Updated on: October 1, 2025
Currency
Japanese Yen (JPY)
Employer Taxes
Employers contribute around 15% of gross salaries for health insurance and pension.
Payroll Frequency
Monthly
Employee Taxes
N/A
Language
Japenese
Date Format
YYYY/MM/DD
Japan by the Numbers
124 million
Population
JPY 540 trillion
GDP
16
National Holidays
N/A
Hiring Difficulty Score
Weekly Working Hours
National Holidays
Leave
In Japan, full-time employees are entitled to 10 days of paid annual leave after completing 6 months of employment with at least 80% attendance. This can increase up to 20 days per year based on years of service.
Maternity leave is 14 weeks (6 weeks before and 8 weeks after childbirth), paid at about 67% through insurance. Paternity leave is up to 4 weeks, to be taken within 8 weeks of birth, and can be split into two parts. Childcare leave is available to either parent until the child turns 1 year old, and may be extended to age 2 in some cases. From April 2025, eligibility for childcare and family care leave has expanded to include employees with less than 6 months of service.
From October 2025, employers must offer at least two flexible work options (e.g., telework or reduced hours) to employees raising children aged 3–6. Short-term childcare leave now also covers school events and closures.
Other leave includes unpaid family care leave (up to 3 months), childcare time-off (5 days per child, capped at 10), and family care time-off (5 days per family member, capped at 10 per year).
Employment Contracts
There is no legal mandate to have a written employment contract. However, the employer must make certain terms of the employment specific such as term, wages, shifts etc.
Types of Employment
There are two types of employment: Employees and Independent Contractors.
Employment Costs
IC Class Factors
When determining the classification of an Independent Contractor (IC), several factors are considered, including how the IC sets up their business, whether they can choose their work location, and if they have the freedom to choose their own working hours. A multifactor test is used to assess aspects such as whether the IC is liable for damages caused during their work and whether they can decline work without breaching the contract. Other important factors include whether the IC has the right to substitute someone else for the work, whether they are hired to deliver specific results, and how they are paid—whether it is a salary, hourly rate, or based on deliverables. Additionally, the tools used by the IC are examined: whether they use their own tools or if the client provides them. Lastly, whether the IC can choose the means and methodology to complete the work is also a crucial factor in determining their status.
Labor Leasing
A Worker Dispatch vendor is required to have a valid license issued by the government in order to legally operate and provide dispatch services.
Minimum Wage Requirements
In Tokyo, the minimum wage is 1,163 JPY per hour, effective October 1, 2024. Each region sets its own minimum wage.
Medical Benefits
Employees need to be enrolled in the mandatory social insurance system. The term social insurance includes health insurance and nursing care insurance, which covers medical and nursing care expenses incurred by workers.
Probationary Periods
The probationary period has no statutory limit, but 3-6 months is common.
Termination Notice
The employer must give the employee to be dismissed at least 30 days’ prior notice or make payment of the average wage in lieu of the notice.
Severance
None, but companies often establish a severance pay system through work rules, employment agreements, or collective agreements. These systems may stipulate that severance pay will be reduced or not paid at all if the employee is dismissed for serious disciplinary reasons. The amount of severance pay is typically based on factors such as the employee’s length of service and contributions to the company.
Pre-hire Checks
Employee background checks in Japan are legal but subject to strict regulations to protect individuals’ privacy rights under the APPI. Work authorization needs to be confirmed to ensure the employee has legal status to work in Japan.
Criminal record and background checks may be conducted, depending on the industry and the job role and are permitted with applicant’s consent and subject to relevant laws.
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