:00 PM with a 1-hour lunch break in the day. Some Japanese-based businesses are permitted to have their employees work up to 44 hours per week at a maximum of eight hours per day. These businesses include retail and beauty services, cinemas and theatres, businesses related to health and hygiene, as well as restaurants and entertainment businesses with less than 10 regular employees.
Employers are required to provide workers with at least 45 minutes of rest periods during working hours, if working hours exceed 6 hours. They must also provide at least one hour if working hours exceed 8 hours.
Employees in Japan are usually paid once per month. Traditionally, payments are made on the 25th of the month, but other dates can be used.
Overtime
An employee is entitled to at least 125% to 175% of their normal pay for overtime hours, depending on when the overtime was completed.
Holiday Allowance
Employers in Japan must grant 10 days’ paid leave to employees that have worked for six consecutive months (from the time of hiring), and who have worked on 80% or more of all scheduled working days.
Length of service (years) | Annual Leave |
6 months | 10 days |
1.5 | 11 days |
2.5 | 12 days |
3.5 | 14 days |
4.5 | 16 days |
5.5 | 18 days |
Over 6.5 | 20 days |
Employers must also grant a minimum of one day off each week, or four days off per four weeks.
Sick Leave
There is no statutory sick leave in Japan.
Maternity & Paternity Leave
In Japan, pregnant women can take 6 weeks’ leave before their expected due date, and 8 weeks following the birth. After maternity leave ends, female employees are eligible for childcare leave until the day before their child turns 1 year old. During this leave, employees receive approximately ⅔ of their typical basic salary paid though the government’s social insurance.
New fathers are encouraged to take paternity leave as part of the government’s efforts to address the country’s low birth rate. Japan is ranked as one of the lowest birth rates in the world. It is also encouraged to promote gender equality. Fathers taking paternity leave helps to promote equal share in childcare responsibilities. The length of paternity leave varies depending on the company and the individual’s employment contract. Most offer around 8-week paternity leave followed by childcare leave up to the day before the child’s 1st birthday.
Public Holiday
There are 16 public holidays:
- Japanese New Year
- Coming of Age Day
- National Foundation Day
- The Emperor’s Birthday
- Vernol Equinox Day
- Shōwa Day
- Constitution Memorial Day
- Greenery Day
- Children’s Day
- Marine Day
- Mountain Day
- Respect for the Aged Day
- Autumnal Equinox Day
- Sports Day
- Culture Day
- Labor Thanksgiving Day
One significant period is called Golden Week in early May, which includes four consecutive holidays: Shōwa Day, Constitution Memorial Day, Greenery Day, and Children’s Day. Many employees use their annual leave to take the whole week off.
Social Contributions
In Japan, employees must contribute the following from their salaries:
- Health Insurance – 99%
- Nursery Insurance – 80%
- Pension – 9.15%
- Labour Insurance – 95%
- Worker injuries – 0.30%
Employers are required to contribute the following:
- Health Insurance – 99%
- Nursery Insurance – 80%
- Pension – 9.15%
- Labour Insurance – 0.60%
- Worker Injuries – 0%
- Child Allowance – 0.36%
Japan has a progressive income tax rate, which is determined based on the taxable income. This is calculated as the total earnings minus a basic exemption, exemptions for dependents and various types of deductions (including deductions for insurance premiums, medical expenses, etc.)
Income Tax
Japan has a progressive income tax rate, which is determined based on the taxable income. This is calculated as the total earnings minus a basic exemption, exemptions for dependents and various types of deductions (including deductions for insurance premiums, medical expenses, etc.)
Health Care
The majority of Japan’s population are covered by their Statutory Health Insurance System (SHIS). A very small percentage of Japan’s population are covered by the Public Social Assistance Program. All citizens and resident noncitizens are required to enroll in a plan. Visitors and any undocumented persons are not covered.
The SHIS consists of two types of mandatory insurance:
- Employment-based plans
- Residence-based insurance plans, which include Citizen Health Insurance plans for non-employed individuals aged 74 and under and Health Insurance for the Elderly plans, which automatically cover all adults aged 75 and older
Each of Japan’s 47 prefectures, or regions, has its own residence-based insurance plan, and there are more than 1,400 employment-based plans.
Tourists and short-term visitors to Japan must ensure that they buy travel insurance to cover any medical expenses that might be incurred on their trip.
Visas
Japan offers a number of long- and short-term visas:
- Highly skilled professionals visa
- Working visa
- General Visa
- Specified visa
- Start-up visa
- Diplomatic Visa
- Official Visa
- Most recent addition Digital Nomad Visa *
*Japan’s Digital Nomad Visa is now open to applicants. The visa allows eligible foreigners and family members to reside in Japan whilst working remotely for their home employer for up to 6 months. Their position must utilise information and communication technology.
“A Japan PEO or EOR provider can also provide guidance on this process. A PEO or EOR can provide a payroll solution in Japan, so that workers can easily set up in Japan and businesses can easily place workers in-country.”
13th salary?
Japan has a customary 13th month salary and even a 14th month paycheck, typically paid as a summer bonus in June and a winter bonus in December. Companies are free to choose whether to pay the bonus to both full-time and part-time workers.
Cultural Information
Japan’s culture is rooted in numerous ancient traditions and family values. As a nation with a rich heritage, Japan has influenced a variety of other cultures throughout the world. Religious groups in Japan are primarily made up of Buddhists and Shintõ (the indigenous religion of Japan).
Japanese is the nation’s primary language, and expatriates should consider grasping some of the basics of this language before relocating.
Punctuality is also extremely important in Japanese culture, particularly in its business environments. Expatriates should be aware of their timekeeping and aim to always be punctual in their professional lives.