Japan Hiring/Employment Compliance
Japan’s employment laws heavily favor employees, so it’s essential to understand every regulation to stay compliant. And, because firing employees in Japan can be incredibly challenging, the initial hiring process becomes even more critical.
How to Hire Employees in Japan
Before hiring employees in Japan, draft a strong employment contract that lays out the job’s expectation and termination terms. The Japan Labor Standards Act does not specify an exact employment contract format. You can either lay the terms and conditions out in your company’s work rules — locally known as shuugyou kisoku — or an employment contract.
Any company with ten or more employees is required to maintain a set of work rules and file them with the Labor Standards Inspection Bureau. Include aspects such as work hours, holidays, termination details, and wages into these rules.
While you are still in the negotiation phase, list all salary and benefit amounts in Japenese yen instead of US currency.
Japan Employment Compliance
Employment compliance in Japan includes following the typical work week hours. Employees usually work 40-hour weeks Monday through Friday unless otherwise stated in an agreement with a union or labor group.
Overtime is a sticking point in Japan, so an employment contract should state the maximum hours of overtime work for your company. The overtime rates in Japan are as follows:
- Basic overtime: 125% of hourly wage
- Work on a rest day: 135% of hourly wage
- Overtime between 10 p.m. and 5 a.m.: 150% of hourly wage
- Overtime between 10 p.m. and 5 a.m. on a rest day: 160% of hourly wage
- More than 60 hours of overtime work a month: 150% of hourly wage
- More than 60 hours of overtime work between 10 p.m. and 5 a.m. a month: 175% of hourly wage
Hire and Onboard Employees in Japan
Japan employment compliance also stipulates how to onboard employees. Before a new employee starts, you’ll need to register them with the appropriate authorities and provide a variety of documents within the applicable deadlines. For example, pension and health insurance forms are due within five days of an employee’s start date, while the insurance report should be sent within 50 days.
It is also best practice to explain what you expect from your workers before their start date. Send an email to remind employees about your company’s regulations, dress code, first-day itinerary, and work rules.
Benefits of Japan Hiring Outsourcing
Japan’s various employment laws often make it difficult to hire and onboard employees yourself. The easiest way to stay compliant is to work with a Japan hiring outsourcing company or a global PEO. Globalization Partners hires employees on your behalf, so you can start operations sooner without establishing a subsidiary.
We take care of paying your employees, dispersing benefits, and handling all compliance issues that pop up. We’ll also act as the employer of record, lifting the liability off your shoulders and placing it on ours. Contact us today to learn more about our services.