Section 4. Human Resource Management


1. Corporate benefit costs

The expenses that a company spends on the welfare benefits of its employees can generally be divided into two groups: statutory welfare expenses, which include labor and social insurance premiums, as well as other legally required costs; and voluntary welfare expenses. According to a study*1 carried out in FY2018 (April 2018 through March 2019), the portion of wages comprised of welfare benefits was 19.8%. Specifically, the aforementioned statutory welfare expenses took up 15.4%, while voluntary welfare benefits amounted to 4.4% of the total (excluding lump-sum retirement allowances and retirement pensions).

Voluntary welfare benefits include providing accommodation, health check-ups and other health-related benefits, general life assistance such as subsidized meals at in-house cafeterias, and the provision of recreational facilities.

The ratio of lump-sum retirement allowances and retirement pensions to the total cash wages was 8.1%.

  1. *1

    Performed by the Japan Federation of Economic Organizations (Since the numbers were rounded off, the total number may not be equal to the sum total.).

2. Labor unions

In Japan, the right of its labor unions to carry out their activities is guaranteed by law. Employers cannot employ a person on the condition that he/she does not join a union, and cannot cause any disadvantage to an employee because he/she is a union member. Furthermore, no company may refuse its labor union's request for collective negotiations without due cause.

According to a survey by the Ministry of Health, Labour and Welfare, the unionization rate of Japan’s unions as of June 2019 was estimated to be 16.7%, which is on a declining trend. Examining labor unions by scale (only private sector), we can see that workers at 40.8% of companies with 1,000 or more employees are unionized, while the same can be said of only 11.4% of companies with employees of between 100 and 1,000. In the case of companies with less than 100 employees, employees at only 0.8% of businesses are unionized.

3. Coverage of temporary workers by labor law

The term "Temporary worker" refers to a worker that enters into a labor contract with a temporary staffing agency (the company that temporarily places the worker), and who, under the orders of the agency, reports for work at a client company of that agency (i.e., a company that enters into a temporary worker placement contract with the agency, and then accepts temporary placement of the worker), and who performs duties under the orders of the client company.

Labor laws such as the Labor Standards Act, the Industrial Safety and Health Act, and the Equal Employment Opportunity Act apply to temporary workers. Companies that accept placement of temporary workers bear the responsibility of complying with the provisions of the Labor Standards Act pertaining to working hours, breaks and days off; those companies may have temporary workers work overtime within the scope allowed by the Labor Standards Act provided they enter into a labor agreement regarding workers' overtime with the agency that places the temporary worker. In this case, the temporary staffing agency bears the responsibility to pay increased rate of wages.

It is the temporary staffing agency's responsibility to ensure temporary workers' annual paid leave, and to supply the client company with a replacement worker if necessary while the original temporary worker is on annual paid leave. Furthermore, it is the temporary staffing agency rather than the client company that must take out labor insurance (Workers' Accident Compensation Insurance and Employment Insurance) and social insurance (Employees' Pension Insurance and Health Insurance) for the temporary worker and pay the appropriate premiums.

If a client company accepts illegal supply of temporary workers (exceeding period limitations, disguised contract, unauthorized supply service, etc.), a direct employment relationship is deemed to have been established between the client company and the temporary workers at the time of accepting such supply of temporary workers.

4. Consultation with specialists on human resource management

Labor and social security attorneys are human resource management experts with special nationally administered qualifications. As well as payroll accounting, they perform a range of services at companies' request, including:

  1. (1)

    Carrying out labor and social insurance-related procedures and other administrative work as a proxy for companies when hiring staff.

  2. (2)

    Consulting services in relation to safety and hygiene, as well as labor management (including drawing up work rules, planning and redesigning wage structures, as well as settling employment problems).

  3. (3)

    Mediation in individual employment disputes.

  4. (4)

    Consulting and handling of claims regarding pensions.

  5. (5)

    Other employment-related tasks.

(Performance of services covered by (1) and (3) by persons other than labor and social security attorneys in private practice, certified social insurance labor and social security attorney corporations, or attorneys is prohibited by law.)

Social and labor insurances procedures when setting up a company or hiring staff/workers

Annual procedures

Section4: Table of Contents

Section4: Documents businesses are required to submit to authorities

Section Documents Where documents are listed within the URL Reference The competent
authorities's URL
4-3a Notice of EmploymentExternal site: a new window will open See PDF Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-3b Employment Agreement ReferencePDF File(227KB)
4-5 Notification of Agreement on Overtime work Working on Holidays Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-6 Rules of Employment ReferencePDF File(1.9MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9a Notification of Acquisition of Employment Insurance Qualification ReferencePDF File(1.1MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9b Notification of the Acquisition of Health insurance Qualification Employees' Pension Insurance Qualification ReferencePDF File(245KB) Japan Pension ServicesExternal site: a new window will open
4-9c Labor insurance Estimated insurance premiums / Increased estimated insurance premiums / Final insurance premiums Declaration ReferencePDF File(919KB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9d Basic amount for calculation of monthly remuneration of person insured Health insurance Employees' pension insurance ReferencePDF File(216KB) Japan Pension ServicesExternal site: a new window will open
4-9e Notification of Dependent Under Health Insurance (Change) ReferencePDF File(731KB) Japan Pension ServicesExternal site: a new window will open
4-9f Notification of the Establishment of a Labor Insurance Relationship ReferencePDF File(1.1MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9g Notice of establishment of the business place to which employment insurance is applied ReferencePDF File(520KB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9h Notice of New Application Health insurance Welfare pension insurance ReferencePDF File(263KB) Japan Pension ServicesExternal site: a new window will open
4-9i Declaration of Tax Exemption for Salaried Employees (Change)External site: a new window will open See the format National Tax AgencyExternal site: a new window will open
4-10 Income Tax Withholding Certificate ReferencePDF File(309KB) National Tax AgencyExternal site: a new window will open

Materials listed as ‘Reference’ contain samples of documents regarding registration, visa, taxation, personnel and labor matters that are necessary when a foreign company establishes a corporation or other entity in Japan. These documents are not published by competent authorities and therefore are not official. For those who are going through the official procedures, please obtain the latest official documents from the competent authorities and related bodies or consult a person who specializes in advising on such information and procedures.

The information contained in this documents should be used at the reader’s independent discretion. While JETRO makes every effort to ensure the accuracy of the information it provides, no responsibility is accepted by JETRO for any loss or damage incurred as a result of actions based on the information provided in these documents or provided by the external links listed on these pages.

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