It takes time to set up a subsidiary in Japan. In Japan, employment also comes with a number of formalities. In order to prevent you from having to divert resources from growth, INS Global, as your Employer of Record or PEO in Japan, manages all HR activities like payroll management, recruitment, and compliance management. All stakeholders can access data on its streamlined, automated platform, which also automates all internal operations.
Employment in Japan
Japanese employment law places a strong emphasis on the person and safeguarding his or her rights. Termination is quite challenging and needs to be viewed as “socially acceptable”. In Japan, it is crucial to uphold a set of “Work Rules” that specify the conditions of employee service.
Most job terms and conditions in Japan are outlined in the Work Rules (shuugyou kisoku). Work Rules must be written by employers who have ten or more employees and submitted to the Labor Standards Inspection Bureau. Work hours, holidays, termination of employment, and pay are only a few of the terms of employment that are specified in the Work Rules, which are a component of the employment contract. Our regional teamwork regulations apply to professionals.
The following standard perks in Japan may be helpful to keep in mind while negotiating the conditions of an employment contract and offer letter with a worker there.
Contracts for Employment in Japan
Although the style of employment contracts is not specified by the Japan Labour Standards Law, some terms and conditions of employment must be provided in writing to employees in Japan. Employers can comply with this requirement by offering workers a formal employment contract and/or a copy of the business’ “work rules” (shuugyou kisoku). All professionals hired, have signed an employment contract with the company that complies with local laws.
The ideal practice in Japan is to set up a solid employment contract that outlines the conditions of the employee’s pay, perks, and termination obligations. The salary and any other remuneration amounts should always be stated in Yen rather than a foreign currency in an offer letter and employment contract in Japan.
Hours of Work in Japan
Unless specifically agreed upon with a union or through a representative of the local workforce, the typical workweek in Japan runs from Monday through Friday and is 40 hours long. The maximum number of overtime hours must be specified in the agreement.
Below-minimum overtime pay is:
- Standard overtime pay is 125% of the base hourly rate.
- 135% of the hourly basic rate is paid for work on a “rest day.”
- Late-night overtime (10 p.m. to 5 a.m.): 150% of the hourly basic rate plus 25%
- On a “rest day,” late-night overtime is paid at 160% of the base hourly rate (plus 25%).
- More than 60 hours of overtime per month are paid at 150% of the base hourly rate.
- Late-night overtime exceeding 60 hours per month is worth 175% of the base hourly salary.
The latter two tariffs above do not currently apply to small to mid-sized businesses. In addition, overtime is typically not required for “those in positions of supervision or management or persons handling confidential topics.”
Vacations in Japan
There are 16 public holidays in Japan that are observed by the workforce and are as follows:
- Christmas Day
- Foundation Day: Coming-of-Age Day
- Constitution for Showa Day on the Vernal Equinox Veterans Day
- Sunshine Day
- Marine Day Children’s Day
- Respect for the Elderly Day on Mountain Day
- Thanksgiving Day
- Day of Health and Sports
- Language Day
- Labour Day of Thanksgiving
- The Imperial Holiday
If a holiday falls on a Sunday, the next day is observed as a holiday instead, with the exception of New Year’s Day. Although it is not legally required, it would be quite uncommon for salaried employees of foreign firms to not be granted the day off on public holidays.
Days of Vacation in Japan
After six months of employment, firms in Japan are obligated to offer employees a yearly paid leave of at least 10 days. Up to a maximum of 20 days per year, the entitlement increases by 1 day each year for the first two years and by 2 days each year after that. If not used, unused yearly leave expires after two years.
Sick Leave in Japan
Unless the work policies or employment contract stipulate otherwise, an employer is not normally compelled to offer paid leave to an employee who misses work due to illness or injury.
In Japan, maternity and paternity leave
Maternity leave is available to expectant workers within six weeks of the due date and for eight weeks following delivery. A female employee may not be hired by an Employer of Record Japan within eight weeks of giving birth unless both of the following conditions are met:
After six weeks following the birth of her child, she wants to return to work.
According to a doctor’s certification, returning to work won’t present any issues.
Unless the employment contract or workplace policies specifically specify otherwise, companies are not compelled to cover maternity leave costs.
Up to 93 days of family care leave are available to employees for each member of their family. Unless otherwise specified in the Work Rules, these absences are not compensated.
Childcare leave: From the day after maternity or paternity leave ends until the day a kid becomes one year old, an employee is entitled to childcare leave. The time frame might be extended, under certain circumstances, to the day a kid becomes one and a half years old.
Benefits of childcare leaves:
1) A lump-sum bonus of JPY 420,000 for childbirth
2) A reduction in the cost of social insurance
3) During the maternity/paternity leave, receive about two-thirds of your monthly wage as a maternity allowance.
4) The benefit for childcare leave is approximately 2/3 of the monthly wage.