Employment in Japan is governed mainly by the Labour Standards Act, the Labour Contracts Act and the Child Care and Family Care Leave Act, with company work rules filling in the detail. Here is what employers need to know about leave, pay, tax, social insurance and ending employment.
Annual paid leave in Japan grows with length of service. Maternity, childcare and family care leave are protected by law, and income during those periods is mostly replaced by health and employment insurance benefits rather than by the employer.
10 working days after 6 months of service with at least 80% attendance, rising each year to 20 days after 6.5 years. Unused days carry over for 1 year.
For employees granted 10 or more days a year, the employer must make sure at least 5 are actually used and keep a leave register.
6 weeks before the birth (14 for multiple births) on request, and 8 weeks after. Health insurance pays about two-thirds of pay.
For either parent until the child turns 1, extendable to 2 if no daycare place is available. Employment insurance pays a benefit.
Fathers can take up to 4 weeks of postnatal paternity leave (sangyo-kyuka) within 8 weeks of the birth, which can be split into two periods, on top of ordinary childcare leave. Employment insurance pays a childcare leave benefit during this time, and a top-up benefit applies when both parents take leave.
Set up Japanese annual leave with service-based entitlements, carry forward and approval rules, and track childcare and family care leave as their own leave types. Live balances make it easy to see who still needs to take their 5 mandatory days, and managers see who is away on a shared calendar. Leave management →
Japan has no single national minimum wage. Each prefecture sets its own regional rate, reviewed every year after guidance from the Central Minimum Wages Council, and some industries have higher specific rates.
FY2025 rates, which took effect between October 2025 and March 2026 depending on the prefecture. Tokyo’s rate is ¥1,226. New FY2026 rates take effect prefecture by prefecture from October 2026.
Work beyond these limits is overtime and needs a labour–management agreement (a “36 agreement”) filed with the labour standards office.
The general cap under a 36 agreement. Special clauses allow more, but never beyond 720 hours a year or 100 hours in a month including holiday work.
| Type of work | Minimum premium |
|---|---|
| Overtime beyond statutory hours | 25% |
| Overtime beyond 60 hours in a month | 50% |
| Work on a statutory day off | 35% |
| Late-night work (10pm to 5am) | 25% |
Record attendance and overtime objectively in IceHrm, keep an eye on monthly overtime against your 36 agreement limits, and feed the hours straight into payroll. Time & attendance →
Japan levies national income tax at progressive rates, plus a 2.1% reconstruction surtax on the tax due and a local inhabitant tax of about 10% of taxable income. Employers withhold income tax from each payment and carry out a year-end adjustment, so most employees don’t need to file a return.
| Taxable income | Rate |
|---|---|
| Up to ¥1,950,000 | 5% |
| ¥1,950,001 – ¥3,300,000 | 10% |
| ¥3,300,001 – ¥6,950,000 | 20% |
| ¥6,950,001 – ¥9,000,000 | 23% |
| ¥9,000,001 – ¥18,000,000 | 33% |
| ¥18,000,001 – ¥40,000,000 | 40% |
| Over ¥40,000,000 | 45% |
Inhabitant tax is based on the previous year’s income. Employers deduct it from salary in 12 monthly instalments from June, as notified by the employee’s municipality.
Health insurance and employees’ pension insurance are shared equally between employer and employee and are calculated on standard monthly remuneration bands, with caps. Employers also pay employment insurance, workers’ accident insurance and a child-rearing contribution.
| Contribution | Total rate | Who pays |
|---|---|---|
| Employees’ pension insurance | 18.3% | Split 50/50 |
| Health insurance (national average) | 9.9% | Split 50/50 |
| Long-term care insurance (age 40–64) | 1.62% | Split 50/50 |
| Child and child-rearing support levy | 0.23% | Split 50/50, from April 2026 |
| Child-rearing contribution | 0.36% | Employer only |
| Employment insurance (general business) | 1.35% | Employer 0.85%, employee 0.5% |
| Workers’ accident insurance | Varies | Employer only, by industry |
Build Japanese pay the way you already structure it, with your own salary components, deductions and formula columns, such as pension and health insurance columns based on standard monthly remuneration. Want to know how well IceHrm handles payroll calculations for Japan? Contact us or see Payroll →
Employment in Japan is not “at will”. Under the Labour Contracts Act, a dismissal is void if it lacks objectively reasonable grounds and is not appropriate under socially accepted norms. Courts apply this strictly, so dismissals for poor performance or redundancy need careful documentation.
An employer must give at least 30 days’ notice of dismissal, or pay the average wage for any days of notice not given. Dismissal is prohibited during maternity leave, during work-related injury leave and for 30 days after either. Employees on indefinite contracts can resign with 2 weeks’ notice.
Japanese law does not require severance pay. Many employers pay a retirement allowance under their work rules, and a negotiated package is common when employment ends by mutual agreement.
Employers must keep employees working to age 65 (by continued employment, a higher retirement age or abolishing retirement) and must make efforts to offer opportunities up to age 70.
Japan has 16 national holidays. When a holiday falls on a Sunday, the next working day becomes a substitute holiday. Many employers also close over the New Year period (usually 29 December to 3 January) and during Obon in mid-August, but these are not national holidays.
National holidays are not automatically paid days off under the Labour Standards Act. Whether they are working days, and how they are paid, depends on the company’s work rules and the employment contract.
Leave groups let each office keep its own holiday calendar, including company closure days over New Year and Obon, so leave requests and balances always count the right working days. Holiday calendars →
Employers must give new employees written notice of their main working conditions when the contract is made. Employers with 10 or more regular employees must also draw up work rules, consult employee representatives and file them with the labour standards office.
Probation is not regulated by statute. Periods of 3–6 months are typical, and dismissal during or at the end of probation still needs reasonable grounds. The 30-day notice rule does not apply to employees dismissed within their first 14 days. A single fixed-term contract generally cannot exceed 3 years (5 years for certain experts and workers aged 60 or over). Once fixed-term contracts with the same employer have been renewed to a total of more than 5 years, the employee can ask to convert to an indefinite contract.
Send written working conditions and contracts for e-signing, store them on the employee’s record, and use onboarding task lists to track social insurance and employment insurance enrolment. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Japan, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Japan? Talk to us.
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