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Hiring guidelines in Japan
- Pay & taxes
- Leave policy
- Termination
- Time-off
- Additional info
Pay & taxes
Leave policy
Termination
Time-off
Additional info
Minimum Wage Requirements
In Japan, the minimum wage is complex. The minimum hourly wage is set according to the region of the employee, and it can vary between ¥714 and ¥1023.
Individual Income Tax
The individual income tax ranges from 5% to 45%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates, such as household status and the number of children.
| Gross Annual Income | Tax Rate (%) |
|---|---|
| Up to JPY - 1.95 million | 5% |
| Up to JPY - 3.3 million | 10% |
| Up to JPY - 6.95 million | 20% |
| Up to JPY - 9 million | 23% |
| Up to JPY - 18 million | 33% |
| Up to JPY - 40 million | 40% |
| Over JPY - 40 million | 45% |
Payroll Cost
The employer cost is generally estimated at 16.67% of the employee salary.
- Health Insurance* - 5%
- Pension Insurance* - 9.15%
- Unemployment insurance - 0.95%
- Long Term Care insurance* (over 40 only) - 0.91%
- Workers Compensation Insurance - 0.30%
- Contributions to Childcare* - 0.36%
- Asbestos Contribution - 0.002%
Annual costs:
Annual Medical Check - JPY 45,000
*Health Insurance, Pension Insurance, Long Term Care insurance, and Contributions to Childcare are calculated on amounts determined by social insurance and based on the employee’s salary. Please note that social insurance also determines maximum salaries for these contributions, so percentages may vary.
Overtime Pay & Maximum Hours
Standard working hours are 8 hours per day, 40 hours per week. The standard work week is from Monday to Friday.
Overtime payment is only mandatory if the employee is not an exempt manager. For that case, overtime payment can’t be included in the salary. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 360 hours of overtime per year.
For additional hours, employees are paid at different rates according to different variables:
| Classification | Rate of increase |
|---|---|
| Work in excess of statutory working hours | 25% |
| Work in excess of statutory working hours exceeding 60 hours in a month | 50% |
| Work on statutory days off | 35% |
| Work late at night (between 10 p.m. and 5 a.m.) | 25% |
| Work late at night in excess of statutory working hours | 50% |
| Work late at night in excess of statutory working hours exceeding 60 hours in a month | 75% |
| Work late at night on statutory days off | 60% |