Article
4 min read
Employer Costs for an Employee in Japan (2026 Guide)
Employer of record
Global hiring
Author
Jemima Owen-Jones
Last Update
February 05, 2026
Quick answer: What is the total employer cost for a $100,000 salary in Japan?
For an employee earning $100,000 USD annually in Japan, employers can expect mandatory employer costs of approximately $11,865 USD per year, bringing total compensation costs to $111,865 USD.
Estimated total employer cost (Japan): ~11.9% on top of gross salary (example estimate).
Hiring in Japan can be a powerful move for global teams—especially if you’re building in high-skill sectors like engineering, AI, robotics, or advanced manufacturing.
But even when two employees earn the same salary, the total employer cost varies by country due to statutory insurance programs, payroll contributions, and mandatory benefits.
This guide provides a ballpark estimate of the mandatory employer cost of hiring an employee in Japan, using an example salary of $100,000 USD per year.
What’s included in this estimate?
This estimate includes mandatory employer-side statutory costs that may apply when hiring an employee in Japan, such as:
- Unemployment insurance
- Workers’ compensation insurance
- Asbestos contribution
- Employees’ pension insurance
- Childcare contributions
- Statutory health insurance
- Long-term care insurance
What’s not included in this estimate?
This estimate generally does not include additional costs such as:
- Paid annual leave (vacation)
- Sick pay beyond statutory requirements
- Private health insurance upgrades
- Employer-provided benefits or allowances
- Bonuses, equity, or commissions
- Equipment and onboarding expenses
- Costs that vary by location, age, or industry
Why employer costs vary in Japan (and globally)
Employer costs can differ depending on:
- Whether health insurance rates vary by region or employee profile
- Salary thresholds and contribution caps
- Industry-specific requirements
- Changes in regulation year to year
- Currency exchange rate fluctuations (if you pay in a different base currency)
Estimated employer cost breakdown for Japan
Below is an estimated breakdown of mandatory employer costs for hiring an employee in Japan earning $100,000 USD/year.
Example salary used in this estimate
- Annual gross salary: $100,000 USD
- Annual gross salary (approx.): ¥15,695,000 JPY
Employer mandatory costs (estimated)
| Employer Cost Category | Estimated Annual Cost (JPY) | Estimated Annual Cost (USD) | Notes |
|---|---|---|---|
| Unemployment Insurance | ¥149,102 | $950 | Contribution to unemployment insurance fund |
| Workers’ Compensation Insurance | ¥47,085 | $300 | Coverage for work-related injury or illness |
| Asbestos Contribution | ¥314 | $2 | Asbestos-related health damage relief fund |
| Employees’ Pension Insurance | ¥713,700 | $4,547 | Employer pension insurance contribution |
| Contributions to Childcare | ¥28,080 | $179 | Childcare and family support contributions |
| Health Insurance | ¥796,404 | $5,074 | Statutory health insurance (varies by region/age) |
| Long-term Care Insurance | ¥127,680 | $813 | Long-term care insurance premium |
| Total Estimated Employer Costs | ¥1,862,365 | $11,865 | Total mandatory employer cost estimate |
Total compensation cost (salary + mandatory employer costs)
| Total | JPY | USD |
|---|---|---|
| Gross Salary | ¥15,695,000 | $100,000 |
| Mandatory Employer Costs | ¥1,862,365 | $11,865 |
| Total Compensation Cost | ¥17,557,365 | $111,865 |
Global Hiring Toolkit
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Hiring internationally introduces a new layer of complexity—local labor laws, payroll rules, statutory benefits, and compliance requirements can add up fast.
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- Local payroll and tax compliance
- Statutory contributions and reporting
- Country-specific benefits administration
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FAQs
What mandatory employer contributions do companies pay in Japan?
Mandatory employer contributions in Japan typically include social insurance and other insurance contributions, such as health insurance, pension insurance, unemployment insurance, and workers’ compensation-related coverage. These mandatory employer contributions are paid on top of salary and are a key part of total employment cost.
Do employers and employees both pay social insurance in Japan?
Yes. In Japan, employers and employees generally share the cost of certain social insurance programs. Employers pay the employer portion and also withhold the employee portion through payroll, then remit contributions through the correct process.
How does social security work in Japan for payroll?
Japan’s social security system is supported through employer and employee contributions to statutory programs such as health insurance and pension insurance. This is why employer costs go beyond salary—because social security and insurance contributions are required for compliant employment.
What is worker accident compensation in Japan?
Worker accident compensation refers to mandatory protections that support employees who experience work-related injury or illness. Employers typically fund this through statutory worker accident compensation insurance and related payroll contributions.
What is an Employer of Record (EOR) in Japan?
An Employer of Record (EOR) is a service that hires employees on your behalf in Japan as the legal employer. This allows companies to hire locally while the EOR manages employment compliance, payroll, and statutory contributions.
Can an EOR help foreign companies hire in Japan without establishing a local entity?
Yes. Many foreign companies use an Employer of Record (EOR) to hire employees in Japan without establishing a local entity. This can be a faster option than setting up a local subsidiary, especially for testing the market or hiring a small team.
Do you need legal entities to hire employees in Japan?
In most cases, companies need a local presence or compliant hiring structure to employ workers directly. If you don’t have local legal entities, an EOR can act as the legal employer and manage payroll and compliance requirements.
How is payroll processed in Japan?
When payroll is processed in Japan, employers must calculate wages, apply statutory deductions, and remit mandatory contributions (including social insurance and other insurance contributions). Payroll must also align with local requirements under Japanese labor and tax rules.
What labor standards apply to employment in Japan?
Japan has defined labor standards that govern employment conditions such as working hours, overtime, rest days, and employee protections. Employers must follow these standards to remain compliant with Japanese labor requirements.
Why does local expertise matter when hiring in Japan?
Hiring in Japan requires careful handling of contracts, payroll reporting, and statutory insurance programs. Having local expertise helps employers avoid compliance mistakes and ensures mandatory employer contributions are calculated and reported correctly.
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
