Hiring in Japan

Japan has some of the strongest employee protections in the world, built primarily on the Labor Standards Act (LSA, 1947) and the Labor Contract Act (2007). The LSA sets baseline rules for working hours, wages, leave, and safety that apply to nearly all workers. What makes Japan stand out is the 'doctrine of abusive dismissal,' a court-developed principle now codified in Article 16 of the Labor Contract Act. Employers cannot terminate an employee unless they have objectively reasonable grounds and the dismissal is considered appropriate by general social norms. In practice, this means firing someone in Japan is extremely difficult, and courts regularly side with employees in wrongful dismissal claims. Most employers negotiate mutual separation agreements and offer settlement packages rather than risk litigation.

For notice periods, Article 20 of the LSA requires at least 30 days of advance notice before termination. Employers can pay 30 days of average wages in lieu of notice, or combine partial notice with partial payment. There is no statutory severance requirement in Japan, but the vast majority of companies pay voluntary severance (taishokukin) based on years of service, often ranging from 1 to 3 months of salary per year worked. Many companies maintain formal severance calculation tables. For employees with 20+ years of tenure, total severance packages can reach 30-50 months of salary.

Japan uses a tiered paid annual leave system under Article 39 of the LSA. Employees who have worked continuously for 6 months with at least 80%% attendance earn 10 days of paid leave. This increases by 1-2 days per year up to a maximum of 20 days after 6.5 years. Employers are legally required to ensure employees take at least 5 days per year (a 2019 amendment). Japan has 16 national holidays (as of 2026). Overtime is governed by Article 36 of the LSA, which requires employers to sign a '36 Agreement' (saburoku kyotei) with the employee representative before any overtime can be assigned. The 2019 Work Style Reform caps overtime at 45 hours per month and 360 hours per year as a general rule, with temporary exceptions allowing up to 100 hours in a single month and 720 hours per year for special circumstances. Overtime pay is 125%% of the base rate for standard overtime, 135%% for work on rest days, and 150%% for late-night overtime (10pm-5am). Overtime exceeding 60 hours per month must be paid at 150%%.

Payroll contributions in Japan are split between employer and employee across several programs. Health insurance (shakai hoken) runs about 4.9-5.0%% each for employer and employee (rates vary by prefecture and insurer). The Employees' Pension Insurance (kosei nenkin) is 9.15%% each, split evenly at a combined 18.3%%. Employment insurance (koyo hoken) costs employers about 0.95%% and employees 0.6%% (rates for general industry as of recent schedules). Workers' compensation (rosai hoken) is fully employer-paid and ranges from 0.25%% to 8.8%% depending on the industry, with most office-based roles at 0.3%%. There is also a children's contribution surcharge of about 0.36%% paid only by employers. Total employer-side payroll costs typically add 15-17%% on top of gross salary.

Parental leave in Japan is generous on paper. Mothers get 6 weeks of pre-birth leave and 8 weeks of post-birth leave (maternity leave under the LSA), paid at roughly 67%% of salary through health insurance. Childcare leave (ikuji kyugyo) is available to both parents for up to 1 year after birth, extendable to 2 years if daycare is unavailable. During childcare leave, employment insurance pays 67%% of salary for the first 180 days, then 50%% after that. A 2022 reform introduced 'postnatal paternity leave' (sango papa ikukyu), giving fathers up to 4 weeks of leave within 8 weeks of birth, paid at 67%%. Japan has been actively pushing to increase male uptake of parental leave, with a 2023 target of 50%% and disclosure requirements for large companies.