Japan offers companies many opportunities to expand or grow your business. Ensuring compliance for your workforce in Japan can be challenging, with labor and payroll regulation changes each year.
Labor and Payroll Considerations in Japan:
- Minimum wage can differ based on region – the national minimum wage is currently 874 JPY per hour, while minimum wage in Tokyo is 985 JPY
- Income tax and social security payroll contributions are withheld from the employee
- Most commonly, employee terminations are managed with a negotiated, voluntary resignation with salary, benefits, and severance pay provided by the employer
- Many types of foreign worker visas are available based on profession
- Visa applicants must have a job offer from a Japanese employer
- In early 2019, Japan passed new legislation to increase foreign worker visas. There is a new unskilled 5-year visa, and a skilled visa for those who pass a Japanese language exam
- Japanese labor law does not address the issue of sick leave, but any benefits are at the discretion of the employer. Japan does mandate minimum standards for paid leave as follows:
• Full-time employee: payment starts at 10 days per year (for an employee that has been working continuously for 6 months)
• Increases to 20 days per year (for an employee that has been working continuously for at least 6.5 years)
• Some companies provide a more generous paid leave benefit (especially firms in the financial services industry and IT industry). If an employee is unable to work due to extended illness (as certified by a doctor), and if the employee has exhausted their paid leave, they would be put on unpaid leave. In such case, they can apply for benefits (sickness allowance) via health insurance.
There are several withholding and reporting requirements for employers including National insurance and National inhabitant withholding, as well as statutory pension requirements and reporting. Year end reporting includes statutory payroll reporting, end of year income tax adjustments, and residence tax reporting each year (in June).
Companies have a variety of options to fund payroll. Blue Marble offers integrated money movement services, so you can fund payroll in USD and settle in the local currency without having a local bank account. If you have a local bank account you can directly pay employees (wire fees must be reimbursed to employees). If you do not have a local bank account, there are options for paying employees as well.
Blue Marble has simplified payroll and compliance with a cloud-based platform, aggregated monthly reporting, and integrated global solutions. View payroll in real-time across all countries and currencies to ensure compliance. Our unique, hybrid service model provides a dedicated US-based team and direct access to our in-country experts when questions come up. Simplify your payroll and compliance in Japan. Click here to learn more