Doing Business in Japan

Human resources

Human resource system in Japan

In order to work in Japan, a labor contract need to be concluded which defines a variety of working conditions between employers and workers, based on the labor-related laws and regulations.

A labor contract

As a general rule, as long as he/she works in Japan, labor-related laws and regulations of Japan(including the Labor Standards Law, Minimum Wage Act, the Industrial Safety and Health Law, Workers' Compensation Insurance Act, such as the Employment Security Act), is applied him/her regardless of nationality.
Upon conclusion of the labor contract, an employer needs to present, for the workers, working conditions (such as wages and working hours, holidays, vacation, retirement and dismissal) which must be explicit in writing.

1. Wage
Wage must be paid in currency with the exception of cases where there is a provision in the laws, regulations and labor agreements.
It must be paid directly to the employee.
An employer must pay the full amount. However, it can be deducted only to those determined by the tax and social insurance premiums or labor-management agreement.
Wages, other than those of the extraordinary, such as bonuses, must be paid to the fixed day at least once a month. An employer needs to pay the minimum wage or more of wages stipulated by the minimum wage law.
(Reference: the minimum wage in Tokyo since October 1, 2014, is 888 yen/hour)
2. Working hours, holidays and vacation
As a general rule, legal working time of one week is 40 hours, and is of one day is 8 hours. Every week at least one holiday, or four or more days of holiday through 4 weeks must be given.
In order to let to work the overtime beyond the legal working hours or to attendance in holiday, labor and management must conclude the "Agreement on the labor overtime and holidays", which needs to be filed at the Labor Standards Inspection Office.
Employer needs to pay wages of more than percent premium rate of 25 If the employer let the labor workers to work overtime late at night (from 22:00 until 5:00 the next morning) and pay wages of more than percent premium rate of 35 If the employer let the labor workers to work in holidays.
Employer needs to give a paid leave of 10 working days to workers who continuously worked for 6 months and more than 80% of all working days from the hiring date
3. Retirement and dismissal
If there is a fixed term in labor contract, as a rule, if the period expires, the contract will be terminated and the employee will retire. However, employee cannot retire as a general rule unless there is a compelling reason during the contract period.
If there is not a fixed term in labor contract, as a rule, unless otherwise specified in the rules of employment, the contract will end after two weeks after workers offer of retirement. A dismissal is to terminate the labor contract with intent of an employer, but the dismissal right is strictly regulated in Japan.
If dismissal, objectively lacks a rational reason, and is not fair and reasonable on the conventional wisdom, it has been disabled as an abuses its rights.
If an employer tries to lay off workers, the employer needs to give notice at least 30 days in advance. However, if the employer did not notice 30 days in advance, the employer needs to pay a dismissal notice allowance of above-average wages of 30 days.

In Japan, social insurance system, such as health insurance and pension insurance, employment insurance and workers' compensation insurance is fully equipped