Employer of Record (EOR) in Japan
Need to hire new employees in Japan or formalise your employment status as a freelancer? You’ve just found the perfect solution for your needs — Native Teams is an all-in-one platform that ensures your global work meets local labour laws requirements!
How does an EOR in Japan work?
For businesses, an EOR acts as the legal employer of their workers in Japan, handling all employment-related responsibilities while the business maintains day-to-day operational control. The EOR manages payroll, social insurance enrollment, tax withholding, labour law compliance, and visa sponsorship. This arrangement allows foreign companies to hire workers in Japan without establishing their own legal entity.
Who can use EOR Services in Japan?
Businesses and individuals can benefit from EOR services in Japan.
Features of Native Teams EOR services in Japan
Employment status
Native Teams’ EOR services enable freelancers to manage their employment status legally, regardless of where they live and work. Employers can also hire, onboard, and pay their global teams in compliance with regulations.
HR administration and documentation
HR tasks are automated, with easy access to documents via the Native Teams dashboard.
Global payroll
With a payroll calculator across 85+ countries, both freelancers and employers can calculate salaries, taxes, and benefits easily, all on one platform.
Benefits
Freelancers maintain flexibility while enjoying benefits like healthcare and pensions, and employers can offer these perks to attract top talent.
Learn more about Japan’s labour laws in our hiring guide
What legal requirements exist for employment in Japan
Employment contract
The employer must provide a written labour contract or detailed work conditions statement (労働条件通知書 - Roudou Joken Tsuchisho) specifying essential terms, including salary, working hours, workplace location, job duties, and termination conditions. This document must be provided on or before the first day of employment.
Working hours and leave
Standard working hours are limited to 40 hours per week and 8 hours per day. Any overtime requires a written agreement. Employees must receive at least one day off per week.
Social insurance
Employers must make contributions for the employee in mandatory insurance systems, like health, pension, employment, and workers’ accident compensation insurance.
Salary and benefits
A minimum wage applies, varying by prefecture. Employers must pay at least monthly and provide overtime pay at a premium rate (typically 125% of regular wages).
Equal opportunity and non-discrimination
The Labour Standards Act prohibits discrimination based on nationality, creed, or social status. The Equal Employment Opportunity Law specifically prohibits gender discrimination in recruitment, hiring, promotion, training, and benefits.
Termination of employment
Japanese law makes it difficult to terminate employees. Employers must have "objectively reasonable grounds" and follow proper procedures. The standard notice period is 30 days or payment in lieu of notice.
Record keeping
Employers must maintain employment records for wage ledgers, working hours, social security, labour contractor, and work condition statements. Depending on the document type, these records must typically be kept for three to five years.
Please note that laws and regulations in Japan can change. So, it’s important to keep abreast of the latest developments regarding labour law.
Why choose Native Teams as your Japan Employer of Record?
Over the past five years, we’ve helped 70,000+ employers and individuals achieve compliance on the global stage. Our global presence in 85+ countries, including Japan, allows you to hire, onboard, and pay new employees from the country without opening a legal entity. We also take care of the boring paperwork regarding employment contracts, record keeping, and social security to ensure full compliance with Japanese labour laws.
``What is an Employer of Record?
An Employer of Record (EOR) is a third-party entity that assumes the legal responsibilities of employing workers for another company. The EOR manages tasks such as payroll, tax compliance, benefits, and legal adherence to local labour laws. They also support freelancers and remote workers in formalising employment status and accessing benefits within Japan's strict employment framework.
What are the costs of using an Employer of Record in Japan?
EOR costs in Japan vary by provider, employee count, and service requirements. Native Teams has one of the most affordable and transparent pricing structures for your global work needs. The Employer of Record plan starts at €99 per month per employee, and the Work Payments plan starts at €19. Both plans cover all the essential tools and features needed for legal employment.
What is the difference between PEO and EOR?
An EOR fully takes on legal employment responsibilities like payroll, taxes, and compliance, while a PEO shares these responsibilities with the client in a co-employment arrangement. In Japan's context, EORs are particularly suited for foreign companies expanding into the market without legal entities, handling complex requirements like social insurance and labour contracts. PEOs are used by businesses already operating in Japan to streamline HR functions.
What are the responsibilities of an Employer of Record (EOR) service provider?
EOR providers act as legal employers, managing payroll, benefits, and employment contracts while ensuring compliance with Japanese labour laws. They handle specific requirements like the year-end tax adjustment (nenmatsu chosei), social insurance enrollment, and work visa sponsorship. They reduce risk by assuming liability for employment issues and offer HR support, enabling businesses to focus on operations.
Is using an Employer of Record in Japan legal?
Yes, using an EOR in Japan is fully legal and complies with Japanese labour regulations. International companies often use EOR services to enter the Japanese market, particularly when they need to navigate complex local employment laws and visa requirements.
Why should I use EOR instead of opening my own company or an office in Japan?
An EOR allows businesses to avoid the complexities of setting up a legal entity in Japan, which can be time-consuming and expensive. The EOR manages legal employment tasks, such as payroll and compliance with Japan's strict labour laws, and offers flexibility to scale operations without the challenges of closing a company if plans change.
How many people can I employ in Japan?
There is no legal limit on the number of employees a company can hire in Japan as long as labour laws are followed. However, certain regulations apply based on company size - for example, companies with 10 or more employees must file work rules (shūgyō kisoku) with the Labour Standards Office.