Hiring in Japan? Yen moves; your cost moves with it.

Japan is one of the world’s most established and technologically advanced places to build a team, but getting your employment model wrong still carries real cost in time, money, and compliance. We help you choose the right way to hire, place you with the right partner, and stay alongside you for the life of the relationship.

  • Independent advice
  • Vetted partners
  • On your side at renewal

A great market to hire in. A multi-branch social insurance system underneath.

Japan is the world’s fourth-largest economy by nominal GDP, with deep advanced-manufacturing, automotive, and robotics strength and a highly skilled workforce, but employer costs run through four separate mandatory social-insurance branches, health, long-term care, welfare pension, and employment insurance, plus a fifth, employer-only branch for workplace accident cover, that a company used to a single combined payroll tax can easily get wrong.

01

The world’s fourth-largest economy, its own currency

A deep automotive, electronics, and robotics manufacturing base among the most advanced in the world, but Japan prices and pays salaries in its own yen (JPY), a freely floating currency, so exchange-rate movement against the EUR or USD is a real, ongoing part of your cost planning.

02

Health insurance priced by prefecture

A national Labour Standards Act enforced by the Ministry of Health, Labour and Welfare (MHLW), mandatory social insurance split across health insurance rated by Kyokai Kenpo per prefecture, kosei nenkin welfare pension, and employment insurance, and dismissal that requires objectively reasonable grounds under the Labour Contract Act rather than at-will termination, mean your employment structure has to be chosen with care.

03

Independent expert advice

Not sure whether you need EOR, payroll, or your own K.K.? We map your headcount, timeline, and risk profile and give you a clear recommendation, not a product pitch.

Four ways to hire in Japan. Pick once, pick right.

Most businesses arrive having already decided, and often decided too quickly. Here is the honest version of each route. When one fits, the detailed guide is one click away.

Employer of Record

An EOR partner becomes the legal employer of your Japan-based staff, handling the contract, payroll, statutory withholdings (national and local income tax, health insurance, kosei nenkin pension, employment insurance), and Labour Standards Act compliance, while you direct the work. Operational in days, no entity needed. Best for testing the market or hiring a small team.

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Global Payroll

For when you already have a Japanese entity, or want to consolidate payroll across several countries. You stay the legal employer; a specialist partner runs the monthly withholding, Kyokai Kenpo and kosei nenkin filings, and National Tax Agency remittances correctly.

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Entity Formation (K.K.)

Your own Japanese company, most commonly a Kabushiki Kaisha (K.K.), formed via notarised articles of incorporation and Legal Affairs Bureau registration. Full control and a local presence, but you carry a notary, registration, and ongoing filings. Right when the headcount and permanence justify it.

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PEO Services

A co-employment model alongside your own Japanese entity. True PEO co-employment is far less established in Japan than in the US, so for most companies EOR or managed payroll is the better fit. We will tell you honestly which one your situation calls for.

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Japan at a glance

Currency

Japanese yen (JPY). Salaries are set and paid in yen, Japan’s own freely floating currency; if your budget lives in EUR or USD, exchange movement quietly changes your real cost.

Minimum wage (2026)

Set prefecturally, not nationally: 47 separate rates revised each October. Tokyo, the highest, is JPY 1,226 per hour; the national weighted average is JPY 1,121; Okinawa, the lowest, is JPY 1,023. The rate that applies depends on where your employee is registered.

Employer costs

Not one line: employers pay 4.925% health insurance (Kyokai Kenpo’s Tokyo rate, reset every March and different in every prefecture), 9.15% kosei nenkin welfare pension, and 0.85% employment insurance, plus 0.81% kaigo long-term-care insurance for staff aged 40-64, and a fully employer-funded workers’ accident insurance premium set by industry, from 0.25% to 8.8% of payroll.

Leave & Notice

Japan is not at-will: dismissal requires objectively reasonable grounds under the Labour Contract Act, with a statutory minimum 30 days’ notice or pay in lieu under the Labour Standards Act. Paid annual leave starts at 10 days after six months’ continuous service and rises with tenure, on top of 16 national public holidays a year.

Hiring in Japan: quick answers

The questions we are asked most about hiring in Japan.

What is the fastest way to hire someone in Japan?

An Employer of Record. Your hire can start in days, with a compliant Japanese employment contract from day one and no entity to set up. It is the lowest-risk way to test the market or place a small team.

Do I need a Japanese entity to hire?

No. With an EOR you can employ people in Japan without your own company. You only need to incorporate when you are committing to a permanent, larger presence, and we will tell you honestly when that point arrives.

Four separate mandatory social-insurance branches (health insurance rated per prefecture, kosei nenkin welfare pension, employment insurance, and employer-only workers’ accident insurance), on top of national and local income tax layers, and dismissal that requires objectively reasonable grounds rather than at-will. None of it is a problem when handled correctly, which is the point of getting the model right at the start.

We are independent: we assess what you actually need, place you with the right vetted partner, secure pricing you will not get going direct, and stay on your side to escalate or renegotiate. You get advice, not a product pitch.

Let’s map your Japan hire.

Tell us who you want to hire and where you are headed in Japan. One conversation maps your options, flags the risks, and usually gets you to a better answer, and better pricing, than going direct. No pitch.

Tax and labour data verified July 2026 (Kyokai Kenpo, Japan Pension Service, MHLW, NTA). Figures change; we confirm the current position when we scope your hire.