When you hire employees in Japan, the employer’s required procedures can be broadly grouped into six areas:

① Employment Contract / Notice of Working Conditions (at hiring)
② Rules of Employment (workplace rules)
③ Social Security (Social Insurance): Health Insurance & Employees’ Pension
④ Labor Insurance: Workers’ Accident Compensation Insurance & Employment Insurance
⑤ Income Tax: withholding, payment, year-end adjustment
⑥ Resident Tax: special collection (withholding from salary)

If you understand “who to submit to, by when, and what to submit,” you can run operations smoothly.

Author / Contributor

Keisuke Shimomura, Representative (CEO)
Shimomura Partners Labor and Social Security Attorney Corporation

Based in Minato City, Tokyo, Keisuke provides end-to-end support for foreign and international companies—especially global firms entering Japan—covering employment matters and Japan’s Social Security (Social Insurance) compliance. He supports clients in setting up smooth, compliant operations so they can run their business in Japan with confidence.

① Employment Contract / Notice of Working Conditions (At Hiring)

1) The Notice of Working Conditions is mandatory

At the time of hiring, the employer must clearly provide the employee with working conditions.

In practice, companies typically prepare either:

• Notice of Working Conditions (including legally required items), or
• Employment Contract (signed/sealed) + Notice of Working Conditions (used together)

Key point: If an overseas headquarters is involved, ambiguity here often leads to disputes later.
It is critical to structure key conditions (salary, working hours, holidays, probation, resignation/termination) according to Japan’s rules and practices.

2) Minimum clauses you should include (common dispute points)

• Contract term (open-ended / fixed-term)
• Probation period (yes/no, whether extension is possible)
• Work location & job duties (including a design that allows for reassignment/transfer if needed)
• Working hours, breaks, holidays
• Wages (base salary, allowances, fixed overtime scheme if any)
• Bonus & pay raise (wording that does not imply “guaranteed” payments)
• Resignation (notice period for voluntary resignation)
• Disciplinary action and termination positioning (must be consistent with the Rules of Employment)

② Rules of Employment (Workplace Rules)

The Rules of Employment are essentially the company’s “operating manual.”
If you have fewer than 10 employees, creating them is not legally required; however, Japan is widely considered to have strong employment protections, and when issues arise, a company without Rules of Employment often has fewer options.

1) Threshold for mandatory creation/filing

If you continuously employ 10 or more workers, you must create and file Rules of Employment.
That said, even with fewer than 10, it is still recommended (reasons below).

2) What often happens without Rules of Employment

• Termination becomes extremely difficult in practice
• Retirement age is not clearly defined
• No leave-of-absence system (increases the risk of disputes)
• You cannot effectively use HR options such as wage reduction

Even with preventive measures, disputes still happen.
If you do not prepare in advance, the outcome can be far worse.

3) Practical tip: Don’t let contracts and Rules of Employment contradict each other

If the Employment Contract (Notice of Working Conditions) and the Rules of Employment conflict, operations break down.

A safer approach is:
Hiring conditions → then incorporate consistently into the Rules of Employment.

Social Security (Social Insurance) vs Labor Insurance (They are different)

• Social Security (Social Insurance): Health Insurance + Employees’ Pension (handled by the pension office / Japan Pension Service)
• Labor Insurance: Workers’ Accident Compensation Insurance + Employment Insurance (handled by the Labor Standards Inspection Office and Hello Work)

Even though both are “insurance,” the authorities and required forms are different.

③ Social Security (Social Insurance): Health Insurance & Employees’ Pension

1) Enrollment as a business (new coverage / new applicable office)

In principle, once a corporation employs regular employees, Social Security (Social Insurance) enrollment becomes necessary.
When requirements are met, the employer submits the “New Applicable Office / New Coverage Application” to the Japan Pension Service.
(Practical guideline: within 5 days from the relevant event.)

2) Enrollment of each employee (qualification acquisition)

For each employee, submit the “Insured Person Qualification Acquisition Notice.”
If the employee has dependents (commonly guided by an expected annual income under approx. JPY 1.3 million), also submit the “Dependent (Change) Notice” together.

④ Labor Insurance: Workers’ Accident Compensation & Employment Insurance

1) Establishment of labor insurance (Labor Standards Inspection Office)

When you hire workers, the labor insurance relationship is established.
In principle, the employer submits the “Labor Insurance Relationship Establishment Notice” to the competent Labor Standards Inspection Office.
(Practical guideline: within 10 days.)

In addition, submit and pay the 「Estimated Insurance Premium Declaration」
If needed, consider applying for bank account transfer (direct debit) using the relevant form.

2) Employment Insurance procedures (Hello Work)

After completing the labor insurance establishment at the Labor Standards Inspection Office, proceed at the Hello Work office with:

• Employment Insurance Applicable Office Establishment Notice
• Employment Insurance Insured Person Qualification Acquisition Notice

⑤ Income Tax (Withholding)

1) Filing for a payroll office (Tax Office)

When you open a payroll-paying office, in principle you must submit the 「Notification of Opening of Salary Payment Office, etc.」 to the competent tax office.

2) Payment of withholding income tax (generally by the 10th of the following month)

Income tax withheld from salary (including reconstruction special income tax) must generally be paid by the 10th of the month following payment.

3) If small-scale, you can pay twice a year (special payment schedule)

If you have fewer than 10 regular payees, you may apply to pay withheld income tax twice a year instead of monthly.
(Many companies use this in practice because it simplifies administration and cash flow.)

⑥ Resident Tax (Special Collection / Withholding from Salary)

As a general rule, resident tax is collected by the employer through Special Collection (withholding from salary).

However, in practice, for a new hire in their first year, it is often paid directly by the employee, and then Special Collection starts from June of the following year after year-end adjustments are reflected.

Employers are generally required to implement Special Collection.
(Local municipality practices vary, so follow guidance from the employee’s municipality of residence.)

Common practical stumbling points (Labor and Social Security Attorney perspective)

• Confusing Social Security (Social Insurance) and Labor Insurance as if they are handled by the same office
• Having to redo procedures because Employment Insurance often comes after Labor Insurance establishment
• Determining Social Security (Social Insurance) coverage for part-time/short-hour workers (coverage expansion continues)
• Not designing payroll operations end-to-end (withholding tax, resident tax special collection, etc.)

Where to submit (Quick summary)

• Pension Office / Japan Pension Service: Social Security (Social Insurance) – new coverage & employee enrollment
• Labor Standards Inspection Office: Labor Insurance – establishment & estimated premium declaration
• Hello Work: Employment Insurance – office setup & employee enrollment
• Tax Office: payroll office notification, withholding tax, year-end adjustment-related items
• Municipality: resident tax special collection

Author / Contributor

Keisuke Shimomura, Representative (CEO)
Shimomura Partners Labor and Social Security Attorney Corporation

Based in Minato City, Tokyo, Keisuke provides end-to-end support for foreign and international companies—especially global firms entering Japan—covering employment matters and Japan’s Social Security (Social Insurance) compliance. He supports clients in setting up smooth, compliant operations so they can run their business in Japan with confidence.