Your quick guide on talent and labor compliance norms in Japan
Japanese Yen (JPY)
GDP per Capita
Known as the “Land of the Rising Sun”, Japan’s distinction from the rest of the world is not only its strategic geographical location but also due to its rich cultural virtues. Japanese people are known to be polite, organized, and have a good work ethic. In turn, the country has many merits to its name and is considered one of the most developed countries in the world.
Japan’s economy is ranked as the third-largest in the world by nominal GDP and fourth by Purchasing Power Parity (PPP) GDP. The country is also one of the world’s leading investors, having more than $220 billion in FDI (foreign direct investments) outflows each year.
Major economic hubs:
Tokyo, Osaka, and Kyoto
Skills in demand:
IT engineer, Cloud Computing Engineer, IoT Engineer, Country Manager.
The top universities in Japan are:
Below listed are the average salaries for some common jobs in Japan.
|Job Title||Average Monthly Salary (in JPY)||Average Monthly Salary (in USD)|
|Business Development Manager||834,000||5,895|
Employees in Japan are paid monthly.
Minimum wage in Japan varies with location, ranging from 790 JPY to 1,072 JPY.
The standard working hours in Japan are 8 hours per day and 40 hours per week. Overtime is legal in the country, with a cap of 45 hours per month and 360 hours per year. The overtime pay varies as per the table below:
13th month pay is customary in Japan. Most employers offer these incentives for their employees as a winter bonus, usually around December.
Japanese employees are entitled to numerous benefits during their employment. Below are some of them:
|Worker’s Accident Compensation Insurance||Varies on the type of business|
|Unemployment Insurance||0.5% (Upto March 2023)|
*Note: There is an additional fixed rate of 0.82% for the long term health insurance that is applicable for ages of 40 and 64.
|Taxable Income (JPY)||Tax Rate||Deduction (JPY)||Tax on base amount (JPY)|
|0 – 1,950,000||5%||0||0|
|1,950,000 – 3,300,000||10%||97,500||97,500|
|3,300,000 – 6,950,000||20%||427,500||232,500|
|6,950,000 – 9,000,000||23%||636,000||962,500|
|9,000,000 – 18,000,000||33%||1,536,000||1,434,000|
|18,000,000 – 40,000,000||40%||2,796,000||4,404,000|
|40,000,000 and above||45%||4,796,000||13,204,000|
The standard VAT rate in Japan is 10%. However, few goods and services are levied a VAT of 8%.
Offboarding & Termination
Employers terminating their employees must provide a notice of termination informing them of the reasons for the decision. In cases of summary dismissal, an employer may do so without any notice but must pay their employees 30-days worth of wages, known as a “notice allowance.”
A notice period of up to 30 days is generally observed in Japan.
A severance pay is not mandatory in Japan.
Visa and Immigration
According to the Japan Immigration Authority, foreign workers can legally work in the country if they have secured a Japanese work visa. Below are the types of visas in Japan:
Streamline payroll and compliance for your international workforce
|Time and date of extra work||Rate|
|Night-time (22:00 – 05:00)||Additional 25%|
|Weekends and Holidays||Additional 35%|
|Night-time (continuing from overtime)||Additional 50%|
|Holiday (continuing from night-time)||Additional 60%|