Easily manage employment in Japan

Payroll services in Japan

Japan has a highly developed economy with key industries in technology, automotive, and finance. With specific labor laws and tax regulations, employers in Japan must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Japan

Employers in Japan must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Japan’s minimum wage varies by prefecture, with the highest set at JPY 1,113 per hour in Tokyo.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Japan is 40 hours, typically spread over five days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated at 125% of the regular wage for extra hours and 135% for work on public holidays.

Taxation and social security contributions

• Personal income tax: Japan has a progressive income tax system with rates ranging from 5% to 45% depending on income levels.
• Employer contributions:
• Social security: Approximately 16% of the gross salary.
• Employment insurance: 0.9% of the gross salary.
• Employee contributions:
• Social security: Approximately 15% of the gross salary.
• Employment insurance: 0.6% of the gross salary.
• Corporate tax: The corporate income tax rate in Japan ranges from 15% to 23.2% depending on revenue.
• Tax reporting: Employers must file payroll taxes and contributions with the National Tax Agency (NTA) and local tax offices regularly.

Payroll compliance in Japan

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Employers must stay updated on changes to Japan’s labor laws and tax regulations to avoid penalties.

Run payroll in Japan with Remote

Managing payroll in Japan requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.