Japan – Employment Terms and Conditions

What are the standard working hours in Japan, and how is overtime regulated?

The legal foundation for working hours in Japan is the Labour Standards Act (LSA), which establishes the upper limit at 40 hours per week and 8 hours per day. Most workplaces follow a Monday-to-Friday schedule running from 9:00 AM to 6:00 PM, with a standard one-hour lunch break built into the day.

Under the LSA, employers must provide a rest break of at least 45 minutes when an employee’s shift exceeds six hours, rising to a full hour when the shift goes beyond eight hours. In addition, employees are entitled to at least one full rest day each week, or a minimum of four days off within any four-week period.

Any time worked beyond the standard eight-hour day or forty-hour week constitutes overtime, referred to in Japanese as zangyo. The LSA requires that employees receive a wage premium for such extra hours. Overtime of up to 60 hours per month must be compensated at no less than 125% of the employee’s ordinary hourly rate. Where monthly overtime exceeds 60 hours, the premium rises to at least 150%. Work performed on statutory holidays attracts a minimum premium of 135%, while late-night work — defined as any hours falling between 10 p.m. and 5 a.m. — carries a minimum supplement of 25% above the standard rate.

Before requiring employees to work overtime, an employer must have concluded a written overtime agreement with a majority representative of the workforce and submitted it to the relevant labour authority. This document is commonly referred to as a “36 Agreement,” drawing its name from Article 36 of the Labour Standards Act. It must be displayed prominently within the workplace or otherwise made readily accessible to all staff.

The Work Style Reform Act, enacted in 2018, introduced binding caps on overtime. Employers may not request more than 45 hours of overtime in any single month or more than 360 hours across a full year. Additionally, overtime in a single month must remain below 100 hours, and the average across any consecutive two-month window within a six-month period must not exceed 80 hours. Where monthly overtime surpasses 60 hours, the 150% premium rate applies to all hours beyond that threshold. Large companies were subject to this requirement from the outset; small and medium-sized enterprises became obligated to apply the same rate from April 2025.

Employees classified as managers or supervisors, and those handling confidential affairs, are generally excluded from overtime provisions under Article 41 of the Labour Standards Act. That said, they retain certain protections — notably the entitlement to late-night shift allowances when working after 10 p.m.

Some occupations — including construction workers, lorry drivers, and doctors — were granted transitional exemptions from the overtime caps until 31 March 2024, at which point the same upper limits that apply to other sectors came into force for these groups as well. The effect on the logistics industry in particular has been considerable and widely reported.

What employment rights and benefits are workers entitled to in Japan?

Workers in Japan are legally entitled to between 10 and 20 days of paid annual leave, with the precise entitlement determined by how long they have been continuously employed. An employee first qualifies for 10 days of annual leave after completing six months of uninterrupted service with the same employer. The entitlement increases progressively with each additional year worked, and employees may carry forward unused leave for up to two years. Employers who fail to meet the statutory minimum face fines of up to JPY 300,000 per affected employee.

Since April 2019, employers have been required to actively monitor how much paid leave their employees take, and must designate at least five days of leave each year for any employee holding an accrued balance of 10 or more days. This obligation was introduced in response to the well-documented tendency among Japanese workers to leave much of their annual leave unused despite being formally entitled to it.

There is no statutory right to sick leave in Japan, and companies are not legally obliged to maintain a dedicated sick leave policy. Employees frequently draw on their annual leave entitlement when unwell. The social insurance system does, however, provide a sickness benefit for employees who are unable to work from the fourth day of illness onwards, payable for up to 18 months. The benefit amounts to 60% of the insured employee’s standard monthly wage.

Pregnant employees are entitled by law to maternity leave commencing six weeks before the expected birth date — extended to 14 weeks before delivery in the case of multiple pregnancies — and continuing for eight weeks following childbirth. The employer is not obliged to pay wages during this period; income is instead typically replaced by maternity allowance from health insurance and, where applicable, a childbirth lump-sum grant, provided the employee is enrolled in the relevant insurance scheme. The maternity allowance equates to 67% of the employee’s usual wages.

Japan does not provide a statutory entitlement to paternity leave as such. However, a parental leave scheme exists which permits both parents to divide up to one year of leave between them. Parental leave payments are set at 67% of standard wages for the initial 180 days and 50% thereafter.

When terminating employment, the Labour Standards Act requires employers to give 30 days’ advance notice or to pay the equivalent of 30 days’ wages in lieu of notice. Japan observes 16 public holidays each year. All of these entitlements apply universally: the Labour Standards Act draws no distinction based on nationality, meaning foreign workers hold the same statutory rights as their Japanese colleagues.

What are the rules around minimum wage and pay in Japan?

Japan’s minimum wage structure operates across two dimensions: regional minimums, which vary by prefecture, and industry-specific minimums that apply to particular sectors and are generally set above the regional floor. Where both a regional and an industrial rate apply to the same worker, the higher of the two must be observed.

The national weighted average minimum wage currently stands at ¥1,121 per hour (as of October 2025). This figure represents a historic milestone: for the first time in Japanese history, all 47 prefectures have crossed the ¥1,000-per-hour threshold, the result of the largest single annual minimum wage increase since 1978.

The regional adjustments that took effect in October 2025 brought changes to all 47 prefectures. Tokyo recorded the highest rate at ¥1,226 per hour, followed closely by Kanagawa at ¥1,225 per hour. The three prefectures with the lowest rates — Kochi, Miyazaki, and Okinawa — each sit at ¥1,023 per hour.

It is the Ministry of Health, Labour and Welfare that determines the minimum wage each year, weighing factors such as economic performance, inflation trends, and recommendations put forward by the regional wage councils. All employers are required to align their pay practices with any resulting adjustments. Japan’s minimum wage cycle is tied to the fiscal year, which runs from April through March.

The Japanese government has announced a target of reaching a ¥1,500-per-hour minimum wage nationwide by the late 2020s. Given that rates are revised annually, always consult the Ministry of Health, Labour and Welfare website to confirm the most up-to-date figures.

Part-time employees are entitled to the same minimum wage protections as full-time workers; the law makes no provision for a reduced rate based on hours worked. Equally, foreign nationals employed in Japan are covered by the same minimum wage rules that apply to local workers, and must receive at least the applicable regional rate irrespective of their country of origin.

How does the employment contract system work in Japan?

Japan’s employment contract framework is anchored in the Labour Standards Act and the Labour Contract Act, which together define the rules governing how employment relationships are formed, managed, and ended. Understanding the different categories of employment is important for anyone entering the Japanese labour market.

Workers in Japan fall broadly into four classifications, and the category to which an employee belongs affects how their pay and rights are calculated. At the top of the hierarchy are regular employees — known as seishain — who hold permanent, open-ended positions and enjoy the greatest degree of legal protection, including the strongest safeguards against dismissal and access to the full range of statutory benefits.

The Work Style Reform Act introduced equal pay for equal work provisions that prohibit unjustified disparities in working conditions — covering base pay, bonuses, and other allowances — between permanent regular employees and those on fixed-term or irregular contracts. Both regular and non-regular employees have the right to request an explanation from their employer if they believe a discrepancy in their conditions is unwarranted.

When a labour contract is formed, the employer is legally required to clearly communicate to the employee the applicable wages, working hours, and any other conditions prescribed by Ordinance of the Ministry of Health, Labour and Welfare. These particulars must be disclosed in a manner specified by the relevant rules. Should the actual working conditions prove materially different from what was stated in the contract, the employee is entitled to terminate the agreement immediately.

Any employer with a regular workforce of ten or more people at a single location is required under the Labour Standards Act to draw up a formal set of work rules. These rules must address all matters that directly and materially bear on working conditions and must be filed with the competent Labour Standards Inspection Office.

Dismissal protections in Japan rank among the most robust in the developed world. Courts have repeatedly affirmed that dismissal is only lawful where there are “objectively reasonable grounds” and the decision is considered “socially appropriate” — a principle known as the doctrine of abusive dismissal. Trial periods, which normally span three to six months, are standard practice; the bar for dismissal is somewhat lower during this phase, although the employee retains virtually all other statutory rights. The Labour Standards Act requires 30 days’ notice of termination or a payment of 30 days’ wages in lieu. While Japan has no statutory severance pay obligation, many employers voluntarily provide separation payments as part of their employment offering.

Fixed-term contracts are widespread, particularly in manufacturing, education, and the services sector. An employee on a fixed-term contract who has been continuously employed for more than five years acquires a statutory right to request that their contract be converted to an indefinite-term arrangement — a rule designed to prevent the indefinite renewal of precarious short-term contracts. Expats should always request contract documentation in a language they can read, as a Japanese-only contract can create significant legal risk if misunderstood.

How does the workplace pension system work in Japan?

Japan’s public pension system is structured in two main tiers: the National Pension (Kokumin Nenkin), which provides a flat-rate basic benefit, and the Employees’ Pension Insurance (Kosei Nenkin), which delivers earnings-related benefits on top of that base. Together, these two layers form a compulsory state-administered foundation broadly comparable in structure to France’s contributory earnings-related pension model, though the administrative arrangements differ.

Regular employees are classified as Type 2 Insureds within the public pension system and are enrolled in the Employees’ Pension Insurance plan (Kosei Nenkin). Workers employed on shorter hours at larger companies have increasingly been drawn into this classification as well. Premiums under this scheme are calculated directly from the employee’s salary level, with employer enrolment procedures managing the administrative process. The cost is shared equally between employer and employee, each contributing 9.15% of the relevant salary amount as of 2025. This fifty-fifty split mirrors the structure seen in Germany’s statutory pension scheme (Rentenversicherung), where contribution costs are divided equally between the two parties.

Employers may also choose to offer supplementary private pension arrangements as an additional benefit. Once a business is established and has engaged any staff — including a company director — it is legally required to register for the national social and labour insurance programmes.

Beyond the public pension, a large number of Japanese companies operate a retirement or resignation allowance scheme. Traditionally structured as a lump-sum payment made when an employee leaves the organisation, eligibility conditions vary across employers, though a minimum period of approximately three years’ service is commonly required to qualify.

iDeCo (Individual Defined Contribution pension) and corporate defined contribution plans offer a compelling triple tax advantage: contributions are deducted from taxable income, investment growth accumulates free of tax, and there are tax breaks at the point of drawing benefits. This arguably makes them the most tax-efficient retirement savings vehicle available in Japan. Unlike the UK’s auto-enrolment workplace pension, participation in iDeCo is voluntary, yet it is open to both employed and self-employed residents. For authoritative guidance on the pension system, the Japan Pension Service website is the primary official resource.

What types of pension arrangements are available to expats in Japan?

All residents of Japan between the ages of 20 and 59 are legally required to enrol in the National Pension, and this obligation applies regardless of nationality. Foreign employees and students are no exception. Failure to register or to keep up with contributions can result in penalties, making compliance important even for those who anticipate a relatively short stay in the country.

The Employees’ Pension Insurance system is designed to provide financial security for employees and their dependants in the event of retirement, disability arising from illness or injury, or the death of an insured spouse. Participation is expected of every individual who meets the eligibility criteria, and nationality is not a factor in this assessment.

Expats who depart Japan before reaching pension age may be entitled to claim a lump-sum withdrawal of the contributions they have made. A minimum of six months of contributions is required to qualify, and refunds are calculated on the basis of up to three years of payments, with the amount varying according to the length of the contribution period and the average standard monthly remuneration. The refund reflects the contributions made, and a 20% withholding tax applies to the payment, though a portion may be recoverable.

Before departing Japan, it is advisable to inform the pension office of the upcoming move. Once you have left the country and your residential registration has been cancelled, you may submit the Lump-Sum Withdrawal Application to the Japan Pension Service. The documentation required includes your pension number, a copy of your passport, and details of an overseas bank account to receive the payment.

Japan has concluded bilateral social security agreements with a number of countries — including the United States, the United Kingdom, Germany, South Korea, Australia, and others — that can enable contribution periods in Japan and the partner country to be aggregated for eligibility purposes and can eliminate the problem of paying into two systems simultaneously. You should always verify whether your home country has a current agreement in place with Japan, and consult the Japan Pension Service or a qualified financial adviser for the latest information, as both the list of partner countries and the terms of individual agreements are subject to change. Voluntary savings vehicles such as iDeCo and NISA can complement public pension entitlements and may offer greater flexibility for expats who expect to relocate again in the future.

What is the retirement age in Japan, and how does the pension eligibility system work?

It is standard practice for Japanese companies to set a mandatory retirement age of either 60 or 65, and this is lawful — it is not treated as unlawful age discrimination under Japanese employment law. State pension payments, however, generally do not commence until the age of 65, creating a potential income gap of several years between the end of a salary and the beginning of pension receipts for those who retire at 60.

To qualify for the Old-Age Basic Pension, a participant must reach the age of 65 and must have been covered under the National Pension system for a minimum of 10 years in total. In addition to the retirement benefit, the system provides a Disability Basic Pension for those who acquire a qualifying level of disability, and a Survivor’s Basic Pension payable to the family of an insured person who dies while contributing to the scheme.

The full basic pension, payable to someone with a complete 40-year contribution record, amounts to approximately ¥795,000 per year. Those with fewer years of contributions receive a proportionally smaller amount. There is no official difference in the pension age between men and women or between most occupational groups, though specific sector rules and early pension provisions can introduce variation. Given that the Japanese government has been actively considering measures to encourage later retirement in response to demographic pressures, it is worth checking the Japan Pension Service and the Ministry of Health, Labour and Welfare for the most current policy position as of 2025.

Data from the Ministry of Internal Affairs and Communications indicates that 50.8% of people aged 65–69 remained in employment as of 2022. Many continue working beyond their company’s retirement age in contract or part-time capacities, driven partly by the income gap between leaving full employment and the start of pension payments, and partly by the relatively modest level of the basic state pension itself.

What taxes and social contributions are deducted from wages in Japan?

It often comes as a surprise to workers receiving their first Japanese payslip to find that the amount actually credited to their account is noticeably lower than the gross figure stated in their contract. This is because salaries in Japan are quoted before deductions, and both tax and social insurance contributions are withheld before the net amount is paid. These deductions are compulsory and affect Japanese nationals and foreign workers alike.

Japan levies income tax on a progressive basis, meaning that higher earners pay a larger proportion of their income in tax. At the upper end, those earning more than ¥40 million annually are subject to a top marginal national income tax rate of 45%. On top of national income tax, residents are also liable for local inhabitant tax (juminzei), which is set at approximately 10%, as well as a Special Reconstruction Income Tax of 2.1% applied to national income tax liability. The latter was introduced as a post-disaster recovery measure and is scheduled to remain in place through 2037.

Japan operates five categories of social and labour insurance: health insurance, pension insurance, nursing care insurance (which applies to employees aged 40 and above), workmen’s compensation insurance, and employment insurance. Tax is deducted at source under a Pay As You Earn (PAYE) arrangement, with the employer responsible for withholding the correct amount each month — a system consistent with the approach taken in France, Germany, and many other countries. For most employees with a single employer, this means there is no requirement to file a separate annual tax return.

After all mandatory deductions have been applied, the majority of workers receive approximately 70–75% of their gross salary as take-home pay. Foreign employees may also be eligible, depending on their home country, for relief under a tax treaty that reduces the amount of income tax withheld. Expats who hold “non-permanent resident” status — broadly defined as those who have spent fewer than five of the past ten years in Japan — are generally taxed only on income that either originates in Japan or is remitted to Japan from abroad.

For authoritative guidance on tax matters, the National Tax Agency (NTA) of Japan is the official reference point. The tax position of foreign workers can be particularly complex, especially for those on secondment arrangements or with income derived from more than one country, and professional advice is strongly recommended in such cases.

What are the rules around trade unions and collective bargaining in Japan?

Every worker in Japan — including foreign nationals — has the legal right to join a trade union. The Trade Union Act enshrines the rights to organise collectively, to bargain with employers, and to take industrial action, with no restrictions based on the nationality of those involved.

Two principal union models operate in Japan: enterprise unions, which are formed within individual companies, and broader industrial or general unions. Enterprise unions are by far the more prevalent form and tend to focus their negotiations on terms specific to a single employer. General unions, which are often more willing to recruit part-time and foreign workers, operate in most major urban centres and frequently offer services in more than one language.

In 2024, the annual wage negotiation season — known as Shunto, or the spring offensive — produced outcomes showing that more than 3,200 companies intended to raise wages by 5.2%, the highest rate of increase seen in 33 years. This momentum carried into 2025, with wage growth of around 5% widely anticipated. These figures suggest that collective bargaining continues to carry real weight in determining pay levels, particularly among larger employers.

Where a collective agreement has been reached between an employer and a recognised union, its provisions generally extend to all employees in the relevant workplace or category — not solely to union members. Non-members may therefore benefit from pay rises or improved conditions negotiated on their behalf. Union membership has been declining across Japan as a whole, but remains comparatively high in manufacturing, transport, and the public sector. Expats working in these areas should establish whether a collective agreement covers their role and, if so, what it provides.

Are there any particular employment protections or challenges that expats should be aware of in Japan?

The core labour legislation that protects workers in Japan — principally the Labour Standards Act and the Labour Contract Act — applies to foreign nationals and domestic employees on equal terms. Nevertheless, expats regularly encounter practical difficulties that their Japanese counterparts are less likely to face.

Language barriers in contracts. Employment contracts, company work rules, and collective agreements are almost universally issued in Japanese, and there is no legal requirement for employers to provide translations. Before signing any contract, expats should arrange for an independent translation and, where possible, have the document reviewed by a lawyer with expertise in Japanese employment law.

Visa-tied employment restrictions. The majority of work visas in Japan are linked to a specific employer or a defined category of work. If employment ends — for any reason — the holder’s immigration status may be placed at risk, and there is typically a limited period in which to secure a new employer or apply for a change of status. The Immigration Services Agency of Japan is the official body for enquiries relating to visa and residence status.

Recognition of overseas qualifications. Japan has no universal mechanism for recognising professional qualifications obtained abroad. The extent to which foreign credentials are accepted varies greatly by field: regulated professions such as medicine, law, and accountancy require Japanese licensing regardless of what qualifications a candidate holds internationally, whereas roles in information technology or engineering may accept overseas experience without any formal recognition process. It is essential to investigate the licensing requirements specific to your profession before making the move.

The equal pay for equal work provisions introduced under the Work Style Reform Act are of particular relevance to expats, who are often offered fixed-term rather than open-ended contracts. Unjustified differences in base pay, bonuses, or allowances between permanent employees and those on fixed-term or irregular arrangements are prohibited. Some visa categories may also create barriers to accessing company-provided housing or commuting allowances — benefits that can form a significant portion of total compensation at many Japanese employers.

Known common issues. A frequently reported concern among expats is unpaid overtime, which may not always be accurately recorded in company systems. Workers who believe their rights have been breached can lodge a formal complaint with the Labour Standards Inspection Office. Assistance is also available from general trade unions and from consultation services operated by the Ministry of Health, Labour and Welfare, some of which are offered in languages other than Japanese.

Frequently Asked Questions

Are my foreign professional qualifications recognised in Japan?

Japan does not operate a centralised recognition framework for qualifications obtained abroad. Whether and how foreign credentials are accepted depends entirely on the profession in question and the relevant regulatory authority. In licensed fields such as medicine, dentistry, nursing, or law, overseas-trained professionals will generally need to obtain a Japanese licence — a process that typically involves language requirements and formal examinations. In less tightly regulated areas such as technology or international business, foreign qualifications are usually assessed at the employer’s discretion. Before relocating, research the specific requirements that apply to your profession by contacting the appropriate Japanese regulatory body.

Can I claim back my pension contributions if I leave Japan?

A lump-sum withdrawal refund is available to those who have made at least six months of pension contributions, with the refund covering up to three years of payments. The application must be submitted after you have left Japan and cancelled your residential registration, and is directed to the Japan Pension Service. A withholding tax of 20% is deducted from the payment, though a portion may be recoverable. If your home country has a bilateral social security agreement with Japan, it may be financially more advantageous to aggregate your contribution periods across both countries rather than claiming a withdrawal. Seek advice from the Japan Pension Service or a qualified financial adviser to determine the most suitable course of action for your circumstances.

What happens to my employment rights if my visa status changes during employment?

Your fundamental employment rights under the Labour Standards Act remain intact regardless of any change in your visa status. However, a shift in immigration status — particularly where your work visa is tied to your current employer — can have practical implications for your right to continue working legally. If you move to a new employer or a different type of role, confirm that the work is permitted under your updated visa category. Should you resign or be dismissed while on a work visa, you are required to notify the Immigration Services Agency within 14 days. Seek prompt legal guidance to avoid inadvertently breaching your visa conditions.

Does Japan have social security agreements with other countries that affect pension contributions?

Yes. Japan has bilateral social security agreements in force with a number of countries, including the United States, the United Kingdom, Germany, France, South Korea, and Australia, among others. These agreements are intended to prevent workers from being required to contribute simultaneously to pension systems in two countries, and in many cases allow contribution periods in both countries to be counted together when assessing eligibility for benefits. The list of countries with which Japan has agreements, and the specific terms attached to each, can change over time. Verify the current position with the Japan Pension Service or with the social security authority in your home country.

Is it true there is no statutory sick pay in Japan?

That is correct — Japan does not provide a statutory entitlement to sick pay. The social insurance system does, however, pay a sickness benefit to employees who are unable to work from the fourth day of illness, for a maximum period of 18 months. This benefit is set at 60% of the insured employee’s standard monthly wage. Some employers supplement this with their own company sick leave policies, which may provide more generous terms; it is worth enquiring about this before accepting a job offer.

Are part-time and fixed-term workers entitled to the same basic rights as permanent employees?

Japan’s equal pay for equal work rules, introduced through the Work Style Reform Act, prohibit unjustified disparities in working conditions — including base salary, bonus payments, and allowances — between permanent employees and those employed on fixed-term or irregular contracts. Part-time workers are entitled to the same minimum wage as full-time employees, and the law makes no provision for a lower rate based on hours worked. Fixed-term employees who have been continuously employed for more than five years are also entitled to request conversion of their contract to an indefinite-term arrangement.

How do I report a workplace rights violation in Japan?

If you believe your rights under the Labour Standards Act have been breached — for example through unpaid overtime, unlawful dismissal, or failure to pay wages — you can submit a complaint to the Labour Standards Inspection Office (Rodo Kijun Kantokkusho) with jurisdiction over your workplace. These offices form part of the network administered by the Ministry of Health, Labour and Welfare. General trade unions also commonly provide free initial consultations, often in multiple languages, for workers facing difficulties. Further information on accessing these resources is available through the Ministry of Health, Labour and Welfare.

What deductions should I expect to see on my Japanese payslip?

Five categories of social and labour insurance contributions appear on a Japanese payslip: health insurance, pension insurance, nursing care insurance (which applies once you turn 40), workmen’s compensation insurance, and employment insurance. National income tax is withheld at source each month, and local inhabitant tax is also deducted via payroll, typically beginning from the year following your first full year of residency. In total, these deductions mean that most workers receive approximately 70–75% of their gross salary as net pay. The precise amounts depend on factors including your salary level, age, prefecture of employment, and insurance category. The National Tax Agency publishes official tax rate tables and guidance for reference.