PEO Services in Japan

A co-employment model for companies that want to share the employer relationship in Japan rather than hand it over entirely. Worth knowing up front: true PEO co-employment is far less established in Japan than in the US, so we will tell you honestly whether PEO or an EOR genuinely fits, and place you with the right vetted partner.

  • Independent advice
  • Vetted partners
  • Honest positioning

What a PEO does in Japan

A Professional Employer Organisation works on a co-employment model. You and the PEO partner share the legal employer responsibilities for your Japanese staff: you keep direction and day-to-day control, while the partner administers payroll, income tax, social insurance, and HR compliance under a shared arrangement.

01

Shared employer role

You and the PEO partner share the legal employer responsibilities. You keep direction and control; they handle payroll, income tax, social insurance, and HR administration.

02

More direct control

PEO suits companies that want to retain more direct control of the employment relationship than a full EOR arrangement allows. In Japan, true co-employment is uncommon, so EOR is usually the better fit.

03

Honest recommendation

For most businesses hiring in Japan, EOR is simpler. We will work with you and advise if the PEO model fits your structure or if EOR would suit you better.

How PEO works in Japan, step by step

From assessing the fit to a compliant co-employment arrangement.

01 — Assess the fit

We map your structure, headcount, and how much control you want to keep, and tell you honestly whether PEO or EOR serves you better. No product push.

02 — Set up co-employment

If PEO fits, we place you with a vetted Japanese partner and structure the shared employer arrangement correctly.

03 — Onboard your people

Compliant Japanese employment terms under the Rodo Kijun Ho (Labour Standards Act), with the administrative employer functions handled by the partner.

04 — Payroll & compliance

Income tax, social insurance, and statutory filings handled monthly, while you keep day-to-day direction.

What PEO in Japan costs

As with EOR, two parts: the statutory cost of employment (split across Japan’s five separate social insurance branches, one of them prefecture-varying) and the partner service fee.

Employer social insurance

Kyokai Kenpo (Japan Health Insurance Association) health insurance at Tokyo’s FY2026 employer rate of 4.925%, kaigo long-term care insurance at 0.81% for over-40s, kosei nenkin welfare pension at 9.15%, and employment insurance, all administered under the shared employer arrangement, and all four still revised on Japan’s own schedule regardless of who runs payroll.

Minimum wage (2026)

Set prefecturally, not nationally, and revised every October: JPY 1,226/hour in Tokyo against JPY 1,023/hour in Okinawa for the 2025 round. You pay the rate where the employee is registered, and a PEO client tracks that shift the same as an EOR client does.

Income tax (employee)

A national progressive schedule from 5% to 45%, plus a 2.1% reconstruction surtax and a roughly 10% local inhabitant tax set by the employee’s own municipality, withheld at source as part of the shared payroll administration.

PEO partner fee

A service fee for the co-employment administration. Under a shared employer arrangement, Japan’s five insurance branches and its prefecture-specific health-insurance rates still have to be tracked and administered correctly by someone. We benchmark across our vetted network, typically 15 to 25% below going direct.

Why arrange it through Bradford Jacobs

Why companies arrange Japanese PEO through us rather than going direct to a single provider.

We tell you if PEO fits your needs

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.

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

Pricing you can’t get direct

A PEO quote in Japan has to price co-employment across five separate insurance branches, with Kyokai Kenpo health insurance set differently in every one of the 47 prefectures depending on where your staff are registered, which is hard to benchmark on your own from outside the market. We benchmark across our vetted PEO network for rates typically 15 to 25% below going direct, and renegotiate on your behalf at renewal.

  • Five insurance branches
  • Prefecture-specific rates
  • Exposure mapped upfront

Straight to the top when it matters

When something needs resolving, and in global employment it sometimes does, you come to us. We escalate directly, past the helpdesk, to people who can actually move it.

  • Direct escalation
  • No support queues
  • Named account contact

We keep you clear of Japan’s dismissal traps

Japan’s Rodo Keiyaku Ho (Labour Contract Act) makes dismissal void unless it rests on objectively reasonable grounds and is socially appropriate; courts routinely reinstate employees dismissed on performance alone without a documented improvement process first. Two decades of placements across global markets means we structure your co-employment exits correctly the first time, not after a claim is filed.

  • Reasonable-grounds standard
  • Exits structured correctly
  • Two decades of placements

We flex as your structure changes

PEO, EOR, and your own entity sit on a spectrum, and the right point shifts as you grow. We advise on the path and manage the moves, EOR to PEO, or either to your own Japanese Kabushiki Kaisha (K.K.), as your Japan presence develops.

  • EOR, PEO or entity
  • Transitions managed
  • Right fit as you grow

What a PEO in Japan still leaves you exposed to

Whichever model you use, the underlying Japanese rules are the same. Under EOR, the partner absorbs the employer-side statutory stack outright; under PEO, you and the partner share it, and Japan’s stack has genuinely more moving parts than most.

Insurance branches & rate changes

Kyokai Kenpo health insurance is priced per prefecture and revised every March (Tokyo’s employer share falls to 4.925% for FY2026); kaigo care insurance rises to 0.81% for over-40s from the same date, with a new 0.23% child-support levy layered on from April 2026. Kosei nenkin welfare pension and employment insurance carry their own separate rates and caps on top. Keeping pace with all of that every March and April is still partly on you under PEO; under EOR, it isn’t.

Statutory protections & exits

Statutory notice, probation, and the protections Japanese employees carry under the Labour Contract Act, since dismissal is only lawful when it rests on objectively reasonable grounds and is socially appropriate, all handled under the shared arrangement. The value is the same as with EOR: the compliance is handled by people who do it daily. The difference is simply how much of the employer role you keep.

What a PEO arrangement covers

The co-employment administration covers all of this, under one transparent fee.

Compliant contract

A compliant Japanese employment contract under the Labour Standards Act, issued and maintained for you.

Payroll & filings

Monthly payroll run, with income tax, social insurance, and local inhabitant tax calculated, withheld, and filed each month.

Statutory benefits

All statutory benefits administered: annual paid leave, sick-leave allowance, childcare leave, notice and severance.

Compliance & support

Ongoing HR compliance and a single point of contact, for the life of the engagement.

Your questions answered

Straight answers on how PEO co-employment works in Japan.

What is the difference between PEO and EOR in Japan?

With an EOR, the partner is the sole legal employer of your Japanese staff. With a PEO, you and the partner share the employer relationship, you keep more direct control, they handle the administration. In Japan, true co-employment is uncommon, so EOR is the usual route; PEO suits specific structures.

For most businesses, EOR is simpler and faster, especially with no Japanese entity. PEO fits when you want to share rather than outsource the employer role, or have a structure that calls for it. We assess your situation and recommend honestly.

It depends on the structure. Some co-employment arrangements assume or work alongside your own Japanese entity. If you have no entity and want none, EOR is usually the cleaner route. We will confirm which applies to you.

The administrative employer functions, payroll, income tax, social insurance across all five branches, statutory benefits, and statutory filings, are handled by the partner. We make sure the arrangement is structured so responsibilities are clear and Japanese law is met.

The statutory employer cost (five social insurance branches, priced differently by prefecture for health insurance) plus a partner service fee for the co-employment administration. We benchmark across our network for pricing typically 15 to 25% below going direct.

Yes. These models sit on a spectrum and the right one changes as you grow. We advise on the path and manage transitions, EOR to PEO, or either to your own Japanese K.K., as your Japan presence develops.

Not sure whether PEO or EOR is right for Japan?

Tell us your structure and headcount and we will give you an honest recommendation, usually within a day, plus pricing you will not get direct. No product push, just the right fit.

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