Employment contracts in Japan should clearly state the terms of employment, including job title, responsibilities, working hours, compensation, and contract duration if applicable. Written contracts are mandatory for fixed-term, part-time, and temporary workers, while permanent employees can also benefit from written contracts to avoid misunderstandings. Contracts should outline salary terms, bonuses, benefits, and any probationary periods.
Employer of Record (EOR) Japan
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Globaine takes care of all compliance matters, including payroll, taxes, and legal obligations, while providing seamless hiring processes. Our platform ensures that every aspect of employee management in Japan is handled efficiently and in full compliance with local regulations.
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Onboard employees in as little as 12 hours.
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The most affordable solution on the market, saving you time and money.
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We draft bilingual contracts that meet Japanese labor laws.
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in JAPAN
An Employer of Record (EOR) is a third-party organization that manages all legal and administrative responsibilities of employing staff on behalf of another company. This includes payroll, tax compliance, employment contracts, benefits administration, and adherence to local labor laws. An EOR allows businesses to hire employees in new countries without establishing a local entity, enabling faster and compliant global expansion.
EOR services in Japan simplify compliance with strict labor laws, manage complex payroll requirements, and allow businesses to expand without establishing a local entity. EOR providers handle employment contracts, tax filings, and benefits, enabling businesses to focus on growth in Japan’s competitive market.
For part-time, temporary, and fixed-term employees, written contracts are essential. A written contract should be provided at the time of hiring, as required by law, and must include clear terms for both the employee and employer to avoid future legal issues.
Salaries must be listed in Japanese yen, with both monthly and annual figures provided when possible. Japanese contracts often specify base pay and include details on bonus structures, allowances, and overtime rates if applicable. The contract should clarify whether bonuses are discretionary or guaranteed.
Key clauses include confidentiality agreements, non-compete clauses, and, if applicable, teleworking arrangements. These clauses are critical to defining job expectations, especially for sensitive roles or remote positions. Non-compete clauses are enforceable under certain conditions but should be reasonable in scope and duration.
in Japan
1. What are the key steps in employee onboarding in Japan?
Employees must register for a tax identification number, social insurance, and, if needed, obtain a work visa. Additionally, setting up a Japanese bank account for payroll is highly recommended. Social insurance enrollment is required within five days of the employee’s start date, while other tax and insurance registrations should be completed promptly to ensure legal compliance.
2. When are pre-employment health checks required in Japan?
Pre-employment health checks are required for roles involving physical labor or in industries where health and safety are prioritized. Health checks must be conducted before the employee begins work to ensure they are fit for the role, as mandated by Japanese labor law.
3. What documents are essential for onboarding in Japan?
Employees need to provide proof of their tax identification number, social insurance enrollment, and, if they are foreign nationals, a valid work visa. Other documents may include bank details, emergency contact information, and any certifications specific to the role. These documents ensure smooth payroll processing and compliance with Japanese employment regulations.
4. Why businesses in Japan need EOR services?
5. How does EOR in Japan different from other countries?
in JAPAN
Salaries in Japan are generally paid monthly, with many companies offering semi-annual bonuses in June and December. Contracts should outline the exact frequency and timing of payments, as well as details on overtime rates and other allowances. Additional compensation, such as transportation and housing allowances, is also common.
Remote employees are entitled to allowances covering work-related expenses, such as internet and electricity costs. The specifics of these allowances should be outlined in the employment contract to ensure compliance with tax regulations and company policies. Employers are responsible for providing appropriate resources for remote work.
The minimum wage in Japan is set on a regional basis, with Tokyo currently having the highest rate at ¥1,072 per hour. Employers must adhere to the regional minimum wage laws to remain compliant.
in Japan
1. What are the income tax rates in Japan?
Japan has a progressive income tax system, with rates ranging from 5% to 45%, depending on income levels. Additionally, residents are subject to local inhabitant taxes, which can vary by municipality and typically amount to around 10% of income.
2. How are non-residents taxed in Japan?
Non-residents are taxed at a flat rate of 20.42% on their Japan-sourced income. Unlike residents, they are not subject to local inhabitant taxes, but they must file taxes for all Japan-earned income unless a tax treaty applies.
3. When should annual tax returns be submitted?
Employees and employers must submit annual tax returns by March 15 for the previous tax year. Employers are responsible for withholding monthly income tax from employee salaries, while employees may also need to file a final tax return.
4. What are the social security contribution requirements?
Employers contribute 14.31% of an employee’s salary toward social insurance, which includes health insurance, pension, and unemployment benefits. Employees contribute around 15% of their earnings, which is withheld directly from their salaries.
in JAPAN
Employees are entitled to at least 10 days of paid annual leave after six months of continuous employment, with the leave increasing by one day per year up to 20 days. This entitlement helps employees maintain a work-life balance and is required by law.
Employees may begin using their leave entitlement after six months of employment. In their first year, employees earn one day of leave per month and may start using these accrued days once they reach six months.
Maternity leave includes six weeks before and eight weeks after childbirth, while paternity leave can be up to 12 months. Both leaves are paid through Japan’s social insurance system, providing parents with financial stability during their leave period.
Japan has 16 national holidays, and employees are entitled to paid time off for these holidays. Companies can provide additional holidays depending on industry practices and company policies.
in Japan
1. What mandatory benefits must employers provide in Japan?
Employers are required to provide social insurance, which includes health and pension coverage, as well as unemployment and worker’s accident compensation insurance. Companies are also expected to cover commuting allowances, generally up to ¥150,000 per month.
2. Is there a home office allowance for remote employees?
Remote employees are often provided with a stipend to cover work-related expenses, though the amount is typically negotiated and included in the employment contract. This allowance supports the costs of working from home, like utilities and internet.
3. Are meal allowances commonly provided?
Meal allowances, while not required, are often provided as a tax-free benefit, making it easier for employees to afford meals during work hours. Allowances are generally a standard benefit in many large companies.
4. What additional benefits are typical in Japan?
Companies frequently offer benefits such as health insurance subsidies, transportation allowances, and annual health exams. Some firms also provide housing allowances and bonuses to attract talent in competitive fields.
FAQs
1. What is EOR in Japan?
An Employer of Record (EOR) in Japan allows businesses to hire employees without establishing a local presence. The EOR manages payroll, taxes, and benefits, ensuring compliance with Japan’s labor laws while enabling quick expansion.
2.What specific cost savings can our company expect by using Globaine's EOR solution compared to setting up a local entity in Japan?
Using Globaine’s EOR saves significantly on incorporation, administrative, and ongoing compliance costs, allowing entry into the Japanese market without establishing a full legal entity.
3. How does Globaine guarantee fast onboarding within 12 hours, and what processes are in place to maintain this speed?
Globaine’s streamlined onboarding platform, local partnerships, and in-country expertise enable efficient document processing, allowing employee onboarding within 12 hours.
4. Can Globaine handle complex employment scenarios in Japan, such as drafting bilingual contracts and managing terminations?
Yes, Globaine provides bilingual contracts tailored to Japanese legal standards and assists in compliant terminations, ensuring alignment with local labor laws.
6. How does Employer of Record work in Japan?
An EOR in Japan acts as the legal employer, handling payroll, benefits, and compliance with labor regulations. The EOR ensures adherence to Japanese laws, including tax filings and social contributions, allowing businesses to expand efficiently.
