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Compliance
The primary legislation is the Labor Standards Act (LSA), supplemented by the Employment Security Act, Equal Employment Opportunity Law, and Industrial Safety and Health Act. The Ministry of Health, Labour and Welfare (MHLW) enforces compliance through regular audits, labor tribunals, and corrective orders.
Written employment contracts are mandatory for indefinite-term, fixed-term, and part-time workers. Contracts must specify working conditions including wages, job content, hours, rest periods, and termination terms. The employer must also issue a working conditions notice. Changes to core terms require employee consent.
Standard hours are 8 per day, 40 per week. Overtime is capped at 45 hours/month and 360/year, unless special agreements (36 Agreements) are signed. Overtime pay ranges from 125% to 150%. Non-compliance may result in MHLW-imposed work stoppages or fines.
Wages must be paid monthly, in full, in currency, and directly to the employee. As of 2025, minimum wage varies by prefecture (e.g., ¥1,113/hour in Tokyo). Employers must issue pay slips and maintain payroll records for at least 3 years. Illegal deductions or unpaid wages can lead to criminal liability.
Employers must enroll staff in four mandatory schemes: health insurance, welfare pension, unemployment insurance, and workers’ accident compensation. Combined employer contribution is around 15–20%. Monthly filings and year-end adjustments are mandatory and audited.
Foreign workers require a valid status of residence and must be employed in activities matching their visa. The company must notify Hello Work (labor office) within 14 days of employment. Sponsorship requires salary to match or exceed Japanese peers. Hiring without compliance results in fines or deportation of the worker.
Dismissals must be for objectively justifiable reasons and must follow procedural fairness. Minimum notice is 30 days or payment in lieu. Terminating employees without cause may be deemed abusive and result in reinstatement or compensation orders from courts. Redundancies require justification, notice, and alternative proposals.
Employees may seek recourse through the Labor Standards Inspection Office, labor tribunals, or civil courts. Mediation is commonly used for disputes. Employers must retain employment, time, and wage records and cooperate with government audits.
AYP helps ensure compliance in Japan by preparing legal employment contracts, filing payroll and insurance obligations, and supporting lawful visa sponsorship. We also advise on dispute prevention and termination best practices.
Looking to hire in Japan? Trust AYP to help you stay compliant in one of Asia’s most regulated markets.
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