Understanding the required compensation and benefits in Japan is a vital aspect of employment law compliance. You must pay employees at least the minimum wage to maintain compliance, but employers often go above and beyond to stay competitive in a thriving market.
Japan Compensation Laws
Japan’s compensation laws vary by the region or city where your company is located. For example, Tokyo’s minimum wage as of 2021 is 1,013 yen — the highest in the nation.
Japanese employees are paid monthly instead of bi-weekly. Wages often start on the lower end, but workers are rewarded by seniority. Promotions are typically based on a mixture of experience and ability.
The nation does not have a mandated 13th-month bonus. However, sales employees’ commission is often similar to those in the US.
Guaranteed Benefits in Japan
Since wages start low, Japanese employers rely heavily on benefits to draw in prospective talent. Guaranteed benefits include a paid annual leave of ten days after six months of work. Employees get a paid leave increase of one day per year for the following two years and then two days every subsequent year until they reach 20 days — the maximum amount of paid leave a year.
All employees receive excellent health care coverage under Japan’s social security system, so many employers do not provide supplemental health benefits. The law requires employers to provide annual physicals and checkups to all employees, as well as stress checkups if necessary based on the type of work. In general, employers should budget about 10% to 15% on top of an employee’s salary for benefits.
Japan Benefit Management
If you choose to handle your own benefit management in Japan, you need to have a keen understanding of the nation’s guaranteed benefits and market norm. Research what other businesses provide and decide what is best for your business and employees. The entire process involves a significant amount of time and travel to Japan.
On the other hand, you can choose to work with a benefits outsourcing company. Choose someone who is knowledgeable about Japanese benefits and can help you through the whole process. A global PEO such as Globalization Partners can ensure that your employees receive entitlements and additional benefits that will help your business stay competitive.
Benefits and Compensation Restrictions
Japan’s compensation laws vary by city, so it is crucial to stay up-to-date on regulations in your area. You also need to comply with all tax laws to avoid costly fines or other penalties.
The country also mandates strict maternity leave restrictions. Women are entitled to maternity leave within six weeks of their expected birth date and then another eight weeks after the birth. According to Japanese law, a woman cannot return to work within eight weeks of giving birth unless she wants to resume her work at least six weeks after giving birth and has a doctor’s certification that resuming work will not cause problems.
Instead of handling Japan benefit management and navigating these restrictions alone, work with Globalization Partners. We will ensure that your employees get top-of-the-line benefits and that you stay compliant with all employment laws. Contact us today to learn more.