Your quick guide on talent and labor compliance norms in Japan
Capital
Tokyo
Currency
Japanese Yen (JPY)
Languages
Japanese
Payroll Frequency
monthly
GDP per Capita
$36,492.15
Employer Tax
15.045%
Talent Overview
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.
Local Universities
The top universities in Japan are:
Local: 1
World: 100
Local: 2
World: 147
Local: 3
World: 256
Local: 4
World: 347
Local: 5
World: 348
Salary Data
Below listed are the average salaries for some common jobs in Japan.
| Job Title | Average Monthly Salary (in JPY) | Average Monthly Salary (in USD) |
| Financial Manager | 1,050,000 | 7,423 |
| General Manager | 931,000 | 6,581 |
| Business Development Manager | 834,000 | 5,895 |
| Financial Analyst | 708,000 | 5,005 |
| Business Analyst | 642,000 | 4,538 |
| Project Manager | 619,000 | 4,376 |
Talent Sourcing Tips
GaijinPot, Daijob, Craigslist, JobsinJapan
3,740,000
Onboarding Japanese employees can be a real asset to businesses expanding their operations in the country. The first step to realizing this is to be familiarized with the Japanese labor regulations. The following section shall guide you through the onboarding process.
There is no required language in Japanese employment contracts, provided it is written in a medium that all parties understand. However, most employers use the Japanese language for these documents.
Employees in Japan can have 3 to 6 months of probation period.
| Date | Name | Type |
| 1 Jan | New Year’s Day | National holiday |
| 1 Jan | January 1 Bank Holiday | Bank holiday |
| 2 Jan | January 2 Bank Holiday | Bank holiday |
| 3 Jan | January 3 Bank Holiday | Bank holiday |
| 8 Jan | Coming of Age Day | National holiday |
| 11 Feb | National Foundation Day | National holiday |
| 12 Feb | National Foundation Day observed | National holiday |
| 23 Feb | Emperor’s Birthday | National holiday |
| 20 Mar | Spring Equinox | National holiday |
| 29 Apr | Shōwa Day | National holiday |
| 3 May | Constitution Memorial Day | National holiday |
| 4 May | Greenery Day | National holiday |
| 5 May | Children’s Day | National holiday |
| 6 May | Children’s Day observed | National holiday |
| 15 Jul | Sea Day | National holiday |
| 11 Aug | Mountain Day | National holiday |
| 12 Aug | Day off for Mountain Day | National holiday |
| 16 Sep | Respect for the Aged Day | National holiday |
| 22 Sep | Autumn Equinox | National holiday |
| 23 Sep | Autumn Equinox observed | National holiday |
| 14 Oct | Sports Day | National holiday |
| 3 Nov | Culture Day | National holiday |
| 4 Nov | Culture Day observed | National holiday |
| 23 Nov | Labor Thanksgiving Day | National holiday |
| 31 Dec | December 31 Bank Holiday | Bank holiday |
| Type of Leave | Time Period | Mandatory |
| Annual Leave | 10-20 days | Yes |
| Sick Leave | 0 days | No |
| Maternity Leave | 14 weeks | Yes |
Payroll
Payroll Cycle
Employees in Japan are paid monthly.
Minimum Wage
Minimum wage in Japan varies with location, ranging from 790 JPY to 1,072 JPY.
Overtime Pay
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:
Bonus
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:
Taxes
| Category | Tax Rate |
| Health Insurance | 4.935% |
| Welfare Pension | 9.15% |
| Employment Insurance | 0.6% |
| Child Allowance | 0.36% |
| Worker’s Accident Compensation Insurance | Varies on the type of business |
| Category | Tax Rate |
| Health Insurance* | 4.905% |
| Welfare Pension | 9.15% |
| Unemployment Insurance | 0.5% (Upto March 2023) |
| Child Allowance | 0.36% |
*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:
| Time and date of extra work | Rate |
| Overtime | Additional 25% |
| 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% |
