Back to Country SolutionsJapan Country
Guide 2024
Find everything you need for confident contracting and working in Japan: labour law, taxation, employment compliance, payroll, benefits, and more.
Japan
Japan is an island country in East Asia, and is one of the most densely populated and urbanized countries in the word. Japan has a very unique history and culture, and it is extremely technologically advanced. People in Japan are very polite, and are always happy to help; but even though they are very welcoming towards foreigners, the number of residents of foreign nationality adds up to only about 2.5 percent of the population – not surprising, since foreigners generally must learn Japanese to quite a high standard in order to find work.
Japan’s health care is universal and one of the best in the world, and public transportation is expansive and always on time. However, the cost of living is quite high, and work-life balance tends to often be skewed towards work, which can lead to stressful 12-hour workdays.
- Capital: Tokyo
- Spoken Languages: Japanese (Several different dialects)
- Currency: Yen (JPY)
- Minimum monthly wage: JPY 148,800 (Gross)
Entry Visa
Citizens from most European countries, United States, Australia, and Argentina can enter Japan without a visa for short stays.
Work Permit / Residence Permit
Before applying for a Japan Work Visa, a potential employee must send documents to the employer or sponsor in Japan so they can apply for a Certificate of Eligibility from the Japanese Immigration Services, which is required for the application. The visa application can be done at a local Japanese Embassy. Once the visa has been received, the individual can enter Japan.
After entering Japan, the individual must register at a local municipal office and obtain a Japan Residence Card within 14 days of arrival.
Social Security Registration
The employer is responsible for registering foreign employees with the Health Insurance and Pension Insurance systems, and this registration is compulsory.
Working Hours
The standard working week in Japan is 8 hours/day (40 hours/week). The cap on overtime is 15 hours/week and 45 hours/month, and overtime is paid extra.
Public Holidays
- New Year’s Day, 01 Jan
- Coming-of-Age Day, 2nd Monday of January
- National Foundation Day, 11 Feb
- The Emperor’s Birthday, 23 Feb
- Vernal Equinox Day, 20 Mar
- Showa Day – Golden Week, 29 Apr
- Constitutional Memorial Day – Golden Week, 03 May
- Greenery Day – Golden Week, 04 May
- Children’s Day – Golden Week, 05 May
- Marine Day, 3rd Monday of July
- Mountain Day, 11 Aug
- Respect for the Aged Day, 3rd Monday of September
- Autumnal Equinox Day, 22 Sept
- Health and Sports Day, 2nd Monday of October
- Culture day, November (Not a standard date)
- Labour Thanksgiving Day, 23 Nov
Vacation Allowance
Employees in Japan are entitled to 10 – 20 days of annual leave, depending on the length of service. Up to 2 years of leave can be carried out to the next year if it was unused.
| Years Worked | Leave Amount (Days) |
| .5 | 10 days |
| 1.5 | 11 days |
| 2.5 | 13 days |
| 3.5 | 14 days |
| 4.5 | 16 days |
| 5.5 | 18 days |
| 6.5 + | 20 days |
Sick Leave
There is no sick leave in Japan – if an employee gets sick, they use their paid vacation allowance. However, some foreign companies grant sick leave as a special benefit.
Maternity / Paternity leave
- Maternity: 14 Weeks; 6 weeks prior to the expected birth, 8 weeks after the birth. The employee salary is be covered by the social insurance up to a limit of around 2/3 of the base salary.
- Paternity: 4 Weeks; within 8 weeks after birth; Effective October 1, 2022.
Termination & Severance
There is no statutory obligation to pay severance allowance upon termination in Japan, except in circumstances when payment is in lieu of notice.
Notice Period
The standard notice period is 30 month for the employer, and 2 weeks for the employee; however, it is customary for the employees to also give 30 day’s notice. If the termination is coming from the side of the employer, they may choose to pay the employee a month’s wages instead.
Social Security
Employee social insurance contributions are deducted automatically from the wage and paid by the employer. The maximum monthly insurable earnings are much higher for bonuses than for regular salary.
| Insurance Type | Employer | Employee | Maximum monthly earnings CNY (Salary / Bonus) |
| Health Insurance | 4.935% (5.83%*) | 4.935% (5.83%*) | 1,390,000 / 5,730,000 |
| Nursing Care | 0.785% | 0.785% ** | N/A |
| Employment Insurance | 0.6% | 0.3% | N/A |
| Welfare/Pension | 9.15% | 9.15% | 620,000 / 1,500,000 |
| Total | 15.47% (16.365%*) | 15.17% (16.065%*) |
* Health Insurance contributions are higher if the employee is older than 40.
** Nursing Care Insurance is only payable by employees between ages 40 and 65.
Pension
The National Pension System in Japan is mandatory for all residents between 20 and 59 years of age, and is built up from part of the Social Security contributions. An individual over 60 is entitled to a public Pension provided they have amassed 25 years of contributions
Taxation in Japan
The Japanese individual income tax year runs from 1 January to 31 December
Tax Rates
The following progressive rates apply for 2024. Tax payable is calculated by (Taxable Income * Tax Rate) – (Deduction).
| Annual Taxable Income (JPY) | Rate (%) | Deduction (JPY) |
| 0 – 1,950,000 | 5% | 0 |
| 1,950,001 – 3,300,000 | 10% | 97,500 |
| 3,300,001 – 6,950,000 | 20% | 427,500 |
| 6,950,001 – 9,000,000 | 23% | 636,500 |
| 9,000,001 – 18,000,000 | 33% | 1,536,000 |
| 18,000,001 – 40,000,000 | 40% | 2,796,000 |
| 40,000,001 + | 45% | 4,796,000 |
Tax Returns
The annual income tax return must be filed by 15 March of the following year. If a taxpayer’s income consists only of employment income paid by one local employer that does not exceed JPY 20 million in a year, they do not need to file a tax return.
Double Taxation
Japan has tax treaties with multiple other countries, which can reduce payable tax on certain incomes.
Health Insurance
Japan has a standard Health Insurance that is available for all full-time employees, locals and foreigners alike.
Cost of Living
The cost of living in Japan is quite high, especially in major cities such as Tokyo; living nearer the suburbs is much cheaper. The estimated monthly cost for a single person is around JPY 150,000 – 170,000, with 50,000 – 70,000 going to rent.
How We Can Help
It can be challenging to figure out how to employ a team, incorporate a subsidiary, and set up payroll in Japan; it requires great attention to detail and a deep understanding of local best practices. Access Financial makes it painless and easy for you to expand into Japan – we do the research, and you reap the benefits.
Access Financial simplifies global expansion by enabling you to hire talent in Japan without a branch office or subsidiary. You find the talent, and we put your team member on our locally compliant payroll. For all intents and purposes, the employee works for you, however, they’re legally on our payroll.
If you would like to discuss how Access Financial can help in Japan, please contact us.
Disclaimer
We have prepared this as a guide only; it does not form part of an offer. Please request illustrations based on your specific case from one of our solution managers.
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