In recent years, top companies have been rethinking how they approach recruitment. As distributed teams become the norm, businesses are tapping into the limitless potential of remote, global hiring. Talent can be found in countries all around the world, and many are looking to Japan for top remote talent.
Japanese employees excel in cutting-edge technologies like robotics, automotive engineering, electronics, and IT. They combine an innovative mindset with a strong work ethic and company loyalty.
If you’re interested in hiring employees from Japan, it’s key to understand how much it costs. This guide will break down everything you need to know.
Costs to Consider
There are a number of costs to keep in mind when hiring employees from Japan. While some are legally mandated, others are optional but frequently offered. We’ll also go over some fringe benefits that can help attract and retain top talent.
Mandatory Costs
- Salary
- Taxes and benefits
- Paid time off
- Overtime pay
- Severance pay
Optional and Frequently Offered Benefits
- Added Benefits
- Bonuses, discounts, and rewards
- Extended health plan
Optional Perks
- Coworking space
- Health and wellness benefits
Mandatory Costs of Hiring in Japan
To start, you need to take the following costs into account — there’s no way around it. Make sure to budget for them to ensure you comply with Japan’s local laws and regulations.
Salary
The minimum wage in Japan varies depending on the prefecture or region. Each prefecture sets its own minimum wage rate, taking into account factors such as cost of living and economic conditions.
The average national minimum wage is ¥961, or 6.85 USD. It ranges from ¥761- ¥1,072 based on region and industry.
Taxes and Contributions
In Japan, employers are responsible for contributing to various taxes and insurance systems, including social insurance, pension, employment insurance, and withholding income tax.
Paid Leave
Employees in Japan are entitled to several different types of paid leave from work. It’s imperative that employers know how much each type of paid time off will cost them.
- Vacation: Full-time employees in Japan are entitled to ten to twenty days of leave per year, depending on how long they have been with their employer.
- Sick leave: In Japan, the sick leave policy can vary depending on the company and employment contract. While there is no specific national law mandating paid sick leave, employers often provide sick leave benefits to their employees.
- Maternity Leave: Pregnant employees are entitled to take maternity leave starting six weeks before the expected date of childbirth. Maternity leave can extend up to eight weeks after childbirth, making a total of 14 weeks of leave. During maternity leave, eligible employees can receive maternity allowance, which is generally ⅔ of their regular salary paid by the employer or the government.
- Parental Leave: After the end of maternity leave, both mothers and fathers can take parental leave until their child reaches the age of one. Parental leave can be taken consecutively or split between both parents.
- Public holidays: Japan has 16 public holidays. Employees generally have the day off, and if they work, they may be entitled to additional pay or compensatory time off as per labor laws and employment contracts.
Overtime Pay
The overtime pay rate varies depending on the number of overtime hours worked. The basic overtime pay rate is 25% of the regular hourly wage for the first 40-60 minutes of overtime in a day, 35% for weekends and holidays and 50% for any subsequent overtime hours.
Severance Pay
In Japan, severance pay, also known as "retirement allowance" or "severance allowance," is not legally mandated by the Labor Standards Act. However, many companies in Japan voluntarily provide severance pay to employees upon retirement or termination, as it is a common practice and considered a customary benefit.
Optional Costs
Attracting in-demand talent in today’s job market isn’t easy. The ongoing labor shortage has companies locked in fierce competition around the world, making it increasingly important to level up. Consider implementing the following benefits to attract and retain top talent.
Benefits
Offering a solid benefits package shows job seekers and employees that you value your team. It’s common for employers to offer Japanese employees health insurance benefits as part of their employee benefits package. Typically, this is in addition to the mandatory national health insurance system called "Kokumin Kenko Hoken," which covers all residents of Japan, including foreign nationals living and working in the country.
An EOR, like Borderless, offers localized benefits packages that typically include the following:
- Medical Insurance
- Vision Insurance
- Dental Insurance
- Life Insurance
- Retirement Contributions
In addition to health insurance, it’s wise to add extra perks to your benefits package. Consider offering a health and wellness spending account, professional development opportunities, and monthly subscriptions. These are just a few attractive offerings that can help incentivize new hires.
Bonuses and Extras
Along with attracting top talent, bonuses come with a range of benefits. They help to improve retention rates, strengthen company morale, and boost productivity. Providing your team with a variety of generous bonuses shows them you value their hard work. There are a number to choose from, like signing, referral, and holiday bonuses.
Perks and Rewards
In addition to bonuses, many employers opt to provide their team with fun perks and gifts as a way to show their appreciation. For example, employers offer their workers rewards based on their interests, such as free sports tickets or live shows. They wine and dine employees and work to show them a good time outside of working hours. Another approach many top companies take is to offer quality employees more paid time off and flexible working arrangements.
Workspace Costs
Working with a global team helps cut down on costs surrounding real estate, utilities, cleaning, office furniture, etc. In short, remote-first work can save you a ton. However, it is a good idea to put aside some money for your distributed team members' workspaces.
Many companies offer their remote employees a budget for their home office or set them up in a coworking space. These membership-based workspaces have been proven to help employees thrive and are available throughout Japan.
WeWork, for example, has nearly 40 coworking spaces throughout the country for as low as $6 USD a day. Andwork, in both Shibuya, Kyoto and more big cities, offers daily workspaces for ¥2,500, or $18 USD. These are just a couple of the many cost-effective coworking spaces available throughout Japan.
Save with Borderless
Sign up with Borderless to learn everything you need to know about hiring in Japan. Our intuitive platform and dedicated team will make sure you take care of your new teammates and maintain compliance every step of the way. Book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
