Effortless Hiring in Japan

Employment Contracts

• Employment contracts in Japan must be provided in writing and include essential details such as:
• Job description.
• Salary.
• Working hours.
• Leave entitlements.
• Termination conditions.
• Types of contracts recognized include:
• Indefinite-Term Contracts: Provide ongoing employment without a predetermined end date. These may include a probationary period.
• Fixed-Term Contracts: Generally not exceeding three years but can be renewed indefinitely under certain conditions.

Probationary Period

• Employers may set a probationary period, typically up to three months, during which either party can terminate the contract with shorter notice.

Payroll Frequency

• Most companies operate on a monthly pay cycle, with employees paid once a month for work performed during that period.

Minimum Wage

• Japan's minimum wage varies by region, with each prefecture setting its own rate. Employers must comply with the regional minimum wage applicable to their location.

Overtime

• The standard working hours are eight hours per day and 40 hours per week. Overtime requires a written agreement filed with the Labor Inspection Office. Overtime pay rates are:
• 25% additional for hours exceeding the standard.
• 50% additional for hours exceeding 60 per month.
• 25% additional for work between 10:00 PM and 5:00 AM.
• 35% additional for work on holidays.

Employee Contributions

1. Income Tax: Employees are subject to income tax, which employers withhold and remit to tax authorities. The tax rate depends on the employee’s income level.
2. Resident Tax: A local tax varying by the employee’s place of residence, also withheld by the employer.
3. Social Insurance: Includes health insurance and pension contributions. Employers enroll employees in these programs and withhold the appropriate contributions.
4. Employment Insurance: A portion of employees’ salaries goes towards unemployment insurance.

Employer Contributions

1. Social Insurance: Employers match employee contributions to health insurance and pension plans.
2. Employment Insurance: Employers contribute to unemployment insurance funds.

Types of Leave in Japan

1. Annual Leave

• Employees are entitled to paid leave based on years of service:
• 6 months: 10 days.
• 1.5 years: 11 days.
• 2.5 years: 12 days.
• 3.5 years: 14 days.
• 4.5 years: 16 days.
• 5.5 years: 18 days.
• 6.5 years: 20 days.

2. Sick Leave

• Sick leave is not mandated by law; companies may implement their own policies. Employees often use vacation days or claim through social insurance systems.

3. Maternity Leave

• Female employees are entitled to 14 weeks of fully paid maternity leave (6 weeks before and 8 weeks after childbirth), receiving approximately two-thirds of their salary through Social Security.

4. Paternity Leave

• Fathers are generally entitled to four weeks off after their child is born, known as Childcare at Birth Leave, taken within eight weeks of birth. Social security pays 67% of their salary during this time.

5. Parental Leave

• Available to both parents starting the day after maternity leave ends, for up to one year.

Social Insurance

• Covers health insurance, pension, and unemployment insurance, with contributions from both employer and employee.

Bonuses

• Commonly paid biannually (summer and winter), though not legally required.

Notice Period

• Employers must provide at least 30 days' notice or pay 30 days' wages in lieu of notice.

Grounds for Dismissal

• Must be objectively reasonable and socially acceptable. Grounds should be clearly stated in work rules.

Restrictions on Dismissal

• Prohibited during periods such as maternity leave and for 30 days thereafter.