Hiring in Japan: Complete Guide 2027
Everything you need to know about hiring and managing employees in Japan
Overview
Japan is the world's fourth-largest economy and a market where staff stay: voluntary turnover is low and tenure long. The price of that stability is a dismissal regime built on case law, where a termination needs objectively reasonable and socially acceptable grounds and a negotiated resignation is the usual exit. Employer on-costs run 15.5–17% of standard remuneration across health, pension, employment and accident insurance, lower than most of Europe. For a foreign company, an EOR avoids a kabushiki kaisha, a Tokyo bank account and Japanese-language filings on day one.
Currency
Primary Language
Payroll Tax
Pay Frequency
Overview
Employer Costs
Employer Social Contributions
Mandatory Benefits
EOR Service Fee
Total Additional Cost
Employee Deductions
Income Tax
Employee Social Contributions
Mandatory Employee Benefits
PAYROLL & SETUP
Setting Up Payroll in Japan
Japanese payroll is monthly, usually on the 25th, in JPY. The employer enrols staff with the Japan Pension Service, Hello Work and the Labour Standards Inspection Office. Employer shares in FY2026 at the Tokyo rate (each prefecture sets its own): health 4.925% (9.85% split in half), long-term care 0.81% for staff aged 40 to 64, pension 9.15% on standard remuneration capped at JPY 650,000 a month, employment insurance 0.85%, workers' accident 0.3% for offices, child-rearing 0.36% and, new in FY2026, the child and childcare support levy of 0.23% split like health insurance. That is 15.5–16% in all under 40 and 16.5–17% from 40 to 64; the employee side is 14.5–15.5%. Income tax is withheld monthly and settled in December; the 10% inhabitant tax is collected from June. Minimum wage is set per prefecture: JPY 1,226 an hour in Tokyo from October 2025, national average JPY 1,121. An EOR files all of it, plus the Rules of Employment.
Key Labor Laws &
Requirements
Employment Contracts
- Written statement of working conditions at hiring
- Probation (shiyo kikan) of 3–6 months
- Rules of Employment mandatory from 10 staff
Leave & Time Off
- 10 days paid leave after 6 months, 20 after 6.5 years
- Employer must ensure 5 days are taken each year
- Maternity 14 weeks at two thirds via health insurance
Termination Rules
- 30 days' notice or pay in lieu
- Dismissal needs objectively reasonable grounds
- Negotiated resignation packages are the usual route
COMPLIANCE
Dismissal and the 36 Agreement in Japan
Japan has no at-will employment. Article 16 of the Labour Contract Act voids any dismissal that lacks objectively reasonable grounds and social acceptability, and courts read it strictly: poor performance alone rarely qualifies. Statutory notice is 30 days or pay in lieu, but most separations are negotiated resignations with a package of three to six months. Working time is 40 hours a week; any overtime needs a 36 Agreement signed with an employee representative and filed with the Labour Standards Inspection Office, with premiums of 25% and 50% above 60 hours a month. From 10 employees, Rules of Employment are mandatory and filed. An EOR drafts and files all three documents and runs the separation talks.
Key Challenges
- Dismissal needs objectively reasonable grounds (Labour Contract Act art. 16)
- Overtime requires a filed 36 Agreement; 25% premium, 50% above 60 hours a month
- Rules of Employment mandatory from 10 staff, filed with the Labour Standards Inspection Office
- Twice-yearly bonuses are customary and expected in offers
- Contracts, payslips and filings in Japanese
Country Highlights
Advantages
- World's fourth-largest economy and deep engineering talent
- Very low voluntary turnover and long tenure
- Employer on-costs of 15.5–17%, below most of Europe
- Strong IP protection and contract enforcement
- Reliable infrastructure and a stable regulatory framework
Popular Industries & Roles
Technology
Avg. Salary: ¥6M-¥12M
Tokyo and Osaka hold deep software, embedded systems and robotics talent, with English-speaking engineers concentrated in product companies
Financial Services
Avg. Salary: ¥7M-¥15M
Tokyo is Asia's second financial centre, with deep banking, asset management and insurance expertise
Manufacturing & Automotive
Avg. Salary: ¥5M-¥9M
Automotive, electronics and precision machinery give Japan one of the world's deepest pools of manufacturing and quality engineers
Top 3 Providers in Japan
Based on our analysis of pricing, compliance record, service quality, and customer reviews
EOS Global Expansion
- Asia-Pacific EOR founded Tokyo 2010
- 15-year Japan EOR track record
- 27+ direct countries post-Hightekers
- B2B white-label for competing EORs
Deel
- EOR in 130+ countries; owned entities in 120+
- Contractor and EOR in one platform
- 300+ integrations including Slack, Workday
- AI-powered compliance automation
G-P (Globalization Partners)
- Enterprise EOR across 180+ countries
- Compliance-first with owned entities
- ISO 27001, SOC 1 and SOC 2 Type II certified
- 4,000+ clients; founded 2012
Frequently asked questions
Hiring in Japan through an EOR, in short.
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How much does an employer pay on top of salary in Japan?
Employer contributions in Japan come to ≈15.5–17%; the largest mandatory line is Pension 9.15%. With the other statutory benefits and a typical EOR fee, budget ~30–40% on top of gross salary.
What does an EOR charge per employee in Japan?
Published EOR fees in Japan run $600–900/mo per employee per month, with any setup fee negotiated separately. The fee is flat, so it weighs less as the salary rises.
What does an employee in Japan pay in tax and contributions?
Income tax is 5–45% progressive and employee social contributions are ≈14.5–15.5% (9.15% pension), both withheld by the employer on every pay run.
How long does it take to hire through an EOR in Japan?
3-7 Days once the employee's documents are in. The contract is issued by the EOR's local entity and payroll runs on the local cycle (Monthly).
Which EOR providers rank best in Japan?
EOS Global Expansion, Deel and G-P (Globalization Partners) hold the first three places in our ranking for hiring in Japan. The full top 10, with the questions to put to each provider before signing, is here: Top 10 EOR providers in Japan.
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