Employment contracts in Japan are shaped by a combination of statutory protections, company rules, and contractual terms. While the law does not always require a written contract, employers must still ensure that certain employment terms are communicated clearly. For organisations hiring staff in Japan, understanding the framework around contracts is essential to avoid legal pitfalls and to maintain fair and transparent workplace practices.

Clarity through written terms

Japanese law does not impose a strict requirement for written employment contracts. However, it does require employers to provide employees with certain “key employment terms” in writing. These include the duration of employment, renewal conditions for fixed-term contracts, workplace location, duties, working hours, rest periods, leave entitlements, and rules on wages, retirement, and dismissal.

Although oral agreements are theoretically valid, most employers opt for written contracts. This approach not only ensures clarity for both parties but also helps prevent disputes and demonstrates compliance with statutory obligations. Written contracts are therefore widely regarded as best practice in Japan.

Language consideration and hiring practice

There is no statutory requirement that employment contracts be written in Japanese, but they must be in a language the employee can reasonably understand. A contract prepared only in English may be unenforceable if the employee cannot fully comprehend its contents. To avoid this risk, many employers use bilingual contracts, particularly when hiring non-Japanese staff.

Unlike in some other jurisdictions, offer letters are not standard practice in Japan. Employers usually proceed directly to an employment contract that sets out all key terms, ensuring compliance with legal requirements from the outset.

Statutory rights that override contracts

Certain protections apply to employees in Japan regardless of what is written in their contract. Statutory entitlements such as annual paid leave, maternity and paternity leave, and overtime pay are built into every employment relationship and cannot be waived. If a contract contains provisions that are less favourable than those required by law, by internal company rules, or by a collective agreement, those provisions are automatically invalid.

This framework ensures that the minimum standards set by legislation and collective bargaining always take precedence over individual agreements. Employers cannot use contracts to reduce or bypass these rights, and any inconsistency will be resolved in the employee’s favour.

Using internal rules and policies

Employment contracts often refer to supplementary documents, particularly a company’s internal rules of employment. These rules typically cover areas such as workplace conduct, confidentiality, disciplinary procedures, and grievance handling. They form part of the employment relationship and are made available to employees when they join.

Employers should ensure that references to such documents are clear and that staff have access to the latest versions. This avoids ambiguity, improves transparency, and strengthens the enforceability of workplace policies.

Limits on altering agreements

Japanese labour law places strict limits on an employer’s ability to make unilateral changes to employment terms. Any amendments that disadvantage the employee, such as reduced salary or benefits, generally require the employee’s express consent. Attempting to impose such changes without agreement is likely to be invalid and may give rise to claims.

There is some scope for unilateral amendments to internal rules of employment, provided these are reasonable in the circumstances. Factors considered include the necessity of the change, the degree of disadvantage to employees, and whether proper consultation was undertaken. Even so, employers should proceed carefully and seek employee agreement wherever possible to avoid disputes.

Practical guidance for employers

For companies hiring staff in Japan, compliance requires more than drafting a contract. Employers should:

• Set out all key employment terms in writing, even though not all contracts are legally required to be written.
• Ensure contracts are prepared in a language the employee understands, often using bilingual formats for international staff.
• Confirm that contractual provisions comply with statutory protections and collective agreements, as weaker terms will be unenforceable.
• Maintain up-to-date internal rules of employment and ensure employees have access to them.
• Approach changes to employment terms with caution, obtaining consent where they may disadvantage staff.

Japan’s employment law framework reflects a strong commitment to fairness and employee protection. While this can appear restrictive for employers, adopting transparent and compliant practices reduces risk, supports good employee relations, and fosters stability in the workplace. For international employers, understanding these requirements from the outset is an important step towards building a successful and legally compliant operation in Japan.

At Access Financial, we have extensive experience supporting our clients in Japan and across the Asia region with fully compliant workforce solutions. In addition to our core Employer of Record (EOR) services, we also provide expert advisory and immigration support — helping you reduce administrative burdens and focus on growing your business.

To learn more about how we can support your operations and employees in Asia, please contact us at [email protected] or call us on +971 503 075 121.