Payroll and Benefits Guide Japan
Last updated: Mar 03, 2026
Contribution
|
Employer Payroll Contributions
|
|
|
9.15%
|
Pension (applied on salary up to 650,000 JPY per month)
|
| 4.955% to 4.925% |
Health Insurance (applied on salary up to 1,390,000 JPY per month). Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65 (generally 1.57%).
|
| 795% to 0.81% |
Nursing Care Insurance (applied on salary up to 1,390,000 JPY per month)
|
| 0.90% to 0.85% |
Employment Insurance
|
|
0.204% – 8.8%
|
Work Injury
|
|
0.36%
|
Child-rearing Contribution (子ども・子育て拠出金), paid by employers only on wages subject to Employees’ Pension Insurance (standard remuneration up to 650,000 JPY). |
|
00% to 0.115% |
NEW: Childcare Support Contribution |
|
16.5% – 26.63%
|
Total Employment Cost
|
|
Employee Payroll Contributions
|
|
|
9.15%
|
Pension
|
|
00% to 0.115% |
NEW: Childcare Support Contribution |
| 4.955% to 4.925% |
Health Insurance (applied on salary up to 1,390,000 JPY per month). Each region has its own health insurance rate, and rates are slightly higher for individuals between the ages of 40 and 65.
|
| 0.55% to 0.50% |
Employment Insurance
|
| 0.795% to 0.81% |
Nursing Care Insurance (applied on salary up to 1,390,000 JPY per month)
|
|
15.54%
|
Total Employee Cost
|
|
Income Tax
|
|
|
5.00%
|
Up to 1.95M JPY
|
|
10.00%
|
1.95M – 3.3M JPY
|
|
20.00%
|
3.3M – 6.95M JPY
|
|
23.00%
|
6.95M – 9M JPY
|
|
33.00%
|
9M – 18M JPY
|
|
40.00%
|
18M – 40M JPY
|
|
45.00%
|
Over 40M JPY
|
|
10.00%
|
Local inhabitant’s tax is generally 10% of taxable income (4% prefectural + 6% municipal), calculated based on the prior year’s income, plus a small per-capita flat amount. |
|
20.42% (flat rate)
|
Non-residents’ Japan-source employment income is generally subject to 20.42% withholding tax on gross compensation (20% national income tax + 2.1% reconstruction surtax), with no basic deductions. Local inhabitant tax (around 10%) is normally imposed only if the individual is a resident of a municipality as of January 1 of that year. |
Employer taxes
Employee taxes
Minimum Wage
General
The regional minimum wage in Japan is set by each prefecture. As of the latest revision for FY2025 (Reiwa 7), hourly minimum wages range from ¥1,023 (lowest prefectures) to ¥1,226 (Tokyo).
Amongst the major locations, the minimum wages are set at:
-
Aichi: ¥1,140 per hour
-
Chiba: ¥1,140 per hour
-
Kanagawa: ¥1,225 per hour
-
Osaka: ¥1,177 per hour
-
Saitama: ¥1,141 per hour
-
Tokyo: ¥1,226 per hour
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Japan is generally monthly.
13th Salary
In Japan, it is customary to pay a “13th month,” or even “14th month” salary as a summer bonus paid in June and as a winter bonus paid in December. However, more international companies today are adopting a straightforward 12 month pay period setup.
Authority Payments
|
Authority Payment |
Due Date |
Method |
|
Tokyo Tax Office |
Monthly; 10th of next month |
Pay-easy |
|
Local Ward Office |
Monthly; 10th of next month |
E-banking (local payment) |
|
Pension Office |
Monthly; last day of next month |
Pay-easy (local payment) |
|
Tokyo Labor Bureau |
Annually; 31st August (once a year). Normally the payment deadline is on July 10th |
Pay-easy (local payment) |
Working Hours
General
The standard working hours in Japan are 8 hours per day, 40 hours per week.
Overtime
-
Maximum Ordinary Hours: The standard work limit is 8 hours per day and 40 hours per week (LSA, Article 32).
-
Overtime Agreement: To legally mandate overtime, the employer and the employees (or their representative/union) must conclude a Labour-Management Agreement (the “36 Agreement”), which must then be submitted to the Labour Standards Inspection Office.
-
Legal Overtime Cap (LSA Reform): Overtime is strictly capped, in principle, at:
-
45 hours per month; and
-
360 hours per year.
-
Note: Even with a “special circumstances” clause, total overtime is legally capped at 100 hours per month (including rest days) and 720 hours per year.
-
Mandatory Overtime Pay Rates (LSA, Article 37)
The LSA sets minimum premium rates, which escalate based on the total overtime hours worked.
| Day/Condition | Minimum Premium Rate (Applied to Base Hourly Wage) | Total Pay Rate | Notes |
| Normal Overtime (Mon-Fri, up to 60 hrs/month) | +25% | 125% | For work exceeding 8 hours/day or 40 hours/week. |
| Heavy Overtime (Exceeding 60 hours/month) | +50% | 150% | Mandatory payment. Small to medium-sized enterprises (SMEs) were granted a grace period, but the 50% rate is now widely applicable. |
| Statutory Rest Days (Typically Sunday) | +35% | 135% | Applies to a designated statutory rest day (one per week or four per four weeks). |
| Night Work (10:00 PM to 5:00 AM) | +25% | 125% | Applies in addition to other overtime/rest day premiums. |
Example of Combined Rate: Overtime work that exceeds 60 hours in a month and is performed late at night (10 PM – 5 AM) must be compensated at a minimum of 75% premium (50% for heavy overtime + 25% for night work) for a total of 175% of the regular wage.
Time & Attendance
Employers are legally required to manage and keep records of working hours (for example, timecards, electronic systems, etc.) so they can demonstrate compliance with statutory working hours, overtime, and rest requirements; there is no obligation to use any particular system or provider.
Leave
Annual Leave (vacation)
Paid leave in Japan is set in the employment contract as dependent upon the years of employment. This paid leave is in addition to any public holidays.
- Employees with up to six months of service are entitled to 10 days of paid leave
- Employees with up to one and a half years of service are entitled to 11 days of paid leave
- Employees with up to two and a half years of services are entitled to 12 days of paid leave
- Employees with up to three and a half years of services are entitled to 14 days of paid leave
- Employees with up to four and a half years of services are entitled to 16 days of paid leave
- Employees with up to five and a half years of services are entitled to 18 days of paid leave
- Employees with up to six and a half years of services are entitled to 20 days of paid leave
PTO carryover
In Japan, statutory paid leave automatically carries over and expires after 2 years from the date it’s granted. Employers cannot forfeit or delete accrued leave before that legal expiration — a blanket “use-it-or-lose-it” policy is not lawful.
Note:
- For EOS, unused annual leave can be carried over to the next year. However, it expires after two years.
- For GoGlobal, PTO carryover is allowed
Public Holidays
They are 16 public holidays in Japan. While there are no legal requirements to pay for public holidays, it is common to grant those days as paid days off.
If a national holiday falls on a Sunday, the next working day will become a public holiday. In addition, companies are usually closed from December 29th to January 3rd.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 12 January 2026 | Monday | Coming of Age Day | Standard holiday |
| 11 February 2026 | Wednesday | National Foundation Day | Standard holiday |
| 23 February 2026 | Monday | The Emperor’s Birthday | Standard holiday |
| 20 March 2026 | Friday | Vernal Equinox Day | Standard holiday |
| 29 April 2026 | Wednesday | Shōwa Day | Standard holiday |
| 3 May 2026 | Sunday | Constitution Memorial Day | Standard holiday |
| 4 May 2026 | Monday | Greenery Day | Standard holiday |
| 5 May 2026 | Tuesday | Children’s Day | Standard holiday |
| 6 May 2026 | Wednesday | Constitution Memorial Day Holiday | |
| 20 July 2026 | Monday | Marine Day | Standard holiday |
| 11 August 2026 | Tuesday | Mountain Day | Standard holiday |
| 21 September 2026 | Monday | Respect for the Aged Day | Standard holiday |
| 22 September 2026 | Tuesday | Citizen’s Holiday | |
| 23 September 2026 | Wednesday | Autumnal Equinox Day | Standard holiday |
| 12 October 2026 | Monday | Sports Day | Standard holiday |
| 3 November 2026 | Tuesday | Culture Day | Standard holiday |
| 23 November 2026 | Monday | Labor Thanksgiving Day | Standard holiday |
Sick Days
Sick leave is not mandatory. Some companies may introduce their own sick leave policies, and employees often use their holiday to cover sick leave or claim social insurance.
Maternity Leave
Female employees are entitled by law to maternity leave of 6 weeks before the expected due date (14 weeks for multiple births) and 8 weeks after childbirth. The law does not require the employer to pay salary during this leave; instead, income is usually replaced by maternity allowance from health insurance and/or childbirth lump-sum grants, provided the employee is insured.
The Childbirth and Childcare Lump-sum Grant is generally 500,000 JPY per child for births on or after 1 April 2023 (slightly lower only in limited cases such as certain non-participating facilities or very early births).
Employees enrolled in Employees’ Health Insurance are generally eligible for a maternity allowance of about two-thirds of their standard daily wage for 42 days before birth (98 days for multiple births) and 56 days after birth.
Paternity Leave
Fathers are entitled to childcare leave (育児休業) under the Act on Childcare Leave/Caregiver Leave. This leave itself is unpaid by default, but fathers who meet eligibility requirements can receive Childcare Leave Benefits from employment insurance (generally 67% of their wage for the initial period, then 50%), instead of salary. Employers may voluntarily top up pay by contract or work rules.
Male employees are entitled to four weeks’ leave, in one or two installments, within eight weeks after birth (Childcare at Birth Leave). Benefits will be payable by Social Security at the same rate as maternity leave (67% of covered pay). This new Childcare at Birth Leave is in addition to the existing government-paid childcare leave entitlements for both parents, which may also now be taken in one or two separate installments (previously only one).
Childcare Leave
Childcare leave can be taken by the mother or the father and starts from the day after the maternity leave ends. Labor insurance covers childcare leave, and an employee can take childcare leave until the child is one year old. If both parents take childcare leave, the leave is then extended to when the child is one year and two months old.
Companies with 1,000 or more employees are required to publicly disclose annually the rate at which their staff take childcare leave.
Other Leave
Bereavement leave (number of days by relationship) is not set by national law. Typical company work rules often grant around 3–5 days for close relatives and fewer days for other relatives, sometimes with extra days if the employee is in charge of arrangements, but the exact number of days is company policy, not a statutory entitlement.
In addition, when the employee is the person in charge of funeral arrangements, they can request an additional two days’ leave.
Under the Act on Childcare Leave/Caregiver Leave, employees can take family care leave (介護休業) for up to 93 days per family member in total. Employers are not required to pay salary during this leave, but eligible workers can receive caregiver leave benefits from employment insurance.
Employees with a child under three years old have certain rights. If they ask to be excused from unscheduled work, they should not be required to work beyond their regular hours. If they wish to adopt a reduced working hour system, their request should be granted. Furthermore, if an employee has a preschool-aged child and asks to be excused from unscheduled work, they should not be required to work more than 24 hours of overtime in a month or 150 hours in a year.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
Termination in Japan is highly complex and in practice dismissals are often reached by mutual agreement of the parties. Termination is only valid if it is objectively reasonable and valid reasons include serious breach of duty, clear performance failure (with documentary evidence), structural redundancy or violation of clear internal policies.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages must be paid at least once a month on a fixed date. | Under the Labour Standards Act, when an employee leaves employment and requests payment, the employer must pay all wages due within 7 days of that request, except in limited cases (e.g., savings-type components). | Wages must be paid in currency directly to the worker (not via a third party) and in full. Payment via bank transfer is permitted if the employee provides the account, but there is no blanket mandate that all payments must go to a bank account. |
Notice Period
After the first 14 days of employment, the law requires 30 days’ notice or pay in lieu unless there is proven serious misconduct. Although a contract may stipulate one month notice, the company must still have due cause to terminate.
Severance Pay
There are no statutory requirements for severance payments in Japan. Given the severe limitations on the employer’s right to terminate an employee, most employees are offered a severance payment in exchange for a waiver and voluntary resignation. Typically, employers resolve such cases with 2–4-months’ salary. However, this figure is on a case-by-case basis depending on seniority, tenure, and reasonableness of the worker.
Probation Period
The probation period in Japan for permanent employees is generally between 3 and 6 months.
Minimal Statutory Termination Costs
Since paid holidays are granted for the purpose of refreshing the mind and body of workers, buying out unused paid holidays (PTO) is illegal in principle in Japan. However, buying out when an employee leaves is customarily done. Other benefits such as commuting allowance, retirement bonuses, or prorated bonuses must be paid if stipulated in the employment contract or company policy. If not specified, they are not automatically owed.
Notice Period:
After the first 14 days of employment, the law requires 30 days’ notice or pay in lieu, even during probation—unless there is proven serious misconduct. Termination without this can be legally challenged.
Disclaimer: There is no statutory severance, but courts may expect 2–4 months’ pay in redundancy or unfair dismissal cases. Most companies offer severance under a mutual agreement to mitigate legal risk.
Setting Up a Business
Setting up a legal entity
Setting up a business involves registering a place of business. It is recommended to appoint a local accountant and lawyer to assist the set up.
Registration requires the following information:
- Name and address of every incorporator
- Amount of investment from each of incorporator
- Name of the company
- Registration address
- Purpose of the business
- Directors (can be a non-resident)
- Auditors (if needed）
- Representative director
- Capital
- Unit of investment
- Fiscal year
- The first fiscal year
Once an office opens and employs anyone including a Director, the entity is legally obliged to register for National Social and Labour Insurance programs. Japan has five types of social and labour insurances: Health Insurance, Pension, Nursing Care (applicable for employees over the age of 40 only) Workman’s Compensation and Employment Insurance. Setting up of a subsidiary can take time, and can be costly, as each part can take from a few days to several weeks. Companies cannot hire employees until all paperwork is completed and processes followed (office, bank account etc). Japan operates a PAYE scheme with an employer obligation to deduct tax from salary
A new business must submit a “Notification on the establishment of a salary paying office” form within one month of establishing a new office or commencing activities that involve paying salaries. A business must also submit a “Notification on the Relocation/Closure of a salary paying office” form within one month of ceasing business, ceasing to have employees, or relocating the premises.
Japanese payroll input is done in Japanese language (kanji and katakana plus hiragana), the English language is not used very often in Japan (Japanese students are now choosing Chinese as their second language).
Employment rights are often driven by Union Agreements. Employers should provide contracts of employment (Labour Contracts) to all employees and must be in written form
Additional information is available here
Registration as an employer
Japan operates a PAYE scheme with an employer obligation to deduct tax from salary
A new business must submit a “Notification on the establishment of a salary paying office” form within one month of establishing a new office or commencing activities that involve paying salaries. A business must also submit a “Notification on the Relocation/Closure of a salary paying office” form within one month of ceasing business, ceasing to have employees, or relocating the premises.
Japanese payroll input is done in Japanese language (kanji and katakana plus hiragana), the English language is not used very often in Japan (Japanese students are now choosing Chinese as their second language).
Employment rights are often driven by Union Agreements. Employers should provide contracts of employment (Labour Contracts) to all employees in writing.
New Employee Registration
Once you have one employee you need to provide social insurance covering health, pension, unemployment, and workers’ accident compensation insurances.
To provide social insurance, you need to run a Japanese payroll which requires tax withholding, social insurance, and insurance payments
Payments for tax withholding and social insurance need to be paid from a domestic Japanese bank account. Bank accounts must be owned by either an individual who is resident in Japan or by a Japanese company
New starters should provide the following:
- Copy of Passport
- Signed Contract
- Work Permit
- Attached Registration Form
- Registration Card
- My Number Card
Employers are required to register new starters with:
- Notification of start of cover for Workers Accident Compensation Insurance and Employment Insurance, is sent to local Public Employment Security Office within 10 days of commencing employment
- Notification of cover for Health Insurance & Employees’ pension insurance to be sent to the local Pension office within 5 days of start of employment
- Application of Local Tax Collection (if applicable) collect taxes
- Many insurances also cover dependents
Immigration
Before arriving in Japan, foreign nationals who want to work in Japan need a work visa from their local Japanese embassy or consulate. There are many different statutes for residence visas allowing the holder to only work in the specified industry.
It is expected that a university degree or extensive professional experience in the specialist field is needed to qualify for a working visa, which usually requires an employer to sponsor.
All foreign workers need an ‘Individual Number’ for administrative procedures for social security, taxation, and disaster response.
VAT
General
The standard consumption tax rate is 10%, and a reduced rate of 8% applies to certain items such as food and non-luxury beverages and newspaper subscriptions delivered under subscription contracts.
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Questions & Answers
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Payroll and Benefits Guide
in Japan
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 12 January 2026 | Monday | Coming of Age Day | Standard holiday |
| 11 February 2026 | Wednesday | National Foundation Day | Standard holiday |
| 23 February 2026 | Monday | The Emperor’s Birthday | Standard holiday |
| 20 March 2026 | Friday | Vernal Equinox Day | Standard holiday |
| 29 April 2026 | Wednesday | Shōwa Day | Standard holiday |
| 3 May 2026 | Sunday | Constitution Memorial Day | Standard holiday |
| 4 May 2026 | Monday | Greenery Day | Standard holiday |
| 5 May 2026 | Tuesday | Children’s Day | Standard holiday |
| 6 May 2026 | Wednesday | Constitution Memorial Day Holiday | |
| 20 July 2026 | Monday | Marine Day | Standard holiday |
| 11 August 2026 | Tuesday | Mountain Day | Standard holiday |
| 21 September 2026 | Monday | Respect for the Aged Day | Standard holiday |
| 22 September 2026 | Tuesday | Citizen’s Holiday | |
| 23 September 2026 | Wednesday | Autumnal Equinox Day | Standard holiday |
| 12 October 2026 | Monday | Sports Day | Standard holiday |
| 3 November 2026 | Tuesday | Culture Day | Standard holiday |
| 23 November 2026 | Monday | Labor Thanksgiving Day | Standard holiday |
What are the rules regarding unpaid wages after an employee has left the job?
When an employee leaves the job, they are entitled to receive unpaid wages within 7 days of request for payment, even if this is before the set payday.
What is the most common pension plan?
All employees are covered by the government pension plan (EE/ER both contribute 9.15%), and therefore most companies do not offer anything above or beyond this. Companies can choose to offer private pension plans as well as an added benefit.
How is a variable bonus for example performance bonus taxed in Japan when it is paid once a year
In Japan, bonus and commission are two different distinct classifications of payments with different treatments. A bonus requires a separate calculation from normal payroll and is done using a different (higher) tax table from the monthly salary (see attached). In order to be classed as a bonus, installments should be paid only up to 3 times payments within a year (no more) as when it’s paid out 4 times or more the payments will be treated as a part of the monthly salary (the same as “commissions”) from a compliance perspective. For this reason, it’s important that from the contract stage, it’s defined if payments will be “bonus” or “commission”.
Additional social insurance calculation is required based on the amount of the bonus. Note that a one-off bonus won’t affect future health insurance monthly payments in the same way that commission payments may.
How to calculate Bonus:
(Example)
The previous month’s salary: 260,000JPY
The previous month’s social insurance: 12,000JPY
Bonus: 500,000JPY
Number of dependents: 2 people
1. 260,000 – 12,000 = 248,000
2. Look at the bonus tax table, apply between 133,000 and 269,000 which is 2.042%
3. 500,000 x 2.042 = 10,210JPY is the income tax
What payroll taxes/superannuation equivalent costs are required for an American company to hire a Japanese national?
Employer payroll taxes in Japan range from 14.94% to 24.37%. I recommend you contact us for a more tailored answer – https://www.papayaglobal.com/contact-us/
Which benefits in Japan have legislative requirements that are dependent on employee headcount?
Hi, there are no specific benefits to the employee that are dependent on headcount.
Is there a way to relocate a non-Japanese employee to Japan without a Japan branch?
In the absence of an established entity, a company can consider EOR.
Can a EOR sponsor Working Visa for foreigner in Japan?
Is dependent spouse health covered by company or employee needs to pay additional heath component
Supplemental health plans covering dependents depend on the agreement between the employee and the employer. It is not a common practice, however, to provide coverage for dependents in Japan, some companies may provide it if they see additional supplementary health plans necessary.
I’ve been working for the same company for 7 years straight, on a yearly contract. Is there a law in Japan which protects the job security of workers like me?
There are various laws regarding employee termination. I would need more info to provide further assistance.
Thanks for the reply. I haven’t been terminated, but my worry is that my contract is renewed yearly. There’s no assurance that it will still be renewed in the years to come.
What are the rules if Japanese employer always give salary late or not on time?
Employers are obligated to pay salaries at least once a month on a fixed date. Workers should carefully review their employment contract or any relevant collective labor agreement. If this issue persists, seeking legal advice is recommended for a thorough understanding and compliance.
How to calculate/formula to calculate unpaid leave in Japan
If leave is unpaid then there is no formula needed, payment is simply stopped for those days of leave.