Recruit and Hire Employees

There are significant risks involved if you plan labor-related matters based on your home country's practice.
We will explain topics including how to hire employees during the start-up phase, Japan's payroll taxes and social security system,
working conditions, and required documents to be provided to the government.

*Please be noted that the following explanation is based on the assumption that the form of the business is a joint stock company (Kabushiki Kaisha, aka KK: 株式会社) or a limited liability company (Godo Kaisha, aka GK: 合同会社).

How to hire employees

Once you establish an office in Japan, you should consider hiring employees. The following are possible ways to recruit employees in Japan.

Direct recruitment through personal connections or the company website
Recruitment at public employment security offices (公共職業安定所 aka ハローワーク)
Use of newspapers, magazines, and online recruitment media
Free job placement conducted by colleges and universities or public organizations
Fee-charging job placement undertaken by private companies

Suppose you are looking for employees with appropriate work experience and language skills. In that case, it may be more reliable and efficient to use fee-based job placement services provided by private firms, but the placement fees may be substantial. In addition, there is a particular risk of incurring high costs to hire employees whose continued employability is uncertain.

Agency workers

To secure a workforce, you may choose to use agency workers (派遣労働者) who are dispatched by staffing agencies. Unlike hiring employees directly, companies are not required to complete social insurance procedures or withhold income taxes when using agency workers. You do not have to perform complicated premium wage calculations for late-night overtime work, etc.

In addition, since they are not subject to labor law restrictions regarding dismissal, you can easily adjust the headcount. Using agency workers can be especially effective during the start-up period and when you don't have full-scale administrative functions.

Employment contract

When hiring an employee, you must sign an employment contract in which the following terms should be clarified in writing:

Working conditions that should be clarified

i) Duration of the labor contract (including renewal criteria in the case of fixed-term contracts)

ii) Place of employment and assigned duties

iii) Working hours, breaks, holidays, and vacations

iv) Wages

v) Retirement and resignation

The Labor Standards Law (労働基準法) and other laws regulate working conditions. It is necessary to stipulate the working conditions to meet those regulatory requirements. In addition, when ten or more workers are employed regularly, you must prepare the employment handbook (就業規則) and notify the Labor Standards Inspection Office (労働基準監督署).

Overview of the social insurance system and registration procedures

All residents in Japan are required to join a particular social insurance system administered by the Japanese government. There are four types of social insurance systems that employees are required to participate.

When a Japanese entity hires an employee, it must complete the enrollment procedures for these insurances as an entity. In addition, each time an employee joins or leaves the entity or applies for insurance benefits, the entity must complete the social insurance procedures for the employee.

Employment-related registration with the local government

When you hire employees in Japan, you must complete the registrations regarding employment. The main items are as follows:

1) Registration with the local branch of the Japan Pension Service (年金事務所) for enrollment in social insurance, i.e., pension and health insurance

If you have one or more directors or employees who meet the requirements for social insurance, you must enroll in the social insurance program.

2) Registration with the Labor Standards Inspection Office (労働基準監督署) for enrollment for workers’ accident insurance

If you employ one or more employees (excluding directors and contractors), you must join the workers' accident insurance (労災保険).

In addition, you must report and pay the estimated premium of labor insurance (労働保険), meaning workers' accident insurance and unemployment insurance (雇用保険), for the first fiscal year ending March 31st. Labor insurance premiums are calculated for one year, beginning on April 1st and ending on March 31st.

3) Registration with the Public Employment Security Office (公共職業安定所) for enrollment of unemployment insurance.

If you employ one or more employees who meet the requirements for enrollment in unemployment insurance, you must enroll in unemployment insurance. To enroll in unemployment insurance, you must complete the workers' accident insurance enrollment with the Labor Standards Inspection Office, as explained above.

All registration procedures can be completed on paper (by mail or in person) or electronically. To file electronically, you must do some preparation in advance.

Notifications that must be submitted annually or each time an event occurs

Social insurance involves various procedures that employers must complete each time employees enter or leave the entity or at specified due dates. Although the details differ for each social insurance system, you should be required to take action for the following cases:

1) Changes related to employees

Notification is required when an employee joins, resigns, deceases, or changes his or her working condition and thus becomes eligible or ineligible for social insurance. In addition, benefits may be provided when an employee takes a leave of absence due to injury, illness, childbirth, nursing care, etc. You must complete the necessary procedures to make it possible for employees to receive such benefits.

*The health insurance card issued through the company will be discontinued in December 2024, and it is scheduled to transition to the My Number Card integrated with the health insurance card, known as the "Maina" insurance card.

2) Procedures for calculating insurance premiums

For workers' accident and unemployment insurance, the employer is responsible for calculating and paying insurance premiums between June 1st and July 1st of every year. For health insurance, long-term care insurance, and employees' pension, the premium calculation procedures for all eligible employees are conducted on July 10th every year. In addition, notification is required whenever there is a significant salary revision or when bonuses are paid.

3) Procedures related to the entity

Notification is required under each system in the event of entity relocation, change of entity name, change of representative, etc. In addition, labor-management agreements must be notified under the Labor Standards Law, and you should be aware of those, as failure to do so may be subject to penalties.

←PREVIOUS STEP

6STEPS

Here we explain each task divided into six steps

Make a Business Plan

Determine the Corporate Structure

Register the Business

Open a Bank Account

Address Taxation