Employ Candidates Compliantly in Japan

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  1. Overview: Japan
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Contractor vs. employee: which is better?
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Global HR Compliance in Japan

If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Japan Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market of Japan and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Japan as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Japan instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Japan .

We are experts in global workforce employment in Japan, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Japan.

See Hiring and Firing Workforce in Japan Guide below for a general overview of labor rules and regulations in the country. Or contact us if you need to employ workers in Japan or would like to get more details.

Hiring and Firing Workforce in Japan Guide

The fact that Japan opens a gateway to Asian huge markets, and is ranked among the leading industrial powers in the world makes it a really enticing site for businessmen who want to extend their operations particularly to Asian market. Japan business environment is highly sophisticated, has a well-developed business friendly infrastructure, and provides good conditions for living. Despite these good factors, research shows that many foreign companies still find it difficult to start up their business in Japan mainly due to how complex its business culture is. To help you Overcome this challenge Acumen International has developed an express global EOR solution that will help you actualize your dreams of penetrating the Japan market in a cost-effective, timely, compliant and risk-free fashion.

Below are some facts you need to know about operating business in Japan.

# Employment contracts

Employers are not legally bound to issue a written contract to their employee. Instead, it is mandatory for them to provide their newly employed with a written statement that explicitly states the job description, employment duration, place and hours of work, remuneration, terms of termination, possibility of and conditions for contract renewal (in the case of fixed-term contract). This statement or the actual contract can be written in any language other than Japanese, provided it is a language understood by the both parties engaging in the contract.

Supplementing a contract and or working condition statement are “work rules” set by the employer, and a “collective agreement”, established by the employer and the trade union. Throughout an employment period, the employer is obligated to set and submit to the relevant inspecting authority, the rules and regulations that will guide the employment.

Theoretically, fixed-term contract should have a three years’ maximum duration. This duration can be stretched into 5 years consecutively and no further. If after the 5 five years, the employer wishes to extend the contract further, the employee has the right to refuse or request for a change of contract to an undetermined-term contract.

# Minimum (Statutory) Employment Rights:

# Hours of work:
The maximum hours an employee is legally permitted to work a day is 8 hours, and a week – 40 hours. The law permits 44 hours in some particular cases.

# Probationary period:
Employment trial period almost always ranges between three to six months and can be extended as far as one year if necessary.
Even during or at the end of the probationary period, an employee can be terminated only if the termination is objectively reasonable and socially acceptable. Although, this test is somewhat easier to meet for probationary employees, it may still be difficult to justify the termination.

# Annual leave
Entitlement to paid holidays starts to take effect from the sixth month of an employment period and the minimum number of days increases as the period of an employee’s services increase in the company. An employee’s minimum number of paid holidays based on his/her length of service is as follows: 6 Months – 10 days, 18 Months – 11 days, 30 Months – 12 days, 42 Months – 14 days, 54 Months – 16 days, 66 Months – 18 days, 78 Months – 20 days. An employee is required to use up his/her paid vacation within the first 2 years that is was given.

# Parental leave
A female employee who is expecting a baby is eligible for 6 weeks paid leave before the baby is born and 8 weeks after the child is born.
An employee raising a child of up to one year old (or one and a half under some conditions) is eligible to take childcare leave until the child reaches one (18 months in special cases). Childcare leave must be taken at once and not as several short leave periods. Employees can also take family care leave for up to 93 days. These leave periods are generally unpaid.

# Sick leave
Unless specially specified in the contract, an employer is not obligated to give his/her employees any sick leave benefits. Rather than that, a sick employee is expected to use part of his/her paid vacation as a sick leave.

# Overtime
The extent to which employees work overtime is alarming. For example, research shows that a huge number of people work more than 60 hours a week. This, in fact, has led to an unplanned death of many employees. To bring to an end this incidence, the relevant authority has enacted a 15 hours’ overtime limit a week, 45 hours limit a month and 120 hours’ limit in months. Within the space of two or three weeks, an employee cannot be allowed to work more than 27 hours or 43 hours. It is important to note that these restrictions have not entirely stop workers from working extra times (against the standard). At any rate, employees are entitled to at least 125% of their hourly wage. There are numerous types of overtime allowances such as overtime on a rest day, late-night overtime on a rest day, and overtime in excess of 60 hours per month that can increase the allowance to up to 175% of the employee’s salary. ‘Managers’ do not receive overtime allowances but are entitled to late-night work allowances.

# State minimum salary
Payment for a job done is mostly made on a monthly basis and in the local currency. The amount of salary to any kind of employee is usually agreed upon prior the employment, however, it must not be less than 848 JPY / hour – the minimum wage.

# Employment termination

Terminations in Japan can be exceedingly difficult. An employee can be dismissed only if the employer has objectively reasonable grounds to do so and the dismissal would not be considered unreasonable in general societal terms. Poor performance or misconduct that justifies termination in other countries often does not warrant it in Japan. A termination that is not justified will be deemed an abuse of the employer’s termination rights. Such a termination is a nullity and the employee will be reinstated with back pay if the employee seeks such relief. The grounds for dismissal should be stated in the company’s work rules and/or employment contract. However, even if an action is stated to be a ground for termination in the work rules and/or employment contract, such a provision will not be enforceable if a court deems it too harsh. Due to the difficulty in justifying a termination, many employers offer severance agreements and pay some consideration in exchange for the employee’s voluntary resignation and waiver of claims against the employer. Employers must give at least 30 days’ notice of dismissal or provide payment in lieu of notice.

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