Human Resource Management

Q. How can I recruit workers?

A. There are over 500 government-managed public employment security offices collectively known as "Hello Work" throughout Japan. Hello Work offers free facilitation and supports matching people searching for a job, and employers with open positions; all industries are covered by the agency.

Similarly, regional public organizations offer free employment services for the general public. Educational institutions such as colleges and universities provide employment services to their students for free. Privately-managed employment agencies come in several types, including executive search agencies and those which maintain a database of registered potential employees and employers and collect fees on a contingency basis (i.e., when someone from their database is successfully employed with a registered employer). Japan also has a wide range of newspapers, magazines (e.g., job-transfer magazines, industry-specific magazines, etc.), and internet websites through which employers seek to fill vacant positions.

Q. What should I keep in mind about labor contracts?

A. When hiring, employers enter into an employment contract with each employee. The following terms and conditions must explicitly be provided, in writing, within the employment contract. Contract period, workplace, duties, working hours, days-off, wage calculation period and pay-day , resigantion and dismissal and so on. Please see details of employment conditions.

Q. What are Japan's employment standards such as wages?

A. There are employment standards which need to be carefully considered when corporations hire people, such as wages, working hours, breaks and days off. For instance, employers must pay wages in legal tender, directly to the employee, not less than once per month, and on a specified date. In addition, working hours must, in principle, not exceed 40 hours per week or eight hours per day excluding breaks (this is known as "statutory working hours"). However, overtime is possible within the limit agreed in the labor-management agreement (agreement between the company and the employee representative). Please see the details of employment standards (Wages / Working hours, breaks, days off).

Q. What restrictions on dismissal are there?

A. Employers can only dismiss an employee (i.e., the employer terminates the labor contract by notifying the employee of its intention to do so) with a concrete and justifiable reason. For example, redundancy is justifiable only after satisfying several criteria, such as necessity, effort to avoid redundancy, reasonable selection and reasonable process. Please see the details of restrictions on dismissal.

Q. Please explain Japan's social security system

A. Japan has a universal insurance system whereby everybody residing in Japan must, in principle, take part in the public health (medical) insurance and pension insurance system. Please see the details of Japan's social security system.

Q. How much do companies pay for labor and social insurance systems, concerning employment?

A. The total premium rate (the employer's burden) of the mandatory social security scheme for employment is about 15% of total annual wage. This includes Workers Accident Compensation Insurance, Employment Insurance, Health Insurance and Nursing Care Insurance and Employees Pension Insurance.

Q. What about the coverage of the "Representative Director" at Kabushikigaisha (KK), "the Executive Officer" or "Representative Member" of the Limited Liability Company, or the "Representative" in Japan at the branch office for labor insurance and the social insurance.

A. As a rule, the person is mandatory to be enrolled into the social insurance system, provided that he/she receives a compensation/salary in Japan. On the other hand, the labor insurance (the worker's compensation insurance and employment insurance) is, in principle, not applicable to him/her. However, the Representative in Japan may be eligible for the labor insurance, provided that he/she is cogently acknowledged to fall under "the worker".

Q. A foreign company which exports its goods to the distributors or trade firms in Japan has hired a person locally here in Japan. He/she will be working at the "Representative office" or "Communication office" in Japan where no subsidiary or branch office is founded because no sales activity is planned in Japan. What about the coverage of the social insurance and labor insurance to such an employee.

A. The social insurnace is voluntarily applicable to an undertaking without the company registration in Japan which does market research, communication/coordination of distributors and/or trading firms, procurement, and so on. In other words, it can be determined by agreement between the company and the employees whether to be enrolled into the social insurance as a whole. At that time, there are two ways. The first way is to make the representative of the office as the employer and exclude him/her from its enrollment, and the other way is to make him/her as one of the employees to enroll him/her into it. Although the application for the labor insurance is mandatory to the employees except the representative of the office, its application to the representative theoretically depends on whether he/she cogently falls into "worker". However, in the terms of the administrative procedure, it is difficult to be accepted.

Q. I am planning to dispatch my employees to a foregin affilicated company in Japan. In addition, some of such companies prefer "subcontracting" or "service contract" to "worker dispatching contract". What about the regulations on dispatching workers in Japan.

A. In Japan, the "worker's dispatching business" means to have the employee employed by you work under directions/orders of another party, and "the license" provided by the counrty is required to undertake such a business. You must meet a certain capital and fund requirement in order to obtaining the license. In addition, direct employment relationship between the dispatched worker and the company where the dispatched worker works is, as a rule, established, in the case where the worker's dispatching business is carried out without license, or the same worker is continuously dispatched to the same organizational unit for more than three years because of the application for "the deemed labor contract offer system".

Q. How the employee who does not require overtime payment is distinguished from the employee who requires it. In addition, is it legally valid in the contract saying "the overtime (of xx hours) is included in the base salary". Furthermore, is it legally valid agreement to say "no overtime is provided.".

A. The Labor Standards Act excludes persons in positions of supervision or management or persons handling confidential affairs from the application for the provisions on working hours, etc. except for midnight work. The criteria for the persons who are excluded from them are, (1) that they have important job contents and responsibilities/authorities, (2) that the working styles are incompatible with the working hours regulations, and (3) that their conditions such as wages, etc. are reasonable. In addition, such an agreement as "the base salary includes overtime for xx hours" is, in principle, invalid. To make valid the wage system where a certain overtime is included (the fixed overtime wage system), part of the wage for ordinary working hours and part of the wage for fixed overtime must be explicitly divided, and the additional wage for the exceeded part must be paid in the case where the actual overtime exceeds the fixed overtime. Besides, an employment contract where "overtime is not paid" is agreed is invalid if it is not for the manager/supervisor.