Work Week

Since 1987, Japan has adopted the principle of a 40-hour week. If people work over eight hours per day, 40 hours per week, or on holidays (and one “weekend” day a week), or at late night (10pm to 5am), they are entitled to overtime pay. Work week is Monday-Friday.

Statutory Holidays

16 national holidays. No legal requirements to pay for the statutory holidays, but is common in Japan to make it as paid days off. It the holiday falls on a Sunday, the next working day will be a holiday instead.

Annual Leave with pay

Annual leave with pay is to be given to workers who have been employed continuously for 6months, and have worked for 80% or more of the whole working days. (Article 39 of the labour Standard Law)

Sick Leave

Sick leave is not mandatory. Employees often use their annual leave to cover sick leave or claim social insurance.

Maternity Leave

Pregnant employees are entitled to maternity leave within 6 weeks of the expected birth date, and 8 weeks after birth. An employer is not allowed to have a female employee work within 8 weeks after giving birth, except if both:

• She wishes to resume her duties after 6 weeks after giving birth.
• The resumption of the work will not cause any problems, as certified by a doctor.

It is not required that employers pay for maternity leave, unless the employment contract or work rules state otherwise. Usually, the maternity payment is made by the Social Insurance based on the National Health Insurance rates, which are currently 420,000 JPY per child.  However, suppose the employee is enrolled in the employees’ Health Insurance. In that case, they may receive a Maternity Allowance of 2/3rds of the regular salary rate from 42 days before birth until 56 days after delivery.

Childcare Leave

An employee is entitled to receive childcare leave from the following day after maternity/paternity leave ends to the day before a child becomes one year old. On a certain condition, the period could be extended to the day a child becomes one and a half years old.

Childcare leave benefits:

• JPY 420,000 of Lump-sum benefit for Childbirth
• Exemption of social insurance premium
• Maternity allowance: About 2/3 of monthly salary during the maternity/paternity leave
• Childcare leave benefit: about 2/3 of monthly salary during the childcare leave.

Paternity Leave

Beginning 1 October 2022, male employees will be entitled to a paid paternity leave (amount yet to be determined) of up to four weeks that may be taken within the eight weeks following the childbirth, subject to a two weeks’ notice to their employer. Male employees will be able to take paternity leave as a single uninterrupted period or split it into two periods. In addition, child care leave entitlement can be taken twice in separate instalments. Paternity leave benefits will be payable by the Japanese social security at the same rate as maternity leave (67% of salary).

Income Tax

In Japan, permanent resident taxpayers (generally Japanese nationals and foreigners who have lived in Japan for more than five of the past ten years, or who have applied for permanent residence status based on one of the fast track procedures recently available) are taxed on their worldwide income. Non-resident taxpayers (generally a foreigner who has worked in Japan for less than 12 months) subject to a flat 20% tax on all Japan-based income. Non-permanent resident taxpayers (generally a foreigner who has worked in Japan with an employment contract for more than 12 months) are taxed on their income other than foreign-source income (in particular, potentially, on certain capital gains) that are not remitted into Japan plus potentially part of their foreign-sourced income that is paid in or remitted to Japan.

Each year in December or January there will be an annual tax reconciliation taking into account total salary income, dependents, etc.

*Note- these figures are accurate as of January 2021,  please Japan team update latest.  

• Resident

Resident tax is a tax paid to the municipality where you live in Japan. It consists of two types, prefectural and municipal taxes.  The formula for calculating the residence tax is as follows.

Municipal Tax Amount = Income Rate+ Per Capita Rate

What is the income rate?

The amount to be paid according to the amount of income.  Basically, the income amount of the previous year × 10% (6% municipal tax + 4% prefectural tax).

What is the per capita rate?

Amount paid by people living in the same local government regardless of their income. There are regional differences but is around 5,000 yen.

• Standards and ranges for foreign workers to pay municipal tax

The resident tax applies to individuals with addresses in local governments regardless of nationality. Whether there is an address is determined is based on January 1 of that year. For example, foreign workers who have been working in Japan since February 1, 2022, but did not have an address in Japan as of January 1, 2022, will not be subject to 2022 residence tax.

In addition, the income rate for municipal tax is applied on all income earned in the year from January 1 of the previous year. In other words, for foreign workers who have no previous year’s income, it won’t apply.

Japan has four different kinds of employer-mandated social insurances:

1. Workers’ Accident Compensation Insurance
2. Employment Insurance:
3. Health Insurance and Nursing Care Insurance
4. Employees’ Pension Insurance

Enrolment is compulsory for all employees, with a portion of the costs paid by the, and some by the employer.

The total cost to an employer is around 16.24% of salary/bonuses for employees aged over 40 and slightly less at 15.375% of salary/bonuses for employees under 40, with specific ceilings based on individual conditions.