Postcard Series: Employing a worker in Japan

Capital GES created this series to help businesses that are considering expansion and hiring international staff.

In this postcard series, members of our sales and business development team provide helpful tips on international employment. The latest country, Japan, will be covered by our very own Crispian Lye, VP Business Development.

As the third-largest market in the world, following the US and China, Japan should be a top priority on your expansion list. Known for its mature market, stable economy, and innovative industries, Japan offers international companies a chance to develop and grow their services in a unique market. Japan focuses primarily on technology and automobiles and is a leading centre of innovation in both.

However, expanding your business to Japan is not without its challenges. In fact, Japan is considered difficult to establish an international business, which is why it’s vital to have local help when expanding. Below, Crispian discusses the three most common questions asked by clients regarding employment in Japan.

About Employment in Japan

The first thing to know about employment in Japan is that Japanese labour laws provide a high level of protection to regular employees. Once hired, the employer’s right to dismiss a regular employee is severely restricted.

1. Contracts

Can I trial a worker using a fixed-term employment contract, as I am not sure whether it will work out in the long-term?

It is possible to use a fixed-term contract; however, it’s important to understand the new rules regarding contracts in Japan.

In 2019, an amendment to the Labour Contracts Act on employment contracts came into effect. Japanese employees on a fixed-term contract are now entitled to convert to an open-ended contract, following five years of continuous employment with the same employer.

Japan’s desire to limit fixed-term contracts reflect the employment regulation trends in the region. So, in order to stay compliant, I suggest discussing your options with a local partner before offering the position to the worker.

2. Termination Rules and Costs

What do I need to know about termination and severance pay in Japan?

Japan is famous for its lifetime employment system and the law here is very protective of employees. As a result, termination in Japan is complex. There is no concept of ‘at-will’ employment in Japan. The employer must have valid reasons for terminating an employee in Japan. Therefore, it’s vital to speak to a local expert about these matters before attempting anything.

30-Day Notice Period

When it comes to giving notice, employers must give 30 days’ notice of dismissal or provide payment of base salary in lieu of notice. An employee must give 30 days’ notice of resignation.

3. Statutory Employee Benefits

What are the statutory employee benefits in Japan?

Paid Holiday Leave

Employees are entitled to a minimum of 10 days paid leave per annum, following six months of employment. Annual paid leave rises to 20 days after six-and-a-half years of service. On top of that, there are 15 days of public holidays in Japan every year.

Sick Leave

In general, there are no sick leave rights in Japan. When employees get sick, they use their paid vacation to take leave of absence.

Maternity Leave

Maternity leave includes a period of six weeks prenatal and eight weeks post-birth in Japan. During maternity leave, the employee salary will be covered by the social insurance, up to a limit of approximately 2/3 of the mother’s regular salary.

Child Care Leave

Paid child care leave applies to both male and female employees. It starts from the day after the maternity leave ends and extends to the day before the child reaches the age of one. If both parents take parental leave, the leave can be extended. During parental leave, payment will be 50% of the worker’s salary and covered by labour insurance.

How Capital GES Can Help You Expand in Japan 

If you are a business that is looking to expand internationally and employ workers in Japan, Capital GES can help. To establish what services you require, contact Crispian CLye@Capital-GES.com or phone +65 9049 5224.

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