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Hiring in Japan can be very beneficial for every global business, especially with the Japanese work culture of respect, authority, and hierarchical structures. However, employing a Japanese workforce can also impose a few challenges associated with compliance with local employment laws and regulations.
More specifically, employers who want to hire in Japan should familiarise themselves with the payroll procedures, tax requirements, employment contracts, and other compliance-related matters. On top of being compliant with local labour laws, it’s also important to follow the country’s culture, norms, and business practices to successfully expand your business in the country.
Japan is an excellent choice for finding remote employees due to a couple of reasons. First of all, the highly skilled and educated workforce is renowned for its dedication, attention to detail, and strong work ethic that can benefit every global team. The cultural emphasis on punctuality, reliability, and continuous improvement makes Japanese employees well-suited for remote roles requiring excellent focus and precision.
Japan also has a rich talent pool, especially in fields like technology, engineering, design, and customer service. While their English proficiency may vary, many Japanese professionals are adapting to global work trends, which contributes to improving their language skills and embracing tools for remote collaboration. Companies that are seeking exceptional talent with a commitment to discipline and quality can highly benefit from hiring individuals from Japan.
Native Teams’ Employer of Record services help you hire and pay your team through an owned infrastructure in Japan. We handle everything from legal employment to ensuring your team is paid and managed compliantly and with care, without any third parties involved.
Hire your first Japanese employee with Native Teams.
Below are some of the most important legal requirements for hiring employees in Japan:
The Japanese Constitution establishes fundamental labour principles, including the right and duty to work, the prohibition of child labour and freedom of association. Rules governing wages, working hours, rest and other employment conditions are established by law and form the basis of Japan’s labour law framework.
The overall legal framework consists of the Constitution, statutes, ordinances, collective agreements and work rules. While the Civil Code of 1896 provides a general definition of employment contracts, labour regulations are primarily governed by the following laws:
These laws generally apply to private-sector employees in Japan, including foreign workers with valid work visas. However, certain categories of workers, such as seafarers, are excluded.
Under Japanese law, employment contracts include indefinite-term, fixed-term, part-time, temporary or dispatch, elderly employment and non-regular contracts.
Indefinite-term employment contracts remain the most common type. They have no specified expiry date and continue until either party terminates the employment in accordance with Japanese law. This type of contract provides greater job security and reflects Japan’s traditional approach to long-term employment.
Fixed-term employment contracts are increasingly used and are subject to specific regulations. Employers may use these contracts without having to provide an objective reason for choosing a fixed-term arrangement.
The usual maximum duration is three years, although this may be extended to five years for employees with specialised expertise or employees aged 60 and over. Employees whose fixed-term contracts are renewed for more than five years may request conversion to an indefinite-term contract.
For part-time employment, Japanese law requires clear terms concerning employee rights, including the possibility of pay rises, bonuses and retirement allowances. Employers are also required to ensure equal treatment of part-time employees in relation to full-time employees.
Other forms of employment include:
Under Japanese law, when entering into any form of employment contract, the employer must provide the employee with a written statement of key employment conditions, including wages, working hours and other essential terms.
The written statement must include the following information:
Failure to provide the required information may result in significant fines for the employer. If the terms stated in the employment contract differ from the actual working conditions, the employee has the right to immediately cancel the employment contract.
Download a free employment contract for Japan through Native Teams.
Under Japanese law, an employment contract may be oral, written or electronic. In particular, the Labour Contract Act does not require an employment contract itself to be in writing, meaning that oral employment contracts are legally valid.
However, written contracts are generally recommended because they provide a clear record of the terms and conditions agreed between the employer and employee and can help prevent potential disputes.
The Labour Standards Act requires certain key employment conditions, including job duties, salary and working hours, to be provided to the employee in writing, even where the employment contract itself is not formally documented in writing.
The statutory working hours in Japan are 40 hours per week and 8 hours per day. These limits may be temporarily adjusted through an agreement between the employer and the enterprise trade union or, where there is no union, a worker representing the majority of employees.
Employers may also require employees to work overtime where a separate agreement has been concluded with the trade union or employee representatives.
Flexible working time arrangements are permitted where they are established in the work rules or labour-management agreements. These arrangements allow employees to work beyond the statutory daily or weekly limits without additional overtime pay, provided that average working hours over the specified period do not exceed 8 hours per day or 40 hours per week.
Flexible working hours systems may also allow employees to choose their start and finish times, subject to the conditions set out in the applicable work rules and agreements. The discretionary working system may be used for employees in specialised roles requiring expert skills, as well as those engaged in planning, research, analysis or proposal development related to business operations.
Under Japanese law, employers must provide employees with at least one rest day per week and mandatory rest periods during working hours. Employees must receive at least 45 minutes of rest after working more than six hours and at least one hour after working more than 8 hours.
Breaks must be taken during working hours and cannot be scheduled at the beginning or end of a shift. Breaks must generally be provided simultaneously to all employees, unless a special exemption has been established through a labour-management agreement.
Statutory holidays must be provided at least once every week or four times within every four-week period. Designated working hours may be further specified within the statutory working hours.
Under Japanese law, statutory holidays must be provided at least once a week or four times every four weeks, although it is common practice for employers to provide additional holidays.
Under the Labour Standards Act, employers must grant paid annual leave to employees who have been continuously employed for at least 6 months, provided they have attended work on at least 80% of the scheduled working days during the preceding six months.
The entitlement to paid annual leave ranges from 10 to 20 days, depending on the employee’s length of service. After 6 months of continuous employment, employees are entitled to 10 days of annual leave. One additional day is added each year for the first two years. After two and a half years of continuous service, employees receive two additional days per year, up to a maximum entitlement of 20 days.
The Japanese wage system is heavily influenced by factors such as an employee’s length of service with the same company, educational background and age.
Under Japanese law, wages include any form of payment made by an employer to an employee, including salaries, allowances and bonuses. The amount of these payments is often closely linked to the employee’s length of service with the company, educational background and age.
Japan has two types of minimum wage:
The exact minimum wage amounts are not fixed by legislation. They are established and regularly updated by the Ministry of Health, Labour and Welfare in consultation with the Minimum Wage Deliberation Commission.
To calculate the salary and taxes in Japan, click here.
In Japan, there is no statutory requirement for employers to provide paid sick leave. Employees typically use their accrued statutory annual leave to cover absences due to illness, provided they have sufficient leave available.
Sick leave provisions may also be established through employment contracts, company policies or collective labour agreements. Many companies voluntarily provide paid sick leave through their work rules to support employees during periods of illness.
Employees may request unpaid sick leave if they become ill, but approval is generally subject to the company’s internal policies.
In Japan, maternity leave entitles pregnant employees to six weeks of leave before childbirth, or 14 weeks in the case of multiple pregnancy, and eight weeks of leave after childbirth. During this period, employers may not require the employee to work, except from the sixth week after childbirth onwards, where the employee requests to work and has medical approval.
Following the 2022 amendment to the Child Care and Family Care Leave Act, fathers are entitled to Paternity Leave (Postpartum Papa Childcare Leave). This provides up to four weeks of leave within the first eight weeks after childbirth and may be taken in one or two separate periods. This entitlement is separate from standard childcare leave.
Both parents may take childcare leave until the child reaches one year of age, with possible extensions until one and a half years or two years where a childcare facility is unavailable or other qualifying circumstances apply. Parents may take their respective leave periods concurrently.
In Japan, the following are commonly recognised as objectively reasonable grounds for dismissal:
These grounds must be demonstrably objective and reasonable and are assessed from the standpoint of societal norms rather than solely from the employer’s perspective.
Dismissals based on conduct, performance or redundancy, although common in many jurisdictions, are rarely upheld in Japan. There are also no detailed statutory rules governing collective redundancies beyond the requirement to notify the Public Employment Security Offices.
Japanese courts apply strict scrutiny to dismissals and frequently invalidate them, including cases involving poor performance or uncooperative behaviour, unless there is clear evidence of the employee’s self-reflection, efforts to improve, or remedial steps previously taken by the employer.
Courts tend to be more receptive to dismissals involving mid-career hires recruited for their advanced expertise. Where such employees fail to meet the expected performance standards, their dismissal is more likely to be considered valid.
In Japan, an employer may dismiss an employee on reasonable grounds. However, the preferred approach to ending an employment relationship is generally through resignation.
Resignation is typically based on mutual agreement between the employer and employee and may be initiated by either party. Employers often propose resignation to employees and negotiate a compensatory payment in exchange for voluntary resignation. The terms, including the amount paid to the employee, are determined through mutual negotiation and agreement.
In these circumstances, the employee effectively agrees not to pursue a claim for wrongful termination in exchange for a lump-sum payment. This payment usually combines notice or payment in lieu of notice with severance pay.
For employees who have completed their probationary period, companies commonly offer three months’ salary or more, with the average often being six months’ salary, to reach an amicable resolution.
Before initiating resignation negotiations, employers are strongly recommended to provide clear performance warnings and give the employee a reasonable opportunity to improve.
In practice, employees may initially reject a resignation offer, even where a favourable compensation package is proposed. However, they may reconsider and accept after the employer improves the terms of the offer.
In principle, dismissal requires at least 30 days’ notice before it takes effect. This period may be shortened if the employer compensates the employee by paying the average wage for each day by which the notice period is reduced.
Although written notice is recommended by court rulings, it is not a legal requirement.
Advance notice is not required in the following exceptional circumstances:
Under Japan’s Employment Insurance Act, workers who meet the eligibility criteria and lose their jobs may receive unemployment benefits through the Employment Insurance system.
The amount and duration of these benefits depend on factors such as employment history, age and the reason for termination. Benefits typically range from approximately 50% to 80% of the average daily wage earned during the six months before unemployment, with higher earners generally receiving a percentage closer to 50% and lower earners closer to 80%.
Benefits may be payable for between 90 and 360 days, depending on the length of insured employment and the reason for job loss.
The benefit amount is generally calculated by taking 50% to 80% of the average daily salary over the previous six months, with the average calculated by dividing total earnings for that period by 180 days. The duration of benefits depends on the individual’s circumstances.
To qualify for unemployment benefits, employees must meet the following criteria:
Under Japanese law, employees may be entitled to severance pay if their dismissal is deemed unlawful by the courts. Generally, there is no statutory entitlement to severance pay or fixed formula for calculating it, except where payment is made in lieu of notice.
However, many companies choose to provide severance pay through their employment contracts to encourage voluntary resignation and avoid the risks associated with unilateral dismissal.
Non-compete clauses are considered a concurrent obligation of employees under the principle of good faith arising from the employment contract. During employment, employees are prohibited from engaging in activities that compete with their employer.
After termination of the employment contract, courts apply strict scrutiny when assessing the validity of non-compete clauses. The scope of the restriction must therefore be reasonably limited to what is necessary to protect the company’s legitimate interests.
When assessing the validity of a non-compete clause, courts typically consider:
Under Japanese law, probationary periods are commonly included in employment contracts to allow employers to assess an employee’s performance, skills and cultural fit, while also allowing employees to determine whether the role meets their expectations. Although probationary periods are not mandatory, they are common for permanent employees.
The length of a probationary period is not legally fixed, and renewal is not prohibited. In practice, probation generally lasts up to three months and may be extended to a maximum of six months, provided the extension is expressly agreed with the employee.
If an employee fails to meet expectations, the employer may terminate the contract during the probationary period with minimal notice, typically between 1 and 2 weeks, as specified in the employment contract.
Under the Japanese Patent Act, an “employee’s invention” refers to an invention that primarily falls within the employer’s business field and arises from activities related to the employee’s current or past job duties. The scope of job duties is interpreted broadly according to case law.
The “work for hire” doctrine applies to copyrights and mask works, and may also apply to patents where the work rules or employment agreement stipulate that patents created under the doctrine are owned by the employer from the outset.
Where an employee’s invention is assigned to the employer, or an exclusive usage right is granted to the employer, the employee is entitled to reasonable remuneration or other economic benefits as compensation for the added value exceeding the usual non-exclusive licence available to the employer.
The law does not specify an exact amount of compensation but sets out factors that must be considered, and the amount must be reasonable. Compensation is typically considered reasonable where it has been determined through prior negotiations between the employer and employee.
The amount is based on factors including the profit the employer gains from the invention, the extent of the employer’s contribution to the invention, the treatment of the employee and any other relevant circumstances.
If the compensation is considered unreasonable, a reasonable amount must be determined through a judicial decision.
Japanese legislation restricts employers from using employees’ personal data for purposes that have not been disclosed or authorised. The collection and processing of employee data must comply with the following requirements:
Employees have the right to request access to their personal data held by the employer, correct inaccuracies, request deletion of data in certain circumstances, and seek the transfer of their data to another entity through data portability.
In Japan, remote work is not explicitly defined in legislation but is regulated through guidelines issued by the Ministry of Health, Labour and Welfare (MHLW), which provide additional frameworks and recommendations for its implementation. Employers must also apply the laws and regulations governing employment relationships without distinction between remote and non-remote work.
Employers must define clear terms and conditions for remote work in their Work Rules and ensure that these are consistent with the conditions applicable to non-remote employees, where relevant.
To ensure that remote work arrangements are fair, transparent and compliant with applicable labour laws and recommended practices, internal policies should address key areas such as:
Under Japanese law, the distinction between "remote working" and "working at a separate workplace" is not explicitly defined in a single legal framework but is guided by the Ministry of Health, Labour and Welfare's guidelines.
The key difference lies in the work environment. Remote work typically takes place at the employee’s home or another space not controlled by the company, while work at a separate workplace takes place at a physical location owned or managed by the employer.
In Japan, “remote working” is a form of telework and generally refers to employees working from a location outside the company’s primary office, often from home. Japanese law does not contain specific provisions defining remote work separately, but remote work is covered by broader employment regulations, particularly the Labour Standards Act, which applies to all employees, including those working remotely.
Employers are therefore required to protect the health, safety and well-being of remote workers in the same way as for on-site employees.
Employers must also comply with general labour laws concerning working hours, rest and break periods, overtime and working conditions. In addition, the Ministry of Health, Labour and Welfare (MHLW) provides comprehensive guidelines for telework arrangements covering areas such as:
In Japan, as with other employees, employers are obligated to take proactive measures to prevent work-related health issues, including mental health concerns, and to ensure the safety of remote workers. This includes providing appropriate support and resources to employees working off-site.
Hiring employees in Japan offers several advantages when compared to other countries, particularly for roles that require precision, reliability, and strong technical experience.
Japan has a highly educated workforce with expertise in fields like engineering, software development, manufacturing, and design. In addition to this, Japanese professionals are renowned for their dedication, discipline, and commitment to quality. The cultural emphasis on excellence and “Kaizen” ensures high standards of any work they undertake.
Japan’s stable economy and infrastructure make it an ideal country to hire from, ensuring reliable access to talent with minimal disruption from economic instability.
When compared to other countries, Japan stands out for its combination of technical expertise, cultural discipline, and a commitment to quality – qualities that are especially valuable in today’s competitive global industries.
Native Teams helps you employ and pay your team in Japan directly through owned entities and infrastructure.
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