🇯🇵 Hiring in Japan

💡 Everything you need to know to hire and manage employees in Japan through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 10-15 business days between submitting a new hire and their start date. Japanese registrations span multiple agencies, which is why the lead time is longer than in most countries: the employee provides their My Number and personal details, and Toku completes the social insurance and pension registrations before their start date.

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

Employer Costs

On top of gross salary, you pay the following employer contributions in Japan:

As a rule of thumb, total cost of employment is roughly 115-117% of gross salary for a typical office-based hire.

Employees pay their own share of health insurance (~5.0%), pension (9.15%), employment insurance (0.5%), and long-term care insurance if aged 40-64, plus national income tax (progressive rates from 5% to 45%, with a 2.1% surtax) and roughly 10% local inhabitant tax. These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.

Compensation & Payroll

ℹ️ Stablecoin payments are not supported in Japan at this time.

Payroll in Japan is monthly. Toku runs one payroll per month, and employees receive an itemized payslip each cycle. Salaries are paid in JPY by bank transfer.

Minimum wages are set by prefecture and are reviewed annually. Ask Toku to confirm the current applicable minimum for the employee's work location and role before making an offer. There is no statutory 13th month salary; semi-annual bonuses in June and December are a common market practice, and contractual bonuses are binding.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, including the written statement of working conditions Japanese law requires at hiring.
• Indefinite-term employment (seishain) is the standard and carries strong dismissal protections. Fixed-term contracts are allowed for up to 3 years (5 years for highly specialized roles), and employees on successive fixed-term contracts for 5 or more years can request conversion to indefinite status.
• Probation is 6 months, with possibility of extension, per Toku's employment agreement. Note that once an employee has worked 14 days, normal dismissal protections broadly apply even during probation.

Working Hours

The standard working week is 40 hours (8 hours per day, 5 days). Employees get a 45-minute break when working 6-8 hours and 60 minutes beyond 8 hours. Overtime is only lawful under a filed labor-management agreement (a "36 Agreement"), which Toku puts in place, and is capped at 45 hours per month and 720 hours per year. Overtime pays 125% of base wage (150% beyond 60 hours in a month), holiday work pays 135%, and late-night work between 10 PM and 5 AM carries an additional 25% premium.

Leave Entitlements

Employees with 10 or more annual leave days must take at least 5 per year, and unused leave carries over for up to 2 years. Parental leave benefits are government-funded: since April 2025, a top-up raises benefits to 80% of pre-leave wages (roughly full net pay) for up to 28 days when both parents take at least 14 days of leave within 8 weeks of the birth.

Public Holidays (2026)

Japan has 16 fixed national holidays, and substitute and bridge day rules bring 2026 to 18 days off. Notable clusters are Golden Week (April 29 to May 6) and Silver Week (September 21-23).

Benefits

Japanese employees are enrolled in the country's comprehensive statutory insurance schemes, whose contributions are shown in Employer Costs above. Japanese law also requires you, as the employer, to provide and pay for an annual health checkup, which Toku arranges and adds to your invoice. On top of this, you can choose to offer international supplemental health insurance through Remote Health by SafetyWing.

Benefits at a Glance

Statutory Benefits

As the employer of record, Toku enrolls eligible employees in Japan's mandatory schemes:

• Health Insurance (Kenko Hoken): national medical coverage; employees typically co-pay ~30% of costs.
• Long-Term Care Insurance (Kaigo Hoken): for employees aged 40-64.
• Pension Insurance (Kosei Nenkin): the public pension system.
• Employment Insurance (Koyo Hoken): unemployment and leave benefits.
• Workers' Accident Compensation (Rousai Hoken): work-related injury and illness. Employer and employee contributions for these flow through payroll automatically, at the rates shown in Employer Costs above.

Mandatory Annual Health Checkup

Under Japan's Industrial Safety and Health Act, employers must provide and pay for an annual health checkup. It isn't covered by health insurance, so Toku covers the cost as EOR and adds it to your invoice; employees don't pay the fee themselves, as Toku settles payment directly with the clinic. The standard statutory package at Toku's partner clinic (Tokyo Midtown Clinic, bilingual, English reports available) starts at JPY 13,750 per person and includes a general exam, urinalysis, chest X-ray, ECG, and blood test. Costs beyond the coverage you approve, and any follow-up treatment, are paid by the employee. Alternative clinics can be coordinated via [email protected].

Optional Supplemental Health

You can choose to offer Remote Health by SafetyWing to your Japan team. It helps cover the ~30% out-of-pocket share under national insurance and adds English-speaking care, specialist consultations, and emergency/evacuation cover when traveling. It's 100% employer-funded and completely optional for employees. For coverage details, see 🌍 Global Coverage: Remote Health by SafetyWing; pricing is shared on request.

What You Need to Know About Benefits

• The statutory schemes and the annual health checkup are required, so plan for both in every Japan hire.
• The checkup cost (from JPY 13,750 per person) appears on your invoice; let Toku know if you want to approve a broader checkup package.
• Remote Health is a client decision: tell Toku if you'd like to offer it to your Japan team. For the full employee-facing detail, Toku's Japan Benefits Overview walks through the mandatory insurances and pensions, the required annual health checkups, and the optional supplemental cover available to your team.

Common Extras

Other common extras in Japan include commuting allowances (near-universal, tax-exempt up to JPY 150,000 per month for public transit), housing or family allowances, meal subsidies, and defined contribution retirement plans. Toku can advise on how each of these affects your total cost.

Ending Employment

Japan is one of the most employee-protective countries in the world for dismissals: a termination is invalid unless it has objectively reasonable grounds and is socially appropriate, and courts apply that test strictly. Involve Toku early, before any termination conversation, so we can guide you to the lowest-risk route. For the process, see How to Terminate an Employee or Contractor.

There is no statutory severance pay in Japan, but negotiated separation packages of 3-12 months' salary are common for involuntary separations, particularly where the parties agree terms to avoid litigation. Employees on work-injury leave or maternity leave (and for 30 days after returning) cannot be dismissed.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: Not automatically required by statute solely because employment ends. Whether unused leave is paid can depend on the employment agreement, work rules, or established company practice.

Statutory carryover / look-back: Statutory annual paid leave generally expires two years after grant. A company policy cannot shorten that statutory life.

Admin responsibility: Track each grant date so leave can expire correctly after two years, and ensure employees with 10 or more granted days actually take at least five days each year as required.

Important exceptions: Employees must still be given a genuine opportunity to use statutory leave during employment. Toku should confirm the contract/work rules before assuming unused leave is or is not payable at termination.

See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.

Hiring Someone from Overseas?

Foreign nationals need a status of residence that permits work; the Engineer/Specialist in Humanities/International Services category is the standard route for most tech and business roles, and Toku can sponsor eligible hires. Expect 1-3 months for the Certificate of Eligibility plus 1-2 weeks for visa issuance, while permanent residents and spouses of Japanese nationals already have unrestricted work rights. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last updated November 5, 2026 (minimum wage guidance and onboarding link only). Other information last verified October 2026. This guide is general information, not legal or tax advice. Your Toku account manager can confirm specifics for your situation.