Planning to hire employees in Japan? Here’s a quick guide

Japan offers one of the most educated and technically skilled workforces in the world, making it a compelling destination for international businesses. With its robust economy, strong work ethic, and growing startup ecosystem, many global organizations, especially from the tech, fintech, SaaS, and digital services sectors, are looking to hire employees in Japan to support their long-term growth.

However, entering the Japanese talent market can be complex. From navigating local labor laws to understanding cultural nuances, U.S. companies hiring in Japan need to approach the process with a clear strategy. 

In this guide, we walk you through your hiring options, legal requirements, and best practices. We also show how an Employer of Record (EOR) can simplify the process, offering a faster, cost-effective way to build your team in Japan without the need for local incorporation.

Options for U.S. companies hiring in Japan

For companies based in the U.S. or other countries, there are several ways to hire employees in Japan, each offering different levels of complexity, control, and flexibility.

1) Set up a legal entity

Establishing a legal entity allows your business to directly hire employees in Japan and manage HR operations in-country. This gives you full oversight of your workforce, but the setup process is resource-intensive and time-consuming. To launch a Japanese entity, you need to:

• Register your business with the Legal Affairs Bureau
• Appoint a local representative director
• Open a corporate bank account in Japan
• Enroll in mandatory social security programs
• Comply with Japanese labor and tax regulations

This model is best suited for enterprises with long-term plans and sufficient internal resources. For smaller companies or those seeking faster market entry, other models may be more practical.

2) Hire contractors in Japan

Hiring independent contractors can be a flexible solution for U.S. companies entering the Japanese market. This approach works well for limited-scope projects or specialized tasks.

However, proper worker classification is critical. Under Japanese labor law, employees and contractors are treated very differently. Employees generally work under the company’s direction, follow fixed hours, and rely on the employer for equipment. Contractors, on the other hand, operate independently and manage their own taxes and tools. Misclassifying an employee as a contractor may lead to penalties, back payments for benefits, and legal disputes. 

3) Use an Employer of Record

An Employer of Record lets you hire employees in Japan without establishing a legal entity. The EOR acts as the legal employer on your behalf and manages:

• Employment contracts
• Payroll processing and tax withholdings
• Benefits administration and social insurance
• Local labor law compliance

Meanwhile, your business retains full control over the employee’s tasks and performance.

This model is ideal for startups, SMBs, and enterprise teams looking to expand in Japan quickly and with reduced operational overhead. An EOR like Payoneer Workforce Management helps U.S. companies hire in Japan while minimizing administrative burden and supporting with local compliance requirements.

To explore this model further, visit our Employer of Record in Japan guide.

Where to find employees in Japan

If you are looking to hire employees in Japan, there are several proven channels to reach qualified talent. Below are the most effective ways U.S. companies hiring in Japan can source candidates.

Popular job boards in Japan

Job boards are one of the easiest ways to hire in Japan, offering access to candidates across industries and experience levels.

Popular job boards in Japan include:

• LinkedIn Japan
• Indeed Japan
• CareerCross
• Daijob
• Jobs in Japan

Each platform offers different features, pricing models, and reach, so it is worth comparing based on the type of role you are hiring for.

Hire contractors in Japan

Hiring contractors is a flexible option for companies entering the Japanese market or supporting short-term work. It is a popular choice for early-stage projects or when testing a new location.

That said, the distinction between contractors and employees is critical under Japanese labor law. Contractors must operate independently and handle their own taxes. If a contractor is treated like a full-time employee, it could lead to misclassification issues.

To reduce risk, some companies consult local experts to ensure contractor relationships comply with hiring practices in Japan and legal guidelines.

Recruit through an EOR

Working with an Employer of Record offers an efficient way to discover talent and hire employees in Japan without opening a local legal entity. With this model, you lead the recruitment process and select the best candidate, while the EOR acts as the legal employer and helps manage:

• Local employment contracts
• Payroll and tax withholdings
• Social insurance contributions
• Benefits administration
• Onboarding and offboarding processes

Payoneer Workforce Management supports this approach by providing streamlined infrastructure and localized HR support, so your business can scale quickly and confidently.

Onboarding employees in Japan

Once candidates are hired, onboarding should be planned carefully to promote engagement and compliance.

Here are the key tasks to include when onboarding Japanese employees:

• Collect required documents: Obtain official ID (such as a residence card for foreigners), proof of address, and educational or previous employment certificates.
• Prepare bilingual onboarding materials: Provide documents and training sessions in Japanese and English to accommodate language preferences and improve understanding.
• Understand cultural norms: Respect hierarchy, formal communication styles, and group harmony valued in Japanese workplaces. Consider cultural training for your managers and team.
• Register employees for the My Number system: This mandatory social security and tax identification system requires employers to submit employee information promptly.
• Set up payroll and benefits: Configure payroll systems in keeping with Japanese tax and social security rules. Explain benefits such as health insurance, pension contributions, paid leave, and public holidays.
• Establish communication channels: Use bilingual tools and platforms to facilitate clear communication between Japanese employees and international teams.

EOR platforms like Payoneer Workforce Management can streamline the onboarding process, including document collection, social insurance registration, and payroll setup, helping U.S. companies save time and reduce errors.

Key employment laws and requirements in Japan

Hiring employees in Japan involves strict adherence to local employment laws that protect workers’ rights and regulate employer responsibilities. Here’s an overview of critical employment law topics relevant to U.S. companies hiring in Japan.

Employment contracts

Employment contracts in Japan must include specific elements, such as:

• Job description and responsibilities
• Working hours and rest periods
• Salary, payment method, and frequency
• Duration of employment (fixed-term or indefinite)
• Termination conditions and notice requirements
• Confidentiality and intellectual property clauses

Contracts should be provided in Japanese and clearly communicated to the employee. Employment contracts form the legal basis for the hiring process in Japan and help prevent disputes.

Employee benefits

Japan mandates various employee benefits that employers must provide, including:

Benefit	Employee entitlement
Vacation leave	Employees receive 10 to 20 days of PTO based on years of service.
Sick leave	No statutory sick leave exists, but many employers offer discretionary sick leave or short-term absence policies.
Maternity leave	Pregnant employees are entitled to 6 weeks of leave before childbirth and 8 weeks after.
Public holidays	There are approximately 16 national public holidays each year.
Social security and pension	Employers and employees contribute to health insurance, welfare pension, unemployment insurance, and workers’ compensation schemes.

Understanding and correctly implementing these benefits is essential to comply with Japanese labor standards and support employee well-being.

Working hours and holidays

Japan’s standard working hours and holiday entitlements are:

• Daily: Typically 8 hours per day
• Weekly: 40 hours per week
• Overtime: Compensated with 125% premium pay or compensatory time off

Employers must monitor working hours carefully to avoid labor law violations, particularly regarding overtime limits and employee health.

Tax obligations

Employers in Japan have several tax responsibilities when hiring employees:

• Income tax withholding: Employers must deduct income tax from employee salaries and remit payments to tax authorities monthly.
• Social security contributions: Employers share the cost of health insurance, pension plans, unemployment insurance, and long-term care insurance with employees. Contributions are typically split approximately 50/50.

Complying with tax obligations ensures your company avoids fines and maintains good standing with Japanese tax authorities.

Termination and severance

Terminating employment in Japan requires careful adherence to legal standards:

• A valid reason for termination is required, such as employee misconduct or redundancy.
• Employers must provide at least 30 days’ notice or payment in lieu.
• Procedures must be fair and documented to avoid claims of wrongful dismissal.
• Severance pay is not mandatory but may be offered as part of company policy or union agreements.

Understanding the intricacies of termination procedures protects employers and preserves their reputation.

Payoneer Workforce Management helps hire employees in Japan

For U.S. companies hiring in Japan, navigating local hiring practices and employment laws can be overwhelming. Setting up legal entities is costly and slow, while managing contractors carries risks of misclassification.

Payoneer Workforce Management offers a streamlined alternative that allows companies to hire employees in Japan quickly and efficiently without local entity setup. Our unified platform supports over 160 countries, providing a full suite of services including:

• Rapid onboarding and compliance: Onboard employees legally and smoothly with expert local support.
• Secure, global payroll: Run payroll through an automated platform with multi-currency support.
• Stay compliant with local laws: Stay updated on Japan’s evolving labor regulations, taxes, and social security.
• Comprehensive workforce management: Manage contracts, benefits, work permits, timesheets, and background checks.
• Payment automation: Reduce manual effort and errors by automating accounts payable workflows through Payoneer’s payment automation tools. Learn more at Payoneer AP automation.

Ready to hire employees in Japan with confidence? Request a demo or speak with our experts today to get started.

FAQs

Can a U.S. company employ someone living in Japan?

Yes. U.S. companies can hire employees in Japan directly or through service providers, but must comply with Japanese labor laws, taxes, and social security regulations.

How do I hire a Japanese employee for a U.S. company?

To hire a Japanese employee for a U.S. company, you can establish a local legal entity in Japan, engage independent contractors, or partner with an Employer of Record like Payoneer Workforce Management. While setting up an entity offers full control, it requires significant time and cost. Hiring contractors is flexible but comes with classification risks. A highly efficient way to hire employees in Japan is through an EOR, which manages compliance, payroll, and benefits so you can focus on finding the right talent.

How can an EOR help U.S. companies hiring in Japan?

An EOR helps U.S. companies hiring in Japan by managing employment contracts, onboarding, payroll, benefits, and local compliance. EORs also support recruitment and handle administrative tasks, making it easier to expand without setting up a legal entity.