Japan is an island country situated in East Asia, located in the Pacific Ocean, with a workforce of 69.1 million people (2023) and a GDP of 4,204.49 billion US dollars (2023). The economy of Japan is the fourth largest in the world, and is reliant on the service and industrial sectors. Challenges faced by the economy include an aging population, and a high level of public debt in comparison with other developed nations.

Japanese labor laws have been developed over time to provide protections to people working in Japan, particularly regarding working conditions and improving labor rights. The Japanese recruitment space is highly competitive, making employee benefits an important factor for businesses in attracting and retaining workers.

This guide will provide all the information required in relation to employee benefits in Japan, including both mandatory and supplementary benefits. We’ll also give you an overview of Remote People’s services which can help simplify hiring employees in Japan.

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Japanese Employment Laws

Labor laws in Japan were significantly reformed in 1947 as part of the Allied reforms following World War II. New laws such as The Labor Standards Law were enacted, setting out standards for working hours, minimum wage, and health and safety laws.

Other key acts that have brought about change in Japanese labor laws include:

  • Employment Security Act of 1947
  • Trade Union Act of 1949
  • Minimum Wages Act of 1959
  • Industrial Health and Safety Act of 1972
  • Employment Contracts Act of 2007

Employers doing business in Japan must comply with Japanese labor laws to ensure the fair treatment of workers in Japan, and it’s recommended that companies consult with legal professionals before hiring to ensure mandatory employee benefits are provided.

Mandatory Employee Benefits in Japan 

The key mandatory employee benefits in Japan are explained in detail in the following sections:

Social Security Contributions

The Japanese Social Security System is a mandatory function that requires contributions from all people working in Japan

Employers are responsible for withholding these contributions from employee salaries, with funding allocated to healthcare insurance, welfare pensions, unemployment insurance, and workers’ compensation.

Employers must make a matching contribution to the Social Security System. The rates of social security in Japan are as follows:

Benefit TypeRateMaximum Monthly Cap
Healthcare4.99%JPY 1,390,000
Pension9.15%JPY 650,000
Unemployment0.60%No cap specified

Annual Paid Leave

Employees in Japan are entitled to a minimum of 10 days of annual leave, once they have completed six months of continuous service with the same employer.

Annual leave increases each year for employees in Japan as per the following:

Years of Continuous ServiceAdditional Working Days
1 year1 day
2 years2 days
3 years4 days
4 years6 days
5 years8 days
6 years or more10 days

Employees can accumulate a maximum of up to 2 years of unused annual leave. 

Companies can be fined up to JPY 300,000 per employee if minimum annual leave requirements are not met.

Working Hours

The standard working week in Japan is 40 hours per week, usually spread across 5 days at 8 hours per day.

Employees must receive a break of at least 45 minutes if they work over 6 hours or 1 hour break for every 8 hours worked. They must also receive 1 day off per week or 4 days off in 4 weeks.

National Minimum Wage

Japan operates under a national minimum wage and has done so since the Minimum Wage Act was implemented in 1959. The current minimum wage as of 2025 in Japan is JPY 1054 per hour.

As of 2025, the average monthly salary in Japan is JPY 313,082.

Overtime Pay

Hours worked over the typical 40-hour week in Japan count as overtime hours.

Overtime pay in Japan is paid at 1.25 times an employee’s regular wages.

This rate is also applied for night work which consists of any hours completed between 10pm and 5am.

Hours worked on a weekend or holiday must be paid to the rate of 1.35 times an employee’s regular wages.

Public holidays in Japan are typically regarded as paid days off if they occur during the working week. The public holidays in Japan in 2025 are as follows:

  • January 1, 2025: New Year’s Day
  • January 2, 2025: January 2nd Bank Holiday
  • January 3, 2025: January 3rd Bank Holiday
  • January 13, 2025: Coming of Age Day
  • February 11, 2025: National Foundation Day
  • February 23, 2025: Emperor’s Birthday
  • February 24, 2025: Emperor’s Birthday Observed
  • March 20, 2025: Spring Equinox
  • April 29, 2025: Shōwa Day
  • May 3, 2025: Constitution Memorial Day
  • May 4, 2025: Children’s Day
  • May 6, 2025: Greenery Day Observed
  • July 21, 2025: Sea Day
  • August 11, 2025: Mountain Day
  • September 15, 2025: Respect for the Aged Day
  • September 23, 2025: Autumn Equinox
  • October 13, 2025: Sports Day
  • November 3, 2025: Culture Day
  • November 23, 2025: Labor Thanksgiving Day
  • November 24, 2025: Labor Thanksgiving Day Observed
  • December 31, 2025: December 31st Bank Holiday

There is no statutory right to sick pay in Japan, however, the Social Security System does provide sickness benefit to employees that are too sick to work after their fourth day of sickness, up to a maximum of 18 months.

These benefits consist of 60% of an insured employee’s standard monthly wage.

Maternity Leave

If a female employee has been enrolled in health insurance by paying social security contributions, they are entitled to maternity leave.

Maternity leave consists of 42 days of leave taken before the expected due date (or 98 days in the event of multiple births), and 56 days of leave taken after birth.

Employees will receive 67% of their typical wages while on maternity leave. 

Paternity Leave

There is no statutory entitlement to paternity leave in Japan.

However, parental leave exists, which allows parents to share 1 year of parental leave between them.

Parental leave is paid at 67% of their typical wages for the first 180 days and 50% for the remaining period.

Pension

Pensions in Japan are divided into two sectors:

National Pension

The National Pension is the public pension system in Japan managed by the goverment, and covers all residents aged between 20 – 59.

The contribution amount in 2025 is JPY 17,510 per month.

Contributions allow participants to receive the Old-Age Pension upon reaching the age of 65, provided that they have been covered under the National Pension system for at least 10 years.

Workers may also receive the Disability Basic Pension if they have a certain level of disability or the Survivor’s Basic Pension in the event of an insured spouse dying while contributing to the National Pension.

Private Pensions

Employees working in the private sector have a range of private pension options available that are managed by companies and business associations.

More firms are beginning to offer private pensions to attract employees and improve staff retention rates.

Severance Pay

There is no statutory severance pay that employees are entitled to by law in Japan.

However, many companies do offer severance pay to dismissed workers as a supplementary employee benefit.

Supplementary Employee Benefits in Japan

There are many supplementary employee benefits that employers may offer to workers in Japan. 

While these employee benefits are not statutory by law, employers may consider devising a list of supplementary benefits to help attract qualified candidates to a job role and to improve staff retention rates.

Examples of supplementary employee benefits in Japan include:

  • Commuting allowances
  • Housing allowances
  • Group insurances
  • Health checkups
  • Education discounts
  • Performance bonuses
  • Flexible working hours

Optimize Employee Benefits with Remote People

Many businesses make the decision to seek help with employee benefits in Japan, which is where Remote People can help.

We specialize in helping companies streamline mandatory and supplementary employee benefits through our Employer of Record (EOR) services. Our EOR solution ensures compliance with Japanese labor laws and handles key employment tasks such as contracts, benefits administration, payroll, and tax processes, all while navigating local customs and language.

We can also assist with Payroll Outsourcing, PEO services (Professional Employer Organization), and recruitment services in Japan. Our team are highly experienced with the Japanese recruitment space, and can help link you with the right people and partners to allow you to focus on your business.

Contact Remote People today to see how we can make hiring in Japan a simpler process.