Oak Admin Guides
Hiring in Japan is where many foreign companies encounter their first real cultural and legal shock. Compared to jurisdictions with flexible labor markets, Japan's employment system can feel rigid, formal, and unforgiving.
Employment in Japan Is Designed for Stability, Not Speed
Japanese employment law is built around the assumption of long-term employment. While lifetime employment is no longer universal, the legal system still strongly protects employees from arbitrary or sudden dismissal.
Many assumptions foreign companies bring with them simply do not apply:
- Employment is not "at will"
- Termination is legally and procedurally difficult
- Probation does not eliminate employee protections
- Job descriptions have legal significance
Written Employment Contracts Are the Norm
In Japan, written employment contracts are standard and expected. Employment contracts typically specify:
- Job duties and responsibilities
- Working hours
- Salary and compensation structure
- Overtime handling
- Contract duration (if fixed-term)
- Workplace location
- Grounds for termination
Ambiguity in contracts tends to favor the employee. Clarity protects both sides.
The Legal Weight of Job Descriptions
Job descriptions are not merely HR documents in Japan, they are legal references. If an employee's role is narrowly defined in their contract, the employer may be limited in assigning additional duties later.
Probation Periods: Common but Often Misunderstood
Probationary periods are common but do not function as trial periods in the way many foreign employers expect. During probation:
- Employees still have legal protections
- Termination requires justification
- Poor performance must be documented
- Arbitrary dismissal is risky
Probation is best viewed as an evaluation period, not an escape hatch.
Termination: Why It Is So Difficult
Termination is one of the most challenging aspects of Japanese employment law. To terminate an employee lawfully, an employer generally must demonstrate:
- Legitimate and objectively reasonable grounds
- Efforts to improve performance
- Proportionality of the decision
- Procedural fairness
In practice, many terminations occur through mutual agreement, often involving severance discussions.
Working Hours and Overtime
Japan regulates working hours and overtime strictly. Standard working hours are defined by law, and overtime generally requires:
- A formal labor-management agreement
- Clear tracking of hours
- Overtime pay at prescribed rates
Payroll in Japan: More Than Paying Salaries
Payroll in Japan is a compliance function intertwined with tax and social insurance. Payroll typically involves:
- Monthly salary calculations
- Withholding income tax
- Enrollment in social insurance programs
- Payment of employer contributions
- Year-end tax adjustments
Social Insurance Obligations
Most employees in Japan must be enrolled in:
- Health insurance
- Pension insurance
- Employment insurance
- Workers' accident compensation insurance
These systems are mandatory. Employer contributions are significant and should be factored into hiring budgets from the outset.
Hiring as a Long-Term Commitment
Perhaps the most important mindset shift for foreign companies is this: hiring in Japan is a long-term commitment.
Each hire represents not just an addition to the team, but an increase in legal and administrative responsibility. Conservative hiring early on is often a rational response to the system.