Article
9 min read
How to Hire Using an Employer of Record in Japan (2025 Edition)
Employer of record
Author
Ellie Merryweather
Last Update
June 27, 2025
Table of Contents
What is a Japanese Employer of Record?
Top reasons to use an EOR in Japan
How to Hire in Japan: Step-by-Step Guide
Employment compliance tasks an Employer of Record manages in Japan
How much does it cost to hire through an EOR in Japan?
How to choose the best EOR Service
Is Deel EOR a strong choice for hiring in Japan?
Hire employees in Japan confidently with Deel EOR
Key takeaways
- Setting up a Japanese entity to hire local talent can take months and could cost up to ¥10,000,000 in legal, tax, and payroll setup.
- A Japanese Employer of Record covers social security, taxes, contracts, and data protection under Japanese labor laws, ensuring full compliance without the headache.
- Deel EOR owns its Japanese entity for full control, supports hiring in 150+ countries, delivers transparent pricing, real-time compliance monitoring, and has top G2 ratings.
Expanding your business to Japan is a strategic move. The world’s third-largest economy offers deep technical talent, renowned quality standards, and high consumer buying power. However, Japan is also known for strong worker protections, unique labor standards, and frequent updates to local labor laws. For most foreign companies, this complexity means lengthy entity registration, parallel payroll testing, and concerns over compliance with employment contracts, payroll taxes, and even wrongful-dismissal claims.
An Employer of Record (EOR) in Japan simplifies this process. The EOR becomes the legal employer of record for your staff, handling all statutory responsibilities—including payroll, health insurance, and social security—so you can focus on managing your team’s output. Deel’s Japan EOR service combines a wholly-owned local entity, real-time compliance monitoring, and a transparent flat monthly fee. This guide covers how EOR in Japan works, what it costs, and the step-by-step workflow to hire employees in Japan compliantly in 2025.
What is a Japanese Employer of Record?
An Employer of Record in Japan is a licensed local entity that hires workers on your behalf, assuming all legal employer obligations while you retain operational control. Here’s how the responsibilities are split:
EOR - Legal & HR liability: Draft compliant employment contracts, enroll staff in health insurance and Employees’ Pension Insurance, handle employment and workers’ compensation insurance, withhold and remit payroll taxes under Japan’s PAYE system
Employer - Operational control: Manage tasks, projects, performance, and working hours
Because the EOR is listed on every payslip, any audit, labor dispute, or issue with payroll taxes or social security falls under their remit. Deel’s Compliance Hub keeps you up-to-date on statutory changes—from overtime premium increases to new paid parental or maternity leave subsidies—ensuring your team remains compliant under local labor laws without extra headcount or stress.
Top reasons to use an EOR in Japan
Japan’s business environment rewards precision and compliance. Using an EOR service makes this much easier:
- No entity, no headache: Avoid ¥3–5 million in incorporation capital and months of bank vetting for your own local entity
- Instant payroll compliance: EORs auto-enroll staff in all four mandatory insurances—health, pension, employment, and workers’ comp—from day one
- Misclassification shield: Avoid costly penalties for misclassifying employees as freelancers; EORs ensure correct employment status
- Seamless pension auto-enrollment: Employees’ Pension Insurance (18.3% shared cost) is managed automatically
- Cost clarity: Deel quotes a flat fee and provides real-time updates on employer costs, including minimum wage in Japan and social security contributions
Deel Employer of Record
How to Hire in Japan: Step-by-Step Guide
Follow this eight-step checklist to move from intention to hiring employees in Japan, fully compliant and without needing your own subsidiary.
1. Choose an EOR with a wholly-owned local entity in Japan
Verify the EOR provider controls its Japanese K.K. (Kabushiki Kaisha) local entity. Direct ownership allows the EOR to sign labor contracts, file MyNumber paperwork, and represent you at the Labour Bureau, reducing misclassification risk and ensuring adherence to local labor laws.
Tip: Deel displays its entity registry on the platform. Download the K.K. certificate of incumbency for your records.
2. Book a demo and verify social proof
Request a demo to see payroll runs, contract templates, and compliance dashboards in action. Check case studies and client testimonials for EOR services in Japan. Scan reviews on G2 and Trustpilot, where Deel EOR holds a 4.8/5 average.
Tip: Request a customer reference in your industry to confirm Japanese payroll accuracy and compliance.
3. Request a transparent EOR quote
Employer of record costs in Japan shift annually. Request a detailed quote that includes statutory employer costs, gross salaries, and the EOR’s fees. With Deel, you get transparent pricing, with no hidden markups on benefits or filings.
Tip: Compare costs before you expand—read our article EOR vs. Entity Costs: What’s More Affordable?
4. Submit a 12–24-month hiring plan
Share your headcount forecasts so the EOR can optimize classification and ensure contract templates comply with probation period limits.
Tip: Deel’s Workforce Planning tool flags when projected overtime could trigger Article 36 Agreement filings for working hours over 40 hours per week.
5. Create the employment contract in the platform
Japanese law requires a written statement of employment conditions, including wages, working hours, dismissal grounds, and paid leave entitlements. Our templates are compliant with Japanese contract regulations by default, including:
- 40-hour workweek clause
- Overtime premium
- IP assignment compliant with Patent Act
Tip: Customize probation durations within legal limits for flexibility.
6. Confirm the candidate’s right to work in Japan
Foreign nationals must have appropriate work visas. Deel Immigration supports visa sponsorship, COE filings, and Immigration Bureau updates.
Tip: Scan and log residence cards within Deel, and receive alerts before visa expiry.
7. Run the onboarding workflow
With Deel EOR, every onboarding is adapted to local labor laws, supported by a dedicated onboarding manager. With a single click, trigger:
- MyNumber collection and APPI consent
- Enrollment in health, pension, employment, and labor insurance
- Bank account registration for payroll
Tip: With Deel Engage, quickly generate welcome messages and surveys to track employee satisfaction, critical in relationship-driven Japanese workplaces.
8. Maintain ongoing compliance
Japanese employment laws change annually—2025 brings updates to social security, maternity leave, and statutory public holidays. Deel’s Compliance Hub provides alerts, updates contract templates, and recalculates pro-rated paid leave.
Continuous Compliance™
Employment compliance tasks an Employer of Record manages in Japan
Here’s how an EOR like Deel ensures full compliance with Japanese local labor laws, payroll taxes, and statutory benefits:
| Category | Key Requirements (2025) |
|---|---|
| Statutory Employer Costs | Employers are required to pay an estimated 16.55% of the employee’s gross salary, covering four social insurances: Health (4.99%), Pension (9.15%), Unemployment (0.95%), and Workers’ Compensation (0.30). Employers may also be expected to pay Contributions to Childcare (0.36%) and Long Term Care insurance for employees over 40 (0.8%). |
| Employment Contracts & Probation Rules | Written employment contracts must be delivered before the start date. Probation is common but legally capped at six months; terminations require objective and reasonable grounds with 30 days’ notice or pay in lieu. |
| Pay and Working Hours | Minimum wage in Japan averages ¥961/hour, and differs by prefecture. (For example, in Tokyo: ¥1,118 vs in Tottori: ¥957). Average workweek: Monday through Friday, 8 hours per day. Overtime paid at 125%–160% depending on circumstances. Employees may only work 360 hours of overtime per year. |
| Payroll & PAYE Compliance | Income tax, residence tax, and social security are withheld monthly. Year-end adjustment required; employers must file e-Tax by January 31. Payslips must list every deduction and be retained for 3 years. |
| Vacation and Public Holiday Allowances | Employees are entitled to at least 10 days paid leave after 6 months of employment, rising to 20 days after 6.5 years. At least five days must be used annually. Japan observes 16 public holidays in 2025. |
| Income Taxes | Progressive rates (5–45%) plus 10% inhabitant tax, which can be paid through salary reductions or settled autonomously. Employers must withhold and remit payroll taxes monthly, or face penalties. |
| Expenses, Allowances, and Bonuses | No statutory 13th-month salary. Commuter allowance non-taxable up to ¥150,000/year. Expenses may be non-taxable if filed with the appropriate documentation. Employers may offer allowances at their discretion, including work from home, gym memberships, wellness, and utilities. Bonuses are market practice but not required, and are taxed as regular income. Employees are also required to complete a medical exam. While the exam is pre-paid, any reasonable related cost (travel, etc.) must be submitted as an expense. |
| Statutory Benefits & Pension Requirements | All employees aged 20–60 must join Employees’ Pension Insurance. Employers pay 9.15% of gross salary for pension (included in statutory social insurance contribution). Other benefits are commonplace but discretionary; education, relocation, wellness, and L&D. |
| Maternity and Parental Leave | Maternity leave: 6 weeks pre-birth, 8 weeks post-birth at 67% wage. Parental leave may be taken by either parent up to one year, at 67% of their wage up to the first 180 days, and 50% thereafter. |
| Sick Leave, Bereavement Leave, and Carer’s Leave | No statutory paid sick leave, but most companies offer three days. Employees on health-insured sick leave receive 66% of their salary from social security. Employees are entitled to condolence leave (kibiki kyuka) of 5 days for the death of a spouse child, or parent, and 3 days for a grandparent, sibling, or grandchild. |
| Terminations/Dismissals, Redundancy, Severance, and Resignations | Dismissal must be “objectively reasonable.” Termination for underperformance is difficult to justify in Japan, and can take years to process. Severance is not statutory, but employees are typically offered ex-gratia severance payment of 3 to 6 months, depending on circumstances. |
| Health & Safety | Employers must comply with the Industrial Safety and Health Act, including risk assessments and remote work ergonomic guidelines. |
| Misclassification Risk | Strict criteria for employment status to prevent sham employment (Giso Koyō); misclassification can lead to backdated social security premiums, interest, and fines. EORs eliminate this risk by issuing standard employment contracts. |
| Data & IP Protection | APPI compliance is mandatory for personal data; IP assignment clauses in contracts ensure employer ownership of employee work. |
Discover how Kyoto Fusioneering accelerated market entry with Deel EOR
Established by Kyoto University, Kyoto Fusioneering is a startup company focused on commercializing fusion energy.
With offices in the US, UK, and Japan, Kyoto Fusioneering was planning on setting up an entity in Germany. But when they realized how expensive, time-consuming, and involved the process was, they began looking for another way to enter the market.
With Deel EOR, the team didn’t have to worry about the complex legal and employment systems in Germany. Instead, they were able to focus on finding the right talent and growing their business.
In just one month, Kyoto Fusioneering hired its first two local employees.
“Deel EOR is the easiest and most cost-effective way to enter a new market. It accelerated our speed-to-hire and helped us save thousands of dollars.”
— Junya Hiroshima, HR Manager, Kyoto Fusioneering
How much does it cost to hire through an EOR in Japan?
When you hire employees in Japan via an EOR, your main costs are:
- Employee’s gross salary
- Mandatory employer social security contributions
- The EOR’s management fee
Deel charges a flat monthly fee that covers payroll processing, contract generation, statutory filings, and platform access—no hidden setup fees or surprise year-end charges.
| Factor | Your Own Japan Entity | Deel EOR Service |
|---|---|---|
| Setup costs | ¥5,907,572 | ¥0 |
| Annual admin costs | ¥4,172,871 | Included |
| EOR annual fee (per worker) | N/A | ¥1,037,875 |
| Legal liability | 100% yours | Shifted to Deel |
| Time to hire | 3 months | 1 business day |
| Total annual cost | ¥10,080,443 | ¥1,037,875 |
How to choose the best EOR Service
Before signing with an employer of record in Japan, evaluate these four factors:
- Entity ownership: Choose an EOR that owns its Japanese local entity for full legal control
- Compliance expertise: Look for deep knowledge of local labor standards, payroll taxes, and proven audit history
- Platform breadth: Future-proof your tech stack with an EOR service that goes beyond hiring to cover equity, device management, visas, and reviews
- Global coverage: Choose an EOR with worldwide reach if you plan to expand beyond Japan
Is Deel EOR a strong choice for hiring in Japan?
Deel is a leading Employer of Record (EOR) for hiring employees in Japan. With a wholly-owned Japanese entity, local labor law expertise, and transparent flat pricing, Deel enables you to hire, pay, and manage employees in Japan without the regulatory headaches.
Why choose Deel’s EOR service in Japan?
- G2 leader: Highest satisfaction and largest presence among EOR providers
- Wholly-owned Japan local entity: No third-party risks
- Hire and pay employees or contractors compliantly in 150+ countries
- Real-time compliance updates for payroll taxes, social security, and health insurance
- Transparent, flat monthly pricing—no surprises
- Fast onboarding: Move from offer to compliant hire in just 1–5 days
- Compliance Monitor: Proactive alerts and evidence logs for regulatory changes
- Manage benefits, payroll, employment contracts, and equity grants in one platform
- Integrated background checks, device deployment, and visa support
- Proven track record supporting global brands in building teams who work in Japan
With Deel, you avoid months of paperwork and focus on growth, making EOR in Japan a seamless addition to your global hiring strategy.
"Deel EOR solved our issue of hiring people compliantly in a country like Japan, where local laws and cultural differences pose significant challenges."
—Andrea Pilar Donoso,
People Manager, Japonal Viajes SLU
Hire employees in Japan confidently with Deel EOR
Ready to hire employees in Japan without the complexity of setting up a local entity or navigating local labor laws and payroll taxes? Book a Deel demo today and see how you can onboard your first hire in as little as 5–10 days, with transparent, flat pricing and full compliance.
Deel’s EOR service covers every compliance need, automates Japanese payroll and social security, and eliminates misclassification risks. Discover why leading companies trust Deel to scale in Japan—schedule your walkthrough and focus on growth, not red tape.
Platform Tour
FAQs
How fast can I onboard an employee in Japan using Deel EOR?
Most hires are fully compliant and ready to start in 5–10 business days once documents are submitted.
Do employees need a local bank account?
No—Deel can pay to Japanese or international bank accounts, but local accounts speed up transfers and reduce currency fees.
What type of contract does Deel use in Japan?
Deel issues standard Japanese indefinite-term (CDI) employment contracts compliant with all local labor standards.
Does Deel handle tax withholding and social security in Japan?
Yes—Deel withholds and remits all required payroll taxes and social security under Japanese law.
When are payroll and benefits processed?
Payroll is processed monthly, typically by the 25th. Deel enrolls employees in all mandatory health insurance, pension, and employment insurance benefits from day one.
Are there statutory benefits or paid leave in Japan?
Yes—employees are entitled to at least 10 paid leave days after six months, rising to 20 days with tenure. Deel ensures full compliance with all statutory benefits.
Is a probation period required?
Probation is common but capped at six months by law; Deel’s contracts enforce this automatically.
Can Deel help with work visas for foreign employees?
Yes—Deel Mobility supports all aspects of work visa sponsorship, renewals, and immigration filings.
Who owns the employee’s work and data?
If specified in the employment contract, IP belongs to the employer; Deel’s agreements include compliant IP assignment and data protection provisions.
What if I need to terminate employment?
Dismissals in Japan must meet strict requirements, including 30 days’ notice or pay in lieu. Deel guides you through the process and manages severance in line with local customs.
About the author
Ellie Merryweather is a content marketing manager with a decade of experience in tech, leadership, startups, and the creative industries. A long-time remote worker, she's passionate about WFH productivity hacks and fostering company culture across globally distributed teams.
