Currency
Japanese Yen (JPY)
EOR IN Japan
The easiest way to Hire and Manage in Japan
Swivelt will take care of payroll, benefits, taxes, compliance, making it easier than ever to expand and manage your team in Japan
GET STARTED
EXPAND YOUR BUSINESS IN Asia - Pacific
A guide to employing and growing your team in Japan
Fast and compliant market entry. Hire top local talent without the need for a legal entity
Japan is one of the world’s largest and most advanced economies, widely recognized for its leadership in technology, automotive manufacturing, robotics, and innovation. With a GDP exceeding $5 trillion and a workforce of nearly 69 million, Japan maintains a highly skilled, professional talent pool with a median age of around 49 years. Japan combines a rich cultural heritage with a modern, business-friendly environment characterized by low unemployment and strong global connectivity. The country’s labor framework is governed by the Labor Standards Act and the Japanese Civil Code, both of which establish comprehensive protections for employees and regulate employment relationships.
Employees benefit from strong anti-discrimination protections across age, religion, sexual orientation, gender expression, and race. In Japan, minimum wage differs by Province. As of October 3, 2025, the minimum wage in Tokyo, Japan will be 1,226 JPY gross per hour.
Employer Contributions
Pension Contribution: 9.15%
Health Insurance: 4.99% (5.79% if 40 years or older)
Unemployment Insurance: 0.6%
Work Injury Insurance: 0.25% – 8.8%
Family Allowance: ~0.36%
Total Employer Contribution: ~15.35% – 23.9%
Employee Payroll Taxes
Pension Contribution: 9.15%
Health Insurance: 4.99% (5.79% if 40 years or older)
Unemployment Insurance: 0.3%
Total Employee Contribution: 14.44% – 15.24%
Employee Income Tax Rates
Up to ¥1.95M ($17,629.67): 5%
¥1.95M – ¥3.3M ($17,629.67 – $29,834.82): 10%
¥3.3M – ¥6.95M ($29,834.82 – $59,579.24): 20%
¥6.95M – ¥9M ($59,579.24 – $81,367.70): 23%
¥9M – ¥18M ($81,367.70 – $162,735.41): 33%
¥18M – ¥40M ($162,735.41 – $361,634.24): 40%
Above ¥40M ($361,634.24+): 45%
Statutory Leave
Employees are entitled to paid annual leave based on tenure, starting after 6 months of employment: 10 days (6 months), 11 days (1.5 years), 12 days (2.5 years), 14 days (3.5 years), 16 days (4.5 years), 18 days (5.5 years), and up to 20 days after 6.5 years of service. Employees can carry forward unused leave for up to two years. Japan has 16 public holidays annually, and while paid leave on these days is not legally mandatory, it is widely practiced.
Pregnancy and Maternity Leave
Female employees are entitled to 14 weeks of maternity leave, beginning up to 6 weeks before childbirth and continuing for 8 weeks after. This leave is compensated at approximately two-thirds of the employee’s salary, paid through the labor insurance system.
Paternity Leave
Eligible male employees can take parental leave (commonly referred to as paternity leave) for up to 12 months, provided they have completed at least one year of service.
Work-Related Injury Leave
Parental Leave
Both parents are entitled to parental leave until the child turns one year old (or up to one year and two months if both parents take leave). During this period, they receive tax-exempt benefits equivalent to approximately two-thirds of their normal wages, funded by the government labor insurance system.
Other Leave
Employees are entitled to additional leave types including bereavement leave (2-5 days depending on relationship), up to 3 months of unpaid hospitalization or caregiving leave annually, unpaid menstrual leave upon request, and unpaid civil duty leave for responsibilities such as voting or jury service.
Termination Process
Termination of employment in Japan is strictly regulated and can be challenging for employers, as dismissals must be justified with valid reasons and follow due process. Employees have the right to dispute termination, and in practice, employers often provide severance packages (commonly around one month’s salary per year of service) to reach mutual agreement.
Notice Period
Employers are required to provide at least 30 days’ advance notice before termination or compensate the employee in lieu of notice.
Probation Period
Probation periods are not strictly defined by law and typically range from 1 to 12 months, depending on the employer and role.