Employer of Record in Japan
Setting up a subsidiary in Japan can be time-consuming. Besides, employment in Japan involves several formalities. Skuad, as your Employer of Record in Japan, manages all HR activities such as payroll management, recruitment, and compliance management to ensure that you do not have to spend your resources on tasks other than expansion. Its unified and automated platform allows all stakeholders to access data and streamline all internal processes.
Japan at a Glance
Estimated Population: 126.3 million
Currency: JPY Japanese Yen
Languages frequently used: Japanese
GDP: USD 5 trillion
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What You Must Know Before Employing in Japan
The primary ambit of labor laws in Japan is the relationship between the employee and the employer. Employees are not defined by nationality but by their relationship with their direct employer. As a result, independent contractors do not count as employees under Japanese labor law.
Several laws in Japan protect employees from discrimination, termination, or unfair practices. Additionally, employees in Japan get generous benefits from the government.
The complex and detailed employment and labor laws of Japan may not be easy to grasp. Partnering with an Employer of Record with rich experience in employing and hiring in Japan will expedite your expansion process with fewer resources. Learn more from Skuad experts.
Some of the provisions of Japan Employment Laws are as follows.
Timings, Holidays, And Leave Policies In Japan
Contractors Vs. Full-time Employees
The distinction between independent contractors and employees in Japan is highly subjective. Independent contractors do not typically come under the ambit of employment laws. Japanese courts use several criteria to determine whether an individual is an independent contractor or an employee. Some of the main criteria that help courts to decide whether the employment is contractual or full-time are as follows:
- The discretion of refusal or acceptance of a job offer;
- The level of freedom the employee has in determining how the service should be performed or offered to the employer;
- Whether the individual or firm in question reports directly to the employer or not;
- Whether it is the employer or the purported employee who determines the working hours;
- Who assumes the responsibility in case of damages.
Employees are granted several protections and benefits under Japanese law, but these benefits do not extend to independent contractors. As a result, while having full-time employees can be financially more taxing for firms, it is much preferred by individuals.
Scope of Negotiating Terms
In Japan, the scope of negotiating the terms of employment has always been limited. The compensation packages and benefits offered to candidates are standard. The same positions will have little to distinguish among them. However, for higher positions, the scope for negotiation can be significantly higher and candidates can often dictate terms. Trust Skuad to take complete charge of your contracts in Japan.
Hiring in Japan
Once the hiring needs are identified, and the job description is put down, employers have to either use an internal team. Those who fulfill all the criteria mentioned in the job description go through an essential background screening before being shortlisted. The shortlisted candidates are interviewed through a series of panels, like technical and HR, to better evaluate their aptitude for the job and analyze if they are a perfect fit for the company and its culture.
After a final evaluation, the most suitable candidates are selected and offered a letter of intent or employment.
Hiring through an employment website, social media posts, or advertisements in Japan has its advantages, such as the availability of many prospective candidates. It takes away the risk of not finding the right candidate or a shortage of talent in the job pool.
On the flip side, organizations may have to go through a tiresome procedure of filtering several applications and selecting prospective candidates who are most suitable for the job offer. It is a challenging process, especially the initial screening. It is impertinent that initial screening is done accurately.
Websites like LinkedIn still have a limited reach in Japan and cannot be the sole platform to source talent, especially if you need talented professionals.
Hiring talented employees in a short span is not easy. Partnering with an Employer of Record like Skuad will prove to be more advantageous than collaborating with hiring companies in Japan because Skuad’s EOR solutions take care of all the compliance and legal issues while helping you speed up hiring using their knowledge of domestic employment practices and virtual onboarding tools.
Not only does Skuad help in quick recruitment, but it assists in other Human Resources-related functions such as payroll management, time and expense management, security and compliance, and tax filing. These features add up to a faster, cheaper, and more seamless experience for the organization and the candidates. Book a Demo to know more.
Probation & Termination
Terminating employees in Japan can often be exceedingly difficult because several reasons and types of elimination, which are permitted in other countries, are not applicable in Japan. It is strictly prohibited to terminate employment contracts due to redundancies. All terminations are considered to be individual, and a robust reason must be given to back up the resignation. Working with an EOR like Skuad helps organizations carry out such actions in compliance with local laws to avoid disputes in the future. Get in touch with Skuad today
EOR solutions are beneficial in so many ways. If you are looking to free up your time and resources to focus on other aspects of your expansion plans, outsource your human resources requirement in Japan. Skuad’s Japan EOR solution allows for a cost-saving, fast-paced, and smooth expansion without the need for establishing a new entity to handle employee management processes.
You may choose to set up an entity and take up the staffing, employee management, and payroll management activities yourself, but it could be overwhelming and may run the risk of legal hurdles. Why take chances when you can collaborate with a trusted partner and employer of record. Talk to Skuad now.
Outsourcing Employment Through an EOR in Japan
Working with an Employee of Record can save you valuable time that would otherwise go into setting up the entire hiring process, payroll management, tax management, and other such services. Tailor-made contracts for your needs, establishing all processes in compliance with local laws, easy amendment of existing contracts, and convenient e-signing of documents are some additional benefits of working with an EOR of repute such as Skuad.
Types of Visas in Japan
If you are a foreign national who wishes to work in Japan, you cannot do so without a work permit. The work permit needs to be applied by you as well as the employer, who will also need to sponsor it.
Payroll & Taxes in Japan
To set up payrolls in Japan, you have to be aware of the local rules and the acts governing those rules. Knowing your employee profile is of utmost importance since it will help you understand which act you have to refer to.
Taxation is also a necessary process you have to pay special attention to. Here too, working with an EOR will help save time and initial costs so that you can focus on the goals and objectives of the expansion.
Taxation in Japan
Incorporation: How to Set Up a Subsidiary in Japan
Setting up a subsidiary in Japan can be a long-winded and often costly process. It is essential to be meticulous when setting up a subsidiary or else the process may get delayed.
The first step when it comes to setting up a subsidiary in Japan is reserving a trading name. You must ensure that your trading name is unique and not owned by another company in the country. In general, you will need to submit several options for approval, out of which the Trade Register will approve one based on your priority.
The next step is preparing the documents of incorporation. For this, you will need legal counsel to draft the articles of association for your company, as well as duly notarize those. In addition, you should provide the details as well as the registration certificate of your company. You will also need to get these documents translated into Japanese, which is a requirement for all foreign entities in Japan.
Next, you will need to open a corporate bank account in Japan. This will be the registered bank account that will contain your share capital. The setup of this account is also subject to certain statutory charges.
Once your bank account has been set up, you can apply with the Japanese tax authorities for social security, employment, and taxation. Once your subsidiary has been duly registered, it is easy to apply for other licenses and permits that are required for activities that are specific to the field that you are operating in.
Professional Employer Organization (PEO)
A Professional Employer Organization (PEO) provides similar expertise in recruitment, payroll management, benefits management, and employee management. But the key area where it differs from an Employer of Record is that a PEO acts as the co-employer of your company’s employees whereas an EOR acts as a legal employer.
The final decisions in all Human Resource matters fall on the organization when working with a PEO. While this can be beneficial for reviewing every detail, it is also time-consuming, especially when it is in the middle of an expansion.
Skuad’s EOR solutions do not require organizations to form an entity in the country of expansion. Skuad completely takes over the hassles of working through the various stages of documentation and employment contracts.
Conclusion: What Gives Skuad’s Japan Solutions an Edge?
The most important part of setting up a remote team in Japan is knowing the local laws and how they affect all employment processes. Factors like knowing the laws governing different kinds of employee types, differences in state laws, understanding the Japanese negotiation process, setting up payrolls, and getting through the nuances of taxation can draw out the process of expansion.
However, instead of setting up a new entity and understanding the impact of every law on the employment process, it is much simpler to work with a trusted partner who can take care of your HR needs. It will also ensure that your HR practices are compliant with the local legal system and you are never on the wrong side of the law.
Skuad’s globally distributed teams and experience make it simple to hire exceptional talent in Japan while also managing your payroll, benefits and helping you with compliances and taxation using a Unified Employment Platform. Skuad has managed to build trust among some prominent remote employers and continues to look for ways to make your expansion plans smoother.
Contact Skuad today to give your business expansion plans the boost they need.